Almost a third (31 per cent) of customers who remortgaged in May increased the size of their loans, aiming to release extra funds for spending or reduction of debt, the latest LMS research shows.
Around a quarter (24 per cent) of them increased the size of their loan by £10,000 in May, which is a 4 percentage point rise on April.
More than one in three (34 per cent) of remortgage customers wanted to reduce their monthly payments by up to £500. However, this was down from 37 per cent in April, and from 38 per cent in March.
The proportion of people remortgaging to get lower interest rates also declined to 62 per cent, from 65 per cent in the previous month.
Many borrowers (around 40 per cent) remortgaged because their deals were expiring. This share, however, has dropped from 47 per cent in April and from 49 per cent in March. This suggests that more people are taking control of their finances and choosing to remortgage for reasons other than their initial term having run its course.
Home improvements (23 per cent) again ranked high on the list of reasons to remortgage.
Andy Knee, chief executive of LMS, comments:
“There is a general confidence in the stability of current interest rates, which may explain a more relaxed attitude towards paying off a remortgage loan and account for why almost a quarter of remortgagors chose to increase the size of their loan by more than £10,000. However, we urge caution that borrowers should not become complacent with regard to low interest rates, as news that fewer remortgagors are doing so for access to lower rates [62 per cent in May vs 65 per cent in April] suggests that competitive rates may not be as readily accessible as previously.
“Cash-strapped, savvy borrowers are certainly using remortgaging to their advantage, but this new confidence implies they’re starting to find their footing without the help of brokers and intermediaries. At a time of regulatory upheaval, and complex affordability checks, brokers can play a vital role in helping borrowers navigate the dreaded mortgage maze to pick the deal that best matches their current circumstances.”
