Borrowers also releasing more cash for spending, or paying off other debts
- March remortgage lending rises to Â£2.9bn, up 12.9% on February’s Â£2.6bn
- Total gross mortgage lending is up 10% to Â£11.6bn.
- Remortgage lending now accounts for a quarter of the gross mortgage lending total.
- Those remortgaging are each taking out an average of Â£20,982 in extra equity (above the value of the redeeming loan), up 47.6% on February. This is also up 22.3% on this time last year (Â£17,155). This implies a total of Â£434.3m equity withdrawal by remortgaging in March.
LMS figures reveal that monthly gross remortgage lending increased by Â£330m in March to Â£2.9bn. This is up 12.9% on February’s Â£2.6bn reported by the Council for Mortgage Lenders (CML) last week.
The CML has also reported that total gross mortgage lending rose 10% in March to Â£11.6bn, from Â£10.5bn in February. As a result, remortgages now represent a quarter of the market.
LMS estimates that the total number of remortgage loans in March increased by 16.2% to 20,699, compared with 17,812 in February. This is also down 24.8% from 27,534 in March of last year.
The average remortgage loan amount has fallen for the first time since May 2012 and now stands at Â£139,280. However, despite this fall, it is still Â£3,000 higher than the peak at the beginning of 2012 (Â£136,083 – January 2012).
Commenting on the latest figures, Andy Knee, Chief Executive of LMS says:
“Remortgage activity outpaced total gross mortgage lending with a strong 13% rise in March. Remortgage borrowers are also taking advantage of current competitive mortgage rates to increase the size of their mortgage borrowing, releasing an average of Â£20,982 cash in order to spend or reduce other debts. As a result, remortgage borrowers are also taking on higher repayment commitments relative to their income.
“Remortgage repayments as a percentage of income are now at the highest for over 3 years at 21.2%. This percentage is now almost the same as for new purchase borrowers, 21.4%, who have typically borrowed more than remortgagors.
“We expect remortgage activity to continue to increase over the next few months, spurred on by low mortgage rates and lenders being able to lend more as a result of the government’s Funding for Lending Scheme (FLS).”