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Remortgage lending bounces back in July

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Remortgage lending was up 13% in July compared to the previous month as borrowers increase their loan size to allow them to pay off more expensive loans.
Remortgage lending bounces back in July

According to a report by LMS Remortgage, homeowners had been holding back on remortgaging until more attractive deals came on the market.

Borrowers who are remortgaging are typically increasing the size of their loan, releasing an average of £16,000 equity to allow them to pay off other more expensive debts or to improve their standard of living

Commenting on the results of the First LMS Remortgage Report, Andy Knee, Chief Executive of LMS said: “July’s remortgage lending is still low in the context of the history of mortgage lending. 

“The July value followed a sharp fall in June, itself the lowest remortgage lending figures since December 2010. The low monthly figures reflect the fact that many borrowers, already on competitive existing rates, have had little incentive to remortgage.”

Despite gross remortgage lending being up 13% last month, it is still historically low at £3.5bn and down on the same time last year.

Knee continued: “Indeed, most new deals which borrowers could have taken out and completed in June or July would not reduce monthly repayments sufficiently to encourage people to remortgage so borrowers have held off taking any action.

“However, the good news is that better deals have materialised! Lenders have recently launched a number of sub 3% rates with terms of 4 or 5 years.

“This has led to a real surge in remortgage applications in late July that has continued into August. We had been expecting this to be a disappointing time with the distraction of the Olympics but the reverse has happened.

“These applications should become completions in late August and September and suggest that we will see a sharp rise in remortgage lending later in the year.”

LMS Remortgage highlight that the current ‘very attractive’ sub 3% remortgage deals suggest a bounce back in remortgage lending later this year.


This report comes at a time when Santander, the UK’s second largest mortgage lender announced it is set to hike its Standard Variable Rate (SVR) by 0.50% from 4.24% to 4.74%, a move expected to affect several hundred thousand customers.

Ben Thompson, MD Legal and General Mortgage Club, said: “With more than 8m of the total 11m or so UK mortgage borrowers currently on a floating rate of some description, these moves will be of interest to the majority of homeowners. Many are perplexed that SVRs can rise without any change to Bank Base Rate, which remains stuck at 0.5%, and has been for over three years.

“However it is the wider cost of funding that has forced change. Although nobody wants their mortgage rates to rise, today’s rates have to be seen in the context of historical levels, and they are very low indeed by comparison. It is almost certain that we have now seen the cheapest mortgage rates in a lifetime, although SVRs bottomed some time ago.

“Santander is by no means the first lender to do this. We have seen a number of SVRs rise recently from the likes of Halifax, the Co-operative Bank and the Yorkshire and Clydesdale Banks.

“In some cases this has been where a lender had an SVR that was previously comparatively low against other lenders, or from lenders who were looking to recoup some margin lost due to the rising costs of funding.”

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