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Remortgaging rockets to seven-year high

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Written by: Christina Hoghton
28/09/2016
Switching your mortgage is back in vogue as borrowers take advantage of low rates.

Record low interest rates have sparked the highest number of remortgage transactions since July 2009, according to figures from LMS.

The firm’s data showed that the number of remortgages rose to 36,195 – up 8% from July and 45% annually – as homeowners look to capitalise on record low interest rates in the wake of the Base Rate cut.

It meant that remortgage activity reached its highest level in more than seven years.

Down in value

However, the overall value of gross remortgage lending actually fell by 2% from £6.0bn in July to £5.9bn in August, as homeowners’ average remortgage loan amount dropped by 6% between July and August from £172,184 to £162,268.

Comparing year on year, those who remortgaged in August 2016 released £31,589 – 11% less than in August 2015, when the average amount released stood at £35,590.

Andy Knee, chief executive of LMS said: “The Bank of England’s decision to cut the base interest rate to 0.25% continues to have a positive impact on the remortgage market. Mortgage interest rates had already fallen to record lows, which along with rising house prices has encouraged a greater number of homeowners to remortgage their homes. Indeed, last month saw the highest number of remortgages for seven years.

“However, in spite of this rise, homeowners appear to be in a more cautious mood than last month: borrowing less in the wake of a couple of turbulent months, both politically and economically, and lowering their LTV in the process. This means, despite a greater level of activity, the value of gross remortgage lending has fallen for the first time since May 2016.”

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