Remortgagors cash in on price increases
Data from property firm LMS showed that the average amount of equity taken from a property was £35,590 in August. This is the highest level ever recorded by the survey and almost double January’s total.
This figure is also 76% higher than at the same point in 2014.
Despite limited wage growth in the UK economy, mortgage rates were virtually flat compared to last year. The firm said this had boosted affordability for borrowers looking to remortgage.
The value of remortgage lending topped £4.3bn in August, this was slightly down on earlier in the summer but 20% up year-on-year.
In total, 27,080 remortgage loans were completed in August, 18% more than the same month in 2014.
Andy Knee, chief executive of LMS, said that market conditions were making it the ideal time to remortgage, with many homeowners choosing to do so.
“Rising house prices and low interest rates mean homeowners are withdrawing record sums of cash from their homes by remortgaging without impacting their loan-to-value ratio as evidenced by a drop in new LTVs from 55% to 53% in August,” he said.
“Although the Bank of England governor, Mark Carney, has consistently stated that when the base rate does rise it will occur slowly and gradually, even the smallest rise could see monthly payments increase enough to damage household budgets. Fixing now at a competitive rate would avoid an increase in outgoings that may otherwise be seen.
“A slight decrease in remortgaging activity from the levels seen at the start of summer is nothing to be concerned about and we anticipate maintained momentum throughout the rest of 2015 and into 2016.”