Remortgaging is propping up slowing mortgage market in the UK, accounting for 33% of total home lending in April, up from 28% the previous month, the latest data shows.
The number of remortgage transactions made in April rose by 8%, a 3,000 additional deals compared to March, according to the figures from conveyancing service provider LMS.
It also found that remortgagors felt a squeeze on family finances, with 15% remortgaging to unlock equity to pay off debts, up from 11% in March while home owners were moving onto longer term deals as 34% remortgaging onto five year deals, in comparison to 8% who previously had this product type
A total of 38,475 remortgage transactions were made in April, an 8% rise from the 35,500 deals made in March. The number of deals also increased annually, by 10%, from 34,700 in April 2016.
‘The remortgage market had a good month in testing conditions. In the next few months the general election and Brexit negotiations will cast a shadow of doubt over the future of the purchase market. Home owners should seriously consider remortgaging now while rates remain low and in case market conditions worsen significantly,’ said Andy Knee, chief executive of LMS.
With real wages falling by 0.2% in the first three months of the year, and family finances in a more delicate state than usual, a greater number of remortgagors consulted a broker in April. Some 72% consulted a broker, up from 63% in March.
Knee said that this is the result of home owners looking to make the best savings possible, with 57% citing this as their motive for consulting a broker in April, in comparison to 47% in March.
‘The fall in real wages in the first three months of the year has placed a real strain on family finances. Despite this, it is encouraging to see increased numbers of homeowners planning their finances in advance by remortgaging in order to pay off debts, and consulting with brokers in the process, to ensure they get the best possible deal,’ Knee added.
