Despite a 24% drop in gross mortgage lending from January, February 2016’s figure of £4.4bn is the largest amount recorded in the month of February for seven years. The value of gross remortgage lending is also 26% higher than February 2015’s figure of £3.5bn, new research reveals.
The latest findings from conveyancing and panel management experts, LMS, also show that the number of loans fell by 16% in February to 27,840, from 33,100 in January 2016.
Year on year figures however show an increase of 23% from February 2015, when 22,700 borrowers remortgaged.
Average remortgage loan amounts varied greatly between regions, from £101,949 in Wales to £261,711.
High house prices in London, meant that despite having the largest remortgage loans, February’s loan-to-value (LTV) figure for the capital was the lowest recorded in the UK, at 48%, a drop of 7 percentage points from January 2016.
The LTV for the North East was recorded at 69%, making it the highest, having risen by 6 percentage points from January’s 63%.
On average LTV figures fell in eight out of ten regions, with the exception of the North East (as above) and the East Midlands, which rose from 59% to 60%.
The LMS also found that the term of a remortgage saw an increase across all regions, which it attributed to that fact that homeowners in the UK are remortgaging less frequently.
When analysing remortgage affordability, LMS found that interest rates fell from 2.55% in December to a record low of 2.49% in January, below the 2.52% last recorded in October 2015.
Household income saw an increase of 0.3%, reaching £46,497 in January from the £46,355 recorded in December.
Overall, household income in December was 2.6% higher than in January last year (£45,311).
The LMS said that despite competitive interest rates, the higher average remortgage loan recorded in January meant the annual remortgage repayment as a percentage of income rose slightly from 18.5% to 19.9% in January.
This is still lower than the average purchase repayment, which accounts for 21.2% as a percentage of income.
Andy Knee, chief executive of LMS said:
"Despite a drop in activity from January – a trend we’ve experienced each year since 2010 – remortgage lending in February remains buoyant.
The value of loans was the largest amount recorded in the month of February for seven years, demonstrating maintained momentum for remortgaging as we return to a healthy, post-recession market."
"New rock-bottom rates should encourage even the most hesitant of homeowners to consider the benefit of remortgaging, since huge savings can be made."
"However, there’s a push and pull occurring in the remortgage market at the moment. On one hand we have enticing, rock-bottom rates, and on the other, a looming uncertainty compounded by the possibility of a Brexit and the shaky global economy.
On the whole, the industry is in agreement that the housing market is unlikely to be unduly affected in the lead up to the EU referendum, although there might be a slight slowdown in house price growth.
This means we expect remortgaging growth to continue but we shouldn’t expect a drastic change in activity until after June 2016."
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