Increased Remortage Activity sees 57% of Homeowners Capital Raising

06.02.17

Homeowners remortgaged for an average of £15,000 more in 2016 than they did two years ago, borrowing around £181,000 compared to £166,000 in 2014. 57% of remortgage cases in 2016 were capital raising, suggesting homeowners wanted to release equity ‘cheaply’ for home improvements, to consolidate debt or to act as the Bank of Mum and Dad

Homeowners across England and Wales, on average, remortgaged for around £15,000 more in 2016, than they did two years ago – with 57% capital raising*, according to research by My Home Move, the UK’s leading provider of mover conveyancing services.

Having analysed over 10,000 remortgage records between 2014 and 2016, My Home Move discovered that those in the East Midlands borrowed almost double the amount in 2016; while those in the East of England, Home Counties, North West, South East and Wales also increased their debt compared to two years ago. (Chart 1)

Commenting on these findings, Doug Crawford, CEO of My Home Move, said,

“This overall increase in borrowing suggests that homeowners are taking advantage of the ‘cheap’ remortgage deals which have been around for the past few years, and thanks to the Bank of England base rate cut in August, will remain so for months to come.

“With such low interest rates, using a mortgage to borrow money can be a smart move. Our research has revealed that 57% of cases from 2016 were remortgaging to raise capital, compared to pound-for-pound borrowing, suggesting people were looking to consolidate debt, release equity to fund home improvements or to pay their children’s university tuition fees or first-time buyer deposit, as the Bank of Mum and Dad was raided again.”

My Home Move has seen a steady increase in its remortgage activity since 2014; while high street lender TSB, recently reported that 31% of homeowners are planning to remortgage this year** – prompting the UK’s leading conveyancing provider to urge homeowners to look beyond the ‘easy’ option of a product transfer, to consider all the remortgage options available.

Continuing Doug Crawford said, “Our remortgage activity has been steadily increasing over the past few years, and with the threat of a rate increase due to increasing inflation levels, brokers and consumers are alert to “this won’t last forever” sentiment. We have already seen SWAP rates, that govern the price of fixed rate mortgages, increasing over recent weeks and this will drive further activity.

“Whilst we have seen a significant increase in recent weeks in Lenders that will pay procuration fees to Intermediaries for Product Transfers (with the existing lender), this research suggests in many situations it would be right for the consumer and the Intermediary to look beyond the Product Transfer to the remortgage option, to ensure their total costs and requirements are taken into account to find the most suitable product available, which their existing Lender may not offer.”

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