New data released by LMS has revealed strong competition between lenders looking to offer the best rates has led to a recent surge in remortgage activity.
21% of remortgagors lowered their total overall mortgage payments in June, a rise from the 15% in May and the greatest number since December 2016. 84% lowered their mortgage rate during June – a rise from 82% in May.
The volume of homeowners remortgaging rose for the second straight month. 35,913 remortgaged during June, in comparison to 32,600 in May – a rise of 9%.
Annually, the number of people remortgaging increased by 10%, from the 32,300 seen in June 2016.
Andy Knee, Chief Executive of LMS, commented: ‘The remortgage market had an excellent month in June. More homeowners saved on their monthly repayments by remortgaging in June, compared to May. This was driven by the intense competition between lenders, many of whom have been offering mortgage products with rock bottom rates to entice remortgagors to switch.’
In addition, there was a large rise in the number of remortgagors expecting a rate rise during June. 47% of remortgagors believe that rates will increase during the next year, up from 40% in May. In fact, this was the highest rate since February.
Lender competition leading to remortgaging surge
Mr Knee went on to say: ‘In June, the market was bracing itself for a rate rise – there was considerable speculation that the Monetary Policy Committee was going to increase rates in the foreseeable future. Remortgagors thought the tide was about to turn, with a greater number expecting a rate rise in the next twelve months.’
‘This fuelled the ongoing shift to fixed five-year deals, but half way through July, inflation fell to 2.6% from 2.9% the month before. It was the first rate drop in the annual rate since October. Economists had expected it to remain at 2.9% – a four year high. That decline eases pressure on the Bank of England to raise interest rates and we’ll have to see how this plays out with remortgagors in July’s Remortgage Report.’