However, the value of remortgaging dropped to £6.8bn, down from £7.1bn in January. Nonetheless, with total mortgage lending dropping even more significantly, LMS said that remortgaging accounted for around 37% of total lending in February, the largest percentage since March 2011.
Andy Knee, chief executive of LMS, said: “February enjoyed the biggest boom in recent remortgaging history. Remortgage transactions rose to their highest level in eight years as homeowners took advantage of continued low rates and the opportunity to lower monthly repayments.”
The affordability ‘warning shot’
However, Knee pointed out that February also featured a warning shot, with affordability worsening. The amount that people are repaying as a percentage of their total income rose from 16.9% to 17.8%, and with inflation on the rise, that will stretch budgets further.
Knee said: “Inflation has risen to 2.3% and real wages are starting to fall. The consequence: homeowners will have less in their pockets come the end of the month. Remortgaging can help alleviate a potentially difficult financial situation, for example, one-in-five reduced their monthly repayments by remortgaging in February.
“With the macroeconomic climate expected to be more precarious from March onwards, homeowners would be wise to take advantage of current conditions and remortgage now – before it’s too late.”