Analysis carried out by Mortgage Advice Bureau revealed that the average customer looking to remortgage had a home worth £248,000 in the first quarter of 2015 up from £230,000 in Q1 of 2014.
Over the same period the average remortgage climbed from £119,900 to £129,000 indicating that borrowers are cashing in around £9,000 of their equity. To help with affordability, more homeowners are stretching the term of their remortgage over 25 years, up from 76% of applicants in Q1 2014 to 86% of applicants in quarter one 2015.
Brian Murphy (pictured), head of lending at Mortgage Advice Bureau, said :”The fact that many people’s properties have gained in value over the last year offers some the chance to take the same percentage loan that they would have done if they remortgaged 12 months ago and give themselves a significant cash boost.”
Murphy said that another benefit of rising house prices meant a reduction in the number of people trapped in negative equity.
Research released this week highlighted an 85% drop in the number of borrowers with a mortgage greater than the value of their homes between quarter one 2011 and the first quarter of 2015.
“Those who are not motivated to release cash can still make big gains by cutting their rates by taking their pick of the attractive deals on offer,” said Murphy.
The average combined income of people seeking a new mortgage rose 22% from £51,846 in Q1 2014 to £63,487 in Q1 2015 as appetite for purchases was driven by higher earners.
The average combined income of people seeking a remortgage deal moved in the opposite direction: falling 27% from £64,180 in quarter one 2014 to £46,724 in the first quarter of 2015.
Murphy said that while affordability constraints were limiting some people’s access to property, low interest rates and recovering house prices were resulting in a more inclusive remortgage market where more people – including lower earners – have an opportunity to benefit from switching their existing loan.
