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Remortgagors releasing housing equity rises in May

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  • 30/06/2015
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Remortgagors releasing housing equity rises in May
Nearly a third of borrowers remortgaging in May increased the size of their mortgage to release cash to pay off debts and fund home improvements.

According to LMS, nearly one in four (24%) remortgagors increased their loan amount by at least £10,000, an increase of 4% from April.

Almost a quarter (23%) used the money to fund home improvements and 8% used the money to pay off other debts. Just 2% of homeowners said they planned to use the money to help their children buy a property.

The number of customers remortgaging to access lower interest rates fell to 62%, down from 65% during the previous month.

Two-fifths of those remortgaging did so merely because they were coming to the end of their deal.

Less borrowers used a broker to remortgage in May. In April 2015 the number of customers seeking intermediary advice rose to a high of 44% but this fell back to 39% in May.

Bank of England figures, released yesterday, showed that lending for remortgages had risen above last year’s figure with £4,731m of lending last month compared to £4,497m in May 2014. House purchase lending dropped from £11,215m to £10,330 year-on-year.

Andy Knee, chief executive of LMS, said: “There is a general confidence in the stability of current interest rates, which may explain a more relaxed attitude towards paying off a remortgage loan and account for why almost a quarter of remortgagers chose to increase the size of their loan by more than £10,000.

“However, we urge caution that borrowers should not become complacent with regard to low interest rates, as news that fewer remortgagers are doing so for access to lower rates [62% in May vs 65% in April] suggests that competitive rates may not be as readily accessible as previously.

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