This is an increase of 20% compared to September’s figure of £5.1bn.
The value of remortgaging also rose by 49% in October compared to the same time last year.
The number of remortgage loans taken out by borrowers in October rose 22% to 37,744 from 31,000 transactions in September, a 20% increase compared to October 2014.
While Andy Knee, chief executive of LMS, said remortgaging is ‘back with a bang’, he said the figures are still nowhere near pre-recession levels, when monthly lending levels frequently exceeded £10bn, which ‘shows there is plenty of capacity for continued growth over coming months and years’.
He said LMS awaits the release of the Chancellor’s Autumn Statement to gauge whether there will be a change in housing policies which could impact activity in the New Year.
“So far, government policies, like extending development rights to convert offices into residential units have offered some respite, but we cannot escape the fact that a severe shortage lies at the heart of the housing challenge, further compounding a growing inequality between the haves and have-nots.”
While homeowners have access to ‘unparalleled housing stock value’, which was exceeding £5.1trn in August this year according to research by Lloyds Banking Group, the average amount of equity withdrawn from remortgaging per customer has decreased month-on-month from £31,241 in September to just over £29,000 in October.
However, this is still a growth of 72% since October 2014, when the average loan amount was £16,828.
The total amount of equity released by remortgaging was £1.1bn in October, 13% higher than September and 141% higher than the £454m recorded in October last year.
This is the second time this year, along with June when the amount was once again £1.1bn, that equity withdrawal has topped £1bn.
Prior to this, the last time such levels of equity were withdrawn was back in May 2008 when borrowers extracted £1.2bn of equity.
The average remortgage loan-to-value also remained stable month-to-month at 52%, however, this is 7% lower than October last year. LMS said this suggests improved affordability and growing house equity for remortgage borrowers.
The average mortgage interest rate held steady at 2.57% in August and September, a decrease from 3.22% in September last year.
Average household income for borrowers taking out a new mortgage fell by 2% to £46,582 in September from August according to CML. This is still a 2% rise compared to the average income in September
last year, which was £45,663.
Annual percentage of repayment rose from 17.9% in August to 18.1% in September. This is lower than last year when more than a fifth (20.4%) of income went towards the repayment of new mortgages.
Knee said all the ‘right conditions’ are in place for a remortgage resurgence, including lender appetite for growth in business, a ‘plethora’ of competitive deals available in the market, and homeowners with a collective housing stock value of £5.1trn.
“The general increase in all segments of the lending market is further underpinned by a general sense of economic prosperity,” he said.
