11% of borrowers who remortgaged in December did so to pay off other debts accumulated in the run-up to Christmas, up two thirds from November’s 7%, according to LMS.
It found that the proportion is also up significantly from December last year when 9% of borrowers said they would use the extra capital to consolidate their debts, suggesting more families felt under financial pressure this festive period.
In addition, 21% of those who remortgaged their properties in December did so, at least in part, to fund home improvement projects.
This coincides with the findings of the LMS Remortgage Report, which showed the average amount of equity withdrawn from remortgaging reached £30,361 per person in December – the largest amount of average equity freed per person in the month of December for ten years.
The main reason for remortgaging was to take advantage of lower interest rates, with 64% of borrowers who remortgaged in December doing so for this reason. This is a 1% rise from the 63% who did this in November. The number of remortgagors who were able to take advantage of lower rates peaked in March this year, when 68% did so, but fell to a low of 60% in September.
81% of borrowers switched lenders in December, a 3% increase from November’s 78%, as homeowners took advantage of the current climate.
The percentage of borrowers able to reduce their remortgage payments by £500 has risen from 33% of respondents in November to 35% in December, further evidence of homeowners remortgaging and making drastic savings due to the current environment, LMS said.
Andy Knee (pictured), chief executive of LMS, said: “Christmas is traditionally the time borrowers end up spending beyond their budget and take on debts that have to be repaid in the New Year. But in good news for UK homeowners, rising house prices and competitive mortgage rates mean there is an obvious solution to this. Remortgaging means homeowners can take advantage of this to settle old debts, reduce monthly outgoings or withdraw cash for other purposes.
“Although a rate rise looks unlikely in the near future, it’s prudent to start saving now rather than when a rate rise is upon us. Borrowers taking the opportunity to lower rates or fix while rates are low can start making immediate savings now, setting their finances up for a strong position for the year ahead.”