The average amount of equity withdrawn from remortgaging has hit a new record of £36,894 per customer in November, a rise of 4% from the previous high of £35,590 recorded in August this year, according to the latest research from LMS.
This is an increase of more than a quarter (27%) month-on-month from £29,027 in October. It is also a rise of 76% since last November, when the average loan amount was just £20,906.
In the run up to Christmas remortgaging can provide a much needed cash injection to households, in this case allowing people to withdraw almost £37,000; equal to almost 30 Harrods’ ‘The Supreme’ hampers*.
The total amount of equity released by remortgaging reached £1.1bn in November, 16% higher than last month and more than double the £0.5bn recorded in November 2014.
The findings also show that the value of monthly gross remortgage lending fell to £4.6bn in November, down 17% from October’s CML figure of £5.5bn. However, this is up by more than a quarter (27%) year-on-year, when just £3.6bn of remortgage loans were recorded.
November also saw a 9% fall in the number of remortgage loans taken out by borrowers, decreasing to 29,363 from 32,100 in October 2015. This is, however, up 22% from the 24,000 remortgages recorded in November of last year.
The term of an average mortgage rose from four years and nine months in October to five years in November – a rise of 5%.
The average mortgage rate fell to a new record low of 2.52% in October. This is lower than the 2.57% recorded in September and the 3.18% seen during October of last year, highlighting the competitive offers currently available.
Andy Knee (pictured), chief executive of LMS said: “After a strong autumn, it’s disappointing to see remortgaging activity decline slightly in the run up to Christmas, a time when many could really use the savings gained from switching to a better rate. The latter part of 2015 has been much stronger than the start, yet, despite this resurgence, remortgaging still remains a long way off the levels seen prior to the recession.
“Historically low interest rates and a range of new mortgage products mean the industry can be optimistic for the year ahead. We hope this environment will generate more consistency in lending levels, something 2015 was unable to maintain.
“Rising house prices and competitive rates mean that remortgaging remains affordable, presenting the opportunity to capitalise on massive savings. Borrowers in November were able to withdraw a record sum from remortgaging, providing many families with a much-needed cash injection in the run up to Christmas. While we wouldn’t necessarily recommend that remortgagors use this money to splurge on luxury hampers, this does offer an indication of the vast savings that can be made and help budget for Christmas spending.”