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Remortgage buyer activity soars as mortgage rates reach all time low

The number of remortgage buyers surge 12% taking advantage of record low mortgage rates to reduce the cost of repayments.

Data from UK Finance shows the number of remortgage buyers is 10% higher year-on-year rising to 36,800 in July as homeowners are attracted to mortgage rates close to historic lows.

Head of Mortgages Policy for UK Finance June Deasy said, the increase in activity means the number of people remortgaging over a year has been at its highest since 2009.

Over a month the numbers remortgaging is higher by 7% and homeowner by value is up 12% for July month-on-month to £6.7 billion.

Mortgage costs at record low

Homeowners have benefitted from rising house prices which lower your loan-to-value (LTV) and first time buyers benefit from cheaper mortgage rates when their borrowings fall from high LTVs above 90% to below 80%.

According to Moneyfacts, the average two-year fixed mortgage rate is 2.22% reducing by 0.1% to a new record low and the average five-year fixed is 2.72%.

Remortgaging at the end of the fixed rate deal can save you a significant amount rather than revert to the lenders standard variable rate (SVR).

For example, in September 2015 the average two-year fixed mortgage rate is 2.72% and a £200,000 mortgage would require a repayment of £5,400 per year or £453.33 a month.

Reverting to the SVR would see repayments increase to £9,200 per year or £766.67 a month, an increase of £313.34 to your monthly outgoings.

Remortgaging to the current two-year average rate of 2.22% would see your repayments fall to £4,440 per year or £370.00 a month or a fall of £83.33 a month less than your existing deal.

Avoiding the standard variable rate and remortgaging would also save money for home movers and buy-to-let landlords.

Improved mortgage activity over a year

Other types of borrowers have seen an increase in activity over the year with first time buyers rising 8.2% from 28,100 in the past year to 30,400 to July although numbers are lower by -15.8% in the last month.

In terms of value this is higher by 13.6% rising from £4.4 billion a year ago to £5.0 billion now but the value of mortgages is down -15.3% over a month.

The amount first time buyers borrowed is slightly higher at £139,000 based on household earnings of £40,974, income multiples of 3.60 and LTV of 85.0%.

Home mover activity over the year is higher at 10.1% rising from 29,800 last year to 32,800 to July with numbers over the month down by -9.9%.

For mortgage values there is a 14.5% rise from £6.6 billion a year ago to £7.1 billion now but over a month values are lower by -9.0%.

The amount home movers borrowed is slightly unchanged at £180,000 based on household earnings of £55,604 and income multiples of 3.39 and LTV of 72.3%.

For older homeowners there is much higher activity with equity release buyers accessing cash in their property with a lifetime mortgage to improve their quality of life, holidays or gift to a family member.

What are your next steps?

Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.

For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to buy a more expensive home or to reduce inheritance tax owed by your beneficiaries.

Learn more by using the equity release mortgage calculator, mortgage cost calculators, and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

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