Recent data has indicated that remortgaging has reached record levels.
According to The Mortgage Hut, remortgages now represent 39% of all mortgages, with market share rising by 10% year on year.
As well as the increase in consumers shopping around before remortgaging their property, the growth has also been attributed to the surge in new products being introduced to the market, further boosting the demand.
Also seeing growth, albeit more modest, was the proportion of buy-to-let mortgages. Largely put down to the increase in mortgages available for landlords, this proportion was up by 8%, now representing 17% of the mortgage market.
Commenting on the rise in remortgaging market share was Chris Schtrups. The Mortgage Hut Managing Director highlighted the need for lenders to adapt to the changing requirements of home owners, as well as the impact of the recent interest rate rise on the market.
“More and more home owners do not fit the conventional box for lenders, such as contractors and the self-employed. However, over the last 12-18 months, many lenders have recognised that the profile of home owners is changing and they need to adapt.
“Many home owner and landlords who have been saddled with lenders on less than competitive interest rates, or stuck on higher standard variable rates, have been able to switch to new lenders.”
He went on to acknowledge the impact of growing property prices, particularly in the South, stating that many are choosing to spend money on their existing property, rather than move up the housing ladder.
“Rising property prices has also had an impact on remortgage growth, especially in London and the South East. Many homeowners have chosen to reinvest in their property, by putting on an extension or refurbishing the property, rather than moving, which can be much more expensive. For example, home owners moving to a £600,000 property need to find £24,000 for the stamp duty, plus removal costs and estate agents’ fees that could exceed £7,000. However, a single story extension can cost between £25,000 and £85,000, and a loft conversion from £35,000 to £60,000.
“Homeowners are seeing some down valuations creep into the market as confidence from recent good times have been met by some caution by surveyors who have generally err on the side of caution.
“We expect to see the demand for remortgaging continuing to rise in 2018, especially if there are further rate rises. There is likely to be a shift towards more consumers considering five year fixed rates, as the risk of rate rises remain for the time being.”
