The latest research from LMS shows the percentage of remortgagors opting for a broker or adviser to guide them through the remortgage process rose by 3% from 38% in May to 41% in June – the highest amount since December 2015 – as more people looked for reassurance and stability for their finances ahead of and immediately after the EU referendum.
The uncertainty in the lead up to the vote also contributed to a push in the number of people remortgaging and saw more homeowners opt for the security that comes from a longer-term fixed rate mortgage – even if this was more expensive in the short term.
There was a bounce of four percentage points in the number of borrowers remortgaging to take advantage of a lower mortgage rate, rising to three in five of respondents (60%) in June from 56% in May 2016.
Almost two in five (38%) who remortgaged in June did so to reduce their mortgage payments by up to £500 – up six percentage points from 32% in May 2016 – while more than a quarter (27%) remortgaged to increase the size their loan. 19% increased the size of their loan by more than £10,000.
The most common use for money withdrawn by remortgaging was spending it on home improvements. More than a fifth (21%) used their equity in this way. One in ten (9%) borrowers used the cash from remortgaging to pay off other debts, up from the 7% who did so the month before. There was also a small percentage of borrowers (3%) who used the money to help their child up the property ladder.
Andy Knee, chief executive of LMS, said: “Although the effects of the UK’s vote to leave the EU are yet to be seen in the coming months following the referendum, there is already news across the board that business is maintaining traction, with minimal transactions falling through. This is fuelled, no doubt, by an overwhelming shortage of housing in the UK and in big cities and is likely to keep demand up and the market ticking over.
“The low interest rates currently available are very positive for homeowners and speculation of the base rate being cut to 0.25% is increasing the supply of these offers. However, longer-term fixed products are becoming increasingly popular as homeowners look to stability in these turbulent times. The desire for greater security and assurance is also reflected by the increase in people using a broker to help guide them through the remortgage process.
“As Mark Carney cautions fresh mortgage borrowers to be prudent and think about long term affordability, it’s important to remind remortgagors to do the same. It may be smarter at this point to capture savings from remortgaging quickly by lowering rates and your repayment amount instead of borrowing more.”