The remortgage market remains steady with an optimistic consumer outlook, the LMS Remortgage Healthcheck Index has revealed.
Produced in partnership with the Centre of Economics and Business Research (CEBR), the index covers Q2 2019.
Every indicator of borrowing costs, remortgage approvals, homeowner equity and consumer sentiment were ranked as neutral.
Nick Chadbourne, chief executive at LMS, said: “Despite the current climate, the wider mortgage market is still being supported by remortgage activity with existing homeowners choosing to taking equity from their home.
“Although many people naturally remortgage each time their current fix comes to an end, others choose not to do so.
“Yet with mortgage lenders offering cut-price deals to existing homeowners we have seen even more customers coming to the market, and a healthy proportion increasing their loan size.
“In Q2 more than nine out of 10 borrowers (96%) opted for a fixed rate mortgage.
“Of those that chose this option, 70% wanted certainty over their monthly payments whilst 18% were worried about the economic climate and wanted to lock in a good rate.
“These low rates mean that people can potentially save hundreds or even thousands of pounds each year by switching. It is interesting that few homeowners wanted to stay loyal to their existing lender, as this shows that banks can do more to keep their current customers happy.”
Each indicator is scored between 0 and 100, with scores between 40 and 60 considered neutral, a score below 40 considered negative, and score over 60 seen as positive for the industry. .
The overall healthcheck of the remortgage market was ranked as 49.3 and remortgage approvals at 42.6..
Nearly half (45%) of those who remortgaged took out a 5-year fixed rate product which was the most popular product in Q2.
Over a quarter of LMS borrowers (26%) said that releasing equity was their primary reason for remortgaging, with more than half of this group (51%) planning to use these funds for home improvements.
This indicator measures the rate of change in average mortgage interest rates and the spread between the rates charged by lenders and their own funding costs.
The homeowner equity indicator which looks at changes in the values of house prices, was also ranked as neutral at 53.6.
In addition, consumer sentiment was ranked also ranked at 57, up by 2.2 points from 54.8 in Q1.
The main factor behind this growth was reportedly the decision by a large proportion of LMS remortgagers to increase the size of their loan (45%).
Only 22% decided to decrease their loan size while nearly a third of borrowers (32%) kept their loan size the same.