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Remortgage market jolts into action

Remortgage market jolts into action

 After months of lying dormant, the remortgage market experienced a surge of activity in July, with remortgage applications up 21 per cent in a month according to the latest National Mortgage Index from Mortgage Advice Bureau, the UK’s leading independent mortgage broker.

In contrast, purchase applications fell 4 per cent from June as the homebuyer market experienced a summer slump. 

This reverses the trend since the beginning of the year, with purchase application volumes having consistently shown greater month-on-month growth than remortgages during the first six months of 2014.  

Data from over 550 brokers and 900 estate agents also shows the typical value of a property being remortgaged reached £310,646 in July, having surpassed £300,000 in May 2014 (£306,128) for the first time in five and a half years since January 2009 – when the Index began tracking this data. 

This latest figure for July 2014 is 18% higher than July 2013’s average of £264,210, compared with a 10% rise in the average price of properties on the purchase market over the same period, from £214,457 in July 2013 to £235,034.

Since July 2013, the average remortgage loan-to-value (LTV) has fallen from 58.5% in July 2013 to 54.3%: a decrease of 4.2 percentage points. This means homeowners are remortgaging with a significantly higher proportion of equity behind them.

Despite increased remortgage activity, the rush to lock into fixed-rate deals has slowed considerably since June, when 93.0 per cent of remortgagers opted to fix. 

In July, just 89.0 per cent of homeowners looking to remortgage chose a fixed-rate product, down 4 percentage points in a month and 2 percentage points year-on-year (from 91 per cent). 

Brian Murphy, Head of Lending at Mortgage Advice Bureau, comments: “The resurgence of remortgage activity in July has been long-awaited, having lagged behind purchase applications since the start of the year. Improved property prices and a boost in housing equity mean current homeowners are in an ideal position to seek a better deal on their mortgage and are prompting the return of wealthier homeowners to the market. 

“Now is the perfect time for many current homeowners to review their options and seek out a better mortgage deal. However, in a rapidly growing market, it’s easy to get lost in the vast number of products on offer. Speaking to an independent mortgage broker can make the process much faster and simpler by giving consumers access to the widest choice of deals available.”

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