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Majority government prospect led to remortgage surge


Majority government

The increase in remortgaging in May was due to borrowers being stimulated by the prospect of a large Conservative majority in the snap-election, according to conveyancing service provider LMS.

The month of May saw the number of remortgage transactions increase by 8% month-on-month from 29,300 in April to 31,936 in May.

Over half (58%) of remortgagors said they didn’t expect a change in the average mortgage rate over the next 12 months, up from the 53% figure recorded in April.

More than a third (34%) remortgaged on to a fixed, five-year deal in May, up from the 8% of homeowners who previously had this product type before remortgaging.

The total value of remortgage transactions fell 1% between April and May from £5.1bn to £5bn.

London experienced the highest average remortgage loan of £285,189.

Wales saw the biggest increase in average loan amount, from £103,318 in April to £111,887 in May.

The fall in interest rates made remortgaging more affordable as they dropped from 2.11% in March to 2.04% in April.

Average LTV was lowest in London and the South West at 60% in May.

The biggest LTV increase was in Wales, which rose from 70% in April to 76% in May.

Andy Knee, chief executive of LMS, said: “Pre-election confidence was the main driver behind the increase in the number of remortgage transactions.

“Remortgagors were so confident that the outcome of the snap election would provide stability that over half said they expected low rates to remain in place for at least the next year.

“Not everyone was confident that the election would give us a strong and stable government.

“While YouGov was a lone pollster predicting a hung parliament, equally, there was a small minority of homeowners who provisioned against a period of economic uncertainty, remortgaging to reduce the amount of debt held with their lender.”





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