"Early March indicators underlined the resilience and demand being seen in the remortgage market"
They are well-used words but the fact remains that 2016 was a politically turbulent year. Despite this, generally speaking, lenders remained well funded and capitalised. Remortgage lending grew, as did levels of competition as the year wore on. The momentum built over the previous 18 to 24 months continued in a slow and steady manner. August saw the launch of the Term Funding Scheme and a Bank of England interest rate cut - the first change in official rates in seven years – both of which offered additional impetus to a remortgage market which continued to demonstrate positive forward strides.
When evaluating remortgage activity for the year as a whole, data from the Council of Mortgage Lenders outlined that homeowner remortgage activity was up 14% by volume and 20% by value in 2016 when compared to 2015. The number of remortgage loans was at its highest since 2009. CML figures for Q4 2016 reported that UK homeowner remortgage activity amounted to £16.6bn, down 5% on the previous quarter but up 10% on the fourth quarter 2015. The number of remortgage loans came to 97,500, down 3% on the third quarter but up 9% on the same quarter in 2015.
It’s evident that conditions remained strong for the remortgage market moving into 2017. Additional confidence emerged from a Bank of England Q4 Credit Conditions Survey which reported that the availability of secured credit, even at high loan-to-values, was expected to improve slightly over the first three months of the year. And this certainly appeared the case when it came to lending figures for January.
CML data outlined a resurgent remortgage market with remortgage activity up 54% by value and 46% by volume on December. Compared to January 2016, remortgage lending was up 22% by value and 21% by volume. These figures certainly stood out in what was a flattish market overall, and really served to illustrate the potential impact, and intent, of the remortgage market in 2017.
Moving into February there was further positive news from LMS which suggested that remortgage levels had reached their highest level for eight years. According to the data, remortgage numbers increased to 43,967 in February, up 8% on January, a rise of 45% on the corresponding month last year and the highest level since January 2009. However, the average loan amount was said to have dropped by 5% to £154,138, with a total of almost £6.8bn borrowed in remortgaging for the month, down from £7.1bn in January. Total mortgage lending fell by a tenth (8%), which meant that remortgaging accounted for two-fifths (37%) of total lending in February – the greatest amount since March 2011.
In contrast, figures from the Bank of England suggested that remortgaging activity dropped sharply in February. The Bank’s Money and Credit report found that a total of £7.7bn was lent for remortgaging purposes in February, across 43,882 loans. That was a significant drop from the £8bn lent in January across 45,859 loans. According to the Bank, approvals across all lending secured on dwellings fell in February for the first time since August. Additional CML data for February outlined that remortgage activity was down 26% by value and 23% by volume on January. On a more positive note, compared to February 2016, remortgage lending was said to be up 8% by value and 9% by volume.
Early March indicators underlined the resilience and demand being seen in the remortgage market, activity was reported to have risen to 21% of the valuations market in March, increasing from 15% in March 2016. This is according to the latest research from Connells Survey & Valuation which added that, as a proportion of market activity, March saw remortgaging hit its highest level in five years.
On initial reading of this raft of data Q1 may appear to have been somewhat of a rollercoaster period for the remortgage sector. However, this is not really fair as we – alongside many other lenders - have experienced consistent and growing demand. Greater numbers of people are noting some rising costs of living and realising that more needs to be done to address higher outgoings. Thanks to sustained competition, remortgaging continues to offer tangible financial relief for many homeowners and we expect increasing numbers to take advantage of favourable market conditions in the coming months.
