The amount of money withdrawn by the typical remortgage customer has hit a new high, according to property service firm LMS.
In August, the average homeowner released more than £35,000 of equity thanks largely to competitive interest rates, the company said. This represented the highest level ever recorded, and was double the amount seen in January 2015.
LMS said that rising average wages were helping borrowers’ affordability levels and keeping interest costs down. Wages were up 3% year-on-year in August, while the typical mortgage rate had risen only fractionally.
Over the past 12 months, remortgage activity has also increased: the total number of loans was up 18% year-on-year.
LMS boss Andy Knee said: “Rising house prices and low interest rates mean homeowners are withdrawing record sums of cash from their homes by remortgaging without impacting their loan-to-value ratio, as evidenced by a drop in new LTVs from 55% to 53% in August.”
“However, an increase in average rates for the first time in nine months, however small, is an indication that we may finally be starting to see the end of record low products and competition among lenders as rumours of an interest-rate rise persist.
“Despite a sign that the mood might be starting to turn, annual wage growth and the growing gap between mortgage and remortgage payments mean the affordability of remortgaging is better than it has been for years.”