Remortgaging has reached a record high, rising to 39% of all mortgages, according to The Mortgage Hut.
The number of remortgages has risen by 10% over the last year, with more homeowners finding more attractive rates by switching mortgage companies.
Together with the recent interest rate rise, the influx of new mortgage products this year has aided demand for remortgaging.
According to managing director of The Mortgage Hut, Chris Schutrups, lenders have widened the criteria to more niche markets by introducing new products.
“More and more homeowners do not fit the conventional box for lenders, such as contractors and the self-employed,” he said. “However, over the last 12-18 months, many lenders have recognised that the profile of homeowners is changing and they need to adapt.”
Many homeowners and landlords who have been stuck with lenders on less than competitive interest rates – or higher standard variable rates – have been able to switch to new lenders, said Schutrups.
According to Schutrups, rising property prices have also had an impact on remortgage growth, predominantly in London and the South East. Homeowners have opted for reinvesting in their property by refurbishing or adding an extension, rather than moving, which can be much more expensive.
For example, homeowners moving to a £600,000 property would need to find £24,000 for the stamp duty, plus removal costs and estate agents’ fees that could exceed £7,000. However, a single-story extension can cost between £25,000 and £85,000, and a loft conversion from £35,000 to £60,000.
“Homeowners are seeing some down valuations creep into the market as confidence from recent good times have been met by some caution by surveyors who have generally err on the side of caution,” Schutrups said.
“We expect to see the demand for remortgaging continuing to rise in 2018, especially if there are further rate rises. There is likely to be a shift towards more consumers considering five-year fixed rates, as the risk of rate rises remain for the time being.”