Fewer remortgaging to increase loan size

Fewer homeowners are remortgaging to increase the size of their loan, with less than a quarter doing so in April.

However, the number remortgaging to cut their monthly payments rose 7% month-on-month to 38%, the highest figure since June 2015

Savvy homeowners are taking advantage of competitive offers, with almost two thirds remortgaging to secure a better rate.

The number of people opting to remortgage to release equity fell by 4 percentage points, from 28% in March to 24% in April, according to research from LMS.

This marks a shift in behaviour from recent months and is also a drop of 6 percentage points from April last year.

Those increasing the size of their loan by more than £10,000 also fell, a substantial fall of six percentage points to 16% in April, from 22% in March.

Almost two-fifths of remortgagors cut their monthly payment by up to £500, 7% more than the number who did so in March.

Andy Knee LMS chief executive said the outlook remains bright for remortgaging but there has been a slight shift in the attitudes of why people are doing so.

“Remortgagors in April were more interested in getting the most cost-effective deal to reduce their monthly payments and boost their spending power elsewhere, rather than using it as a tool for debt reduction or increasing the size of their loan.”

He said this suggests household finances are more robust and are a ray of hope in the face of predicted economic slowdown as the country nears the EU referendum.