A breakdown of the figures show that the number of approvals for remortgaging was 41,347, compared to the average of 40,755 over the previous six months while the number of approvals for other purposes was 12,875, compared to the average of 12,267 over the previous six months.
According to Kevin Purvey, chairman of the Independent Mortgage Lenders Association (IMLA), approvals dipped just slightly from February as the short term effect of the buy to let stamp duty surcharge fades away.
He pointed out that remortgaging rose slightly over the average established over the previous six months. ‘Having seen the remortgage market bounce back during summer and autumn of 2015, it’s a positive sign to see it remaining in rude health in the first quarter of 2016. This is likely to be influenced by intense competition among mortgage lenders, which has driven mortgage rates down to record lows,’ he said.
‘Following house price rises, it means now could be a sensible time to consider remortgaging whether simply to refinance or release equity. We expect remortgaging to be one of the strongest growth areas within the mortgage market this year, with home owners looking to remortgage benefitting very much from lender competition and the plethora of products available,’ he added.
David Brown, chief executive officer of Marsh & Parsons, said that the first three months of 2016 was by no means a typical quarter. ‘Activity in the opening three months of this year has been exceptionally skewed by the additional layer of stamp duty for both buy to let and second home purchases,’ he pointed out.
‘Naturally, the knee jerk reaction among these groups has been to hurry through property purchases before the deadline, and make savings while they can. Second home owners really jumped to it this spring, and were much more prominent in the market than we would typically expect,’ he explained.
‘Now that the ruckus has passed, we’ll see much more orderly transactions over the summer months, as the market rebalances towards first time buyers and other owner occupiers for whom it will just be business as usual,’ he added.
Meanwhile, separate research shows that just a third of remortgagors consulted a mortgage broker in March and at 35% this was the lowest amount since September, leading to concerns borrowers may be missing out on best available rates.
Overall the number of remortgagors consulting brokers has declined since the start of the year, according to the latest research from LMS. It fell to just 35% in March, the lowest amount since September last year and down from 39% in February.
It is also 11% lower than the 46% who consulted a broker at the start of the year. This leads to concerns that borrowers may be missing out on competitive rates or the most suitable products for their circumstances as intermediaries can access products not available on the high street.
The research report suggests that home owners are more confident in their own ability to make a decision about remortgaging without consulting a broker likely, in part, to low expectations of a base rate rise. Expectations of a rate rise among remortgagors has fallen four percentage points from 16% in February to 12% in March, the lowest recorded by LMS.
Despite the competitive rates currently available, the number who remortgaged to lower their mortgage rate in March was just 57%, a drop of 11% year on year.
The percentage of individuals who remortgaged in March because they came to the end of their current deal fell to 45%, a 5% fall compared to the previous month while 28% opted to increase the size of their loan, with 22% increasing the size of their loan by more than £10,000.
The research shows that the number of people remortgaging who did so to help their children buy a home is now at 3%, up 1% from February and there was a 1% month on month fall in the number of people remortgaging to pay off other debts. There was also a 2% fall in the number of people opting to remortgage for home improvements, down to 18%.
‘A persistently low base rate and a host of competitive mortgages on offer may be leading many remortgagors to miss out on the best available rates through apathy. After seven years of a historic low rate, there is no sign of an increase in sight, reducing the motivation of homeowners to remortgage or consider their options,’ said Andy Knee, chief executive of LMS.
‘Concerning too, is the fall in the number of remortgagors seeking independent financial advice when remortgaging. While home owners may feel confident in their ability to remortgage, shopping around is the best way to ensure you take advantage of the most competitive offers that may enable savings of hundreds of pounds each month, and advice can help to navigate the complexities of the mortgage market to find the most suitable product for your circumstances,’ he explained.
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