Homeowners holding back on remortgages but experts predict a surge in activity after summer holidays

The number of people remortgaging their homes took a tumble in June, with experts predicting an autumn surge as homeowners wait for better deals.

New figures from mortgage experts LMS show that remortgage instructions, the first step in the remortgaging process, plummeted by 14% last month. This follows a trend of fewer homeowners choosing to switch their mortgage deals. June saw 32% fewer remortgages completed compared to the previous month.

There’s no need to panic though! Experts say this is just a temporary lull. Nick Chadbourne, CEO of LMS, believes that while remortgage activity has slowed down, it’s not because people are worried about interest rates. Instead, he thinks “we are in a quiet phase for product expiries”. Basically, many people aren’t ready to remortgage yet.

What’s Behind the Remortgage Slowdown?

Chadbourne predicts a flurry of activity as summer ends. “The stability of a new government, an expected rate cut towards the end of the summer, and increasing lender competition will start to reverse this activity trend,” he explained, adding that he expects things to pick up “once the kids are well into the first term of their new school year.”

Key Remortgage Trends in June:

• Fewer Cancellations: Good news! The rate of cancelled remortgage applications fell by 9% in June.
• Pipeline Shrinking: The number of remortgage applications in progress decreased by 4% compared to May.
• Loan Sizes Grow: Almost half (47%) of homeowners who did remortgage opted to increase their loan amount.
• Monthly Payments Rise: The average monthly mortgage payment jumped by £364.09 for those who remortgaged in June.

Fixed-Rate Deals Still Popular

Two-year fixed-rate mortgages continue to be the top choice for homeowners, with 45% choosing this option in June. The desire to lower monthly payments remained the biggest motivator for remortgaging, with 26% of homeowners citing this as their main reason.

London Leads in Remortgage Amounts

As expected, Londoners are borrowing bigger sums when they remortgage. The average remortgage loan amount in the capital hit £360,297, dwarfing the average for the rest of the UK, which stood at £173,842.

Interestingly, Londoners also had the longest average time since their last remortgage: 75.91 months (or 6.33 years). In contrast, homeowners in the West Midlands had the shortest average time since their last remortgage at 63.23 months (5.27 years).