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No sign of slow-down in re-mortgage market - 03/06/05
- Almost half (48 per cent) of all homeowners have
switched lenders at some point, with 52 per cent of these
people doing so in the past five years
- For those people who haven't yet switched lenders,
it's clearly top of mind, with just under two thirds (65 per
cent) saying they would consider doing so this year
- Lifestyle changes have started to be funded by re-mortgaging,
with four per cent using this as a way to start a new business,
or give up work and take time out, or start a family
Latest figures from the Council of Mortgage Lenders (CML)
reveal an increase in the number of people re-mortgaging.
In the first quarter of 2005, the average number of home loans
specifically for people re-mortgaging accounted for 48 per
cent of all home loans,1 compared with 43 per cent in 2004.
Whether this signals a return to the heady days of re-mortgaging
in early 2003 remains to be seen, when it peaked at 51 per
cent of all home loans as short-term fixed rate mortgage deals
were at an all time low.
New research from Abbey2 shows just how many homeowners have
switched lenders to obtain a better deal, with 40 per cent
having done so at least once in the last five years, and 11
per cent having re-mortgaged twice in that period. In Wales
and the north east, two per cent of homeowners have re-mortgaged
three times in the last five years. And, in London, one per
cent have re-mortgaged four times. Overall, Yorkshire sports
the highest number of people who have re-mortgaged at some
point (59 per cent) against a national average of 52 per cent
over the past five years.
Not surprisingly most people re-mortgage to get a better mortgage
rate and reduce monthly payments (66 per cent). However, many
people have also re-mortgaged to borrow more money against
the property (19 per cent), and others have done so to obtain
a mortgage with more features, such as a flexible mortgage,
so that overpayments and underpayments can be made in the
future (8 per cent). Two per cent have switched because they
were unhappy with their existing lender.
Re-mortgaging to release equity is also a popular move, with
one fifth (19 per cent) having done this. Of these people:
- Just over one third (36 per cent) raised money for
home improvements
- 16 per cent consolidated debts
- Five per cent used the money to buy another property
- A further five per cent used the money to buy a car
- More than four per cent re-mortgaged to change their
lifestyle and career by either using the equity to finance
a new business, giving up work before changing career or starting
a family
- Three per cent re-mortgaged in order to fund a holiday.
Re-mortgaging, however, is not for everyone (52 per cent).
When asked why they wouldn't consider re-mortgaging, 19 per
cent were happy with their existing lender and one in ten
(10 per cent) had a good mortgage rate at the moment. Nine
per cent, however, are tied-in to an existing mortgage deal
and would have to pay a penalty if they switched lender. Others
think it's too expensive to re-mortgage (3 per cent) and a
further three per cent simply can't be bothered and feel the
process is too time consuming.
The majority of respondents thought they had a standard variable
rate mortgage at the moment (37 per cent), followed by a fixed
rate mortgage (32 per cent) and tracker mortgage (13 per cent).
But when asked which type of mortgage they felt they would
go for if they re-mortgaged, 38 per cent said they didn't
know, 20 per cent said a fixed rate mortgage and eight per
cent a tracker mortgage. Nine per cent, however, thought they
would go for a standard variable rate mortgage.
Gary Hockey-Morley, Abbey's Director of Mortgages, said: "More
and more people are now re-mortgaging to help them change
their lifestyle or career and to own their own home quicker,
not just to reduce their monthly repayments. Some people still
feel that it's too expensive to re-mortgage although actually
it needn't cost a penny. I'd urge anyone considering changing
their mortgage to talk to lenders, like Abbey, who have deals
that offer free legal and valuation fees as well as good rates".
For more information about Abbey mortgages visit www.abbey.com
or call 0800 100 802.
Regional Highlights
- Yorkshire has the highest number of people who have
re-mortgaged (59 per cent)
- People in the north who re-mortgaged to borrow more
money did so primarily for debt consolidation (Yorkshire 23
per cent, north east and north west both 20 per cent), while
this reason was the least for those in the south east and
south west - both at 10 per cent.
- Scotland has the least number of people who have
re-mortgaged (42 per cent), but it also has the highest number
of borrowers on a standard variable rate (42 per cent). The
national average for re-mortgaging is just over 48 per cent
and the number on SVRs is 36 per cent.
- In London, 73 per cent of people who want to move
to another lender will do so in order to reduce monthly repayments,
but in the north east only 56 per cent state this as their
main reason. More than a quarter (26 per cent) of those in
the north east want to re-mortgage in order to borrow more
money from the existing value of their property.
- CML gross mortgage lending data by type of advance 29/4/05
- Survey: 1095 people with mortgages surveyed by Tickbox.net
over the period 05-13 April 2005
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