Recently published research has revealed that the total number of re-mortgages increased during the month of June, although the month on month and year on year value of the re-mortgages has actually decreased. This means that the current value of re-mortgaging is now slightly lower than it was during June of 2015.
According to the research undertaken by one of the UK’s leading legal conveyance outsourcers, LMS, the total equity withdrawn has decreased by 14% in June, while it has decreased 15% year on year and 13% month on month.
Total of Re-Mortgages Rises by 6%
The total amount of re-mortgages taken out during June reached 32,873, which is an increase of 1,973 or 6% from the previous month of May. Although it’s a significant increase month on month, it should be noted that it is only a 1% increase from the total number of re-mortgages taken out in the same month last year.
The Chief Executive of LMS, Andy Knee, said, “We witnessed a strong start to the year with re-mortgage lending up year on year each month in 2016, when in a safer, surer climate, home owners had rushed to re-mortgage in a desire to lock into better rates before a possible rate rise. But activity in June has slowed with the value of re-mortgage lending down as indecision increased in the lead up to, and following, the referendum.”
Brexit Causing a ‘Pause’ in Decision Making
Knee also pointed out that they will only start seeing the real impact of the referendum result from July onwards, and that it is highly probable that the small drop off only occurred because people ‘took pause’ from making decisions due to the uncertainty surrounding the British exit from the European Union. He also noted that as the terms for Britain’s withdrawal from the EU are negotiated, there will likely be more volatility as borrowers brace themselves for whatever impact the Brexit negotiations will have on their equity.
Knee continued, “Our research into re-mortgaging habits showed a spike in the percentage of re-mortgagers opting for a broker or adviser to guide them through the process, a sure sign people are looking for answers and stability, something which will continue to dominate in the months after the referendum. There is some good news however for re-mortgagers, in that falling repayments, and rising household incomes, have taken pressure off families feeling insecure about what the future holds.”
While Mr Knee is confident that the mortgages market will soon have clarity, it remains unknown exactly when the Brexit negotiations will take place, and with the EU likely to take a hard stance, the impact of Britain’s withdrawal from the union could yet have a significant impact on the lending sector.