Article 50 led to remortgage market in the UK stalling, latest report suggests

A resurgent remortgage market in the UK has stalled with experts blaming the triggering of Article 50 in March which began the formal process of leaving the European Union.

The latest data shows that the value of remortgaging levelled off at £5.2 billion in March and accounted for 25% of the total lending market, down from 29% the previous month.

The figures from conveyancing service provider LMS also shows that more home borrowers are opting for fixed five year deals with 32% choosing such a product, a substantial rise from the 9% previously with a five year fixed rate.

Andy Knee, chief executive of LMS, believes Article 50 prompted the change and he also thinks that the general election in June and Brexit negotiations overall coupled with rising interest rates means that the remortgage market could experience some tricky months between now and the end of the year.

The report also suggests that with interest rates starting to creep up it is price and long term financial security that were the two main motives for remortgaging in March. Some 19% of home owners lowered repayments by remortgaging in March, while 84% lowered their mortgage rates through remortgaging.

The figures show that while five year fixed mortgage rose, variable mortgages decreased in popularity with just 7% fixing onto a variable mortgage, down from the 19% who previously had one.

However, for the first time since September 2016, the average mortgage rate increased. The average mortgage rate climbed to 2.13% in February from 2.06% in January, the highest increase since June 2012.

The report suggests that it is significant that the number of home owners expecting a rate fall has dropped for the sixth month in a row. In September 2016 some 9% of those polled by LMS expected rates to fall. By January, this had fallen to only 2% and now sits at just 1%. Remortgagors predict further interest rate rises with 46% expecting mortgage rates to rise again within a year.

Knee said it is encouraging that the number of people remortgaging rose year in year in March as this is the result of improved affordability. Remortgage repayments accounted for just 17.3% of income in February, down from 18.4% in February 2016.

http://www.propertywire.com/news/uk/article-50-led-remortgage-market-uk-stalling-latest-report-suggests/