LMS: Remortgagers taking out record amounts of equity in November

Customers releasing more cash in the run up to Christmas

  • November remortgage lending rose to £4.22bn, up 0.4% on October’s £4.20bn. November’s figure is also 24.1% higher than this time last year.
  • Total gross mortgage lending fell to £17.0bn; remortgaging now accounts for 25% of the total market.
  • Those remortgaging are each taking out an average of £26,498 in extra equity (above the value of the redeeming loan). This figure is not only 22.8% higher than the previous month and 33.5% higher than this time last year – but it is in fact the highest figure on record.
  • This figure implies the total amount of equity withdrawn by remortgaging in November to be £741.1m.

LMS figures reveal that monthly gross remortgage lending increased by £18m in November to £4.22bn. This is up 0.4% on October’s £4.20bn reported by the Council for Mortgage Lenders (CML) last week, and 24.1% higher than this time last year.

The CML has also reported that total gross mortgage lending fell to £17.0bn in November. As a result, remortgages now represent 25% of the total market.

LMS estimates that the total number of remortgage loans in November dropped to 27,968, compared with 28,300 in October. However, despite this, the number of remortgage customers in November is still 5.9% higher than this time last year (26,400).

The average remortgage loan amount has risen slightly (by 1.0%) over the past month and now stands at £150,822. This figure is also 8.8% higher than this time last year.

Commenting on the latest figures, Andy Knee, Chief Executive of LMS says:

“While the CML reported total gross mortgage lending to be down slightly over the past month, the remortgage market has resisted the seasonal dip and is up 0.4% on October’s figure.

“In November, remortgage lending continued to climb as savvy customers flock to the array of competitive rates on offer. Our latest customer survey suggests that more than a third (35%) were able to reduce their monthly payments by up to £500*.

“Last month remortgage customers released more cash than ever before, over £26,400, which will most likely be used to fund a festive spending spree. Looking ahead into the New Year, we are likely to see activity levels continue to rise, although the introduction of the Mortgage Market Review (MMR) in the spring may prove to be something of a rumble strip.”

Advertisements

News headlines for 16th August 2012

Economics

For the first time, the Liberal Democrats have begun to break ranks with the Chancellor and are putting him under increasing pressure to change the course of his economic strategy and borrow to pay for a short-term stimulus to end the recession. George Osborne has repeatedly attacked Labour for advocating methods such as this, but the calls from the Lib Dems threaten to undermine the main thread holding the coalition together. p.2 of the Financial Times, p.2 of Daily Mirror, and p.4 of Daily Express

Property

The occupants of beach huts on the Sandbanks peninsula in Poole, Dorset are fighting an attempt to evict them. In this area homes change hands for millions of pounds; there is a ten-year waiting list for the huts, but the council wants to put a fixed term on rental periods. Bob Lister, the chairman of the Poole Beach Huts Association, said “the council should be building new beach huts, not kicking loyal tenants out”. p.19 of The Times

Personal Finance

Despite concerns of the Treasury, the government has revived plans to limit the individual cost of care to £35,000. The amount that people will have to pay towards their care in old age is going to be capped by the government after a dramatic rethink over policy by David Cameron. p.2 of The Independent, p.11 of The Guardian and p.2 of The Daily Telegraph

Recruitment

Universities are apparently hoping to woo students by using ‘bribes’. In a hope to cling on to the best students, certain universities are going to offer financial incentives to bright A-level candidates. Rewards such as £3,000-a-year bursaries and free laptops are to be offered to students with at least two A grades and one B. The offers have emerged as 350,000 students across the country are going to be receiving their A-level exam results today. p.4-5 The Independent

News headlines for 14th August 2012

Economics

Britain’s businesses are becoming increasingly frustrated at the government’s failure to address the recession and as a result, they are threatening to cut back on investment if policies keep being delayed or torn apart by infighting. Although the Confederation of British Industry has been supportive of the deficit reduction plan and schemes like Funding for Lending, they have not said that the government continues to test the patience of the nation as it continues to lack any real focus on the economy. The Cover of City A.M.

Greece’s economy is sinking even further into recession as data revealed yesterday that it has shrunk by an annual rate of 6.2% in the second quarter of this year. The troubled Eurozone member state’s economy is now 16% smaller than its peak in 2008, and is in fact now the same size as it was nearly a decade ago, in 2003. The Cover of City A.M

Investors in Facebook are still reeling from the social network’s disastrous stock market debut, bracing themselves for further losses as the ban on early backers selling their shares is set to be lifted later this week. The staggered process is said to begin on Thursday and peak in November, as 1.9bn shares – four times the current publicly traded number – will begin to be released from “lock-up”. P. 18 of The Guardian

Property

In a hope to help drag Britain out of recession, ministers are preparing to unveil a new package of measures next month in the hope of stimulating the flagging housebuilding sector. The plan has been drawn up by Oliver Letwin, the prime minister’s head of policy, along with Grant Shapps, housing minister, and Danny Alexander, chief secretary to the Treasury. It features a complex scheme under which the government would relax rules requiring private housebuilders to incorporate social housing in big projects. The Cover of the Financial Times

The Royal Institution of Chartered Surveyors claimed yesterday that house prices in all of the regions of the UK outside London are being pushed down as a result of the weakest level of property sales in four years. P.22 of The Guardian

Personal Finance

Consumer group Which warned yesterday that banks’ customers could be badly ‘ripped off’ if the popular “free banking’ model of current accounts is scrapped. Providing accounts without charges means that banks have to raise fees and prices elsewhere in order to cross-subsidise the accounts. Sir David Walker, the chairman of Barclays, told The Sunday Telegraph that this set-up may even have led to mis=selling as banks sought greater profits on certain products. P.4 of City A.M

Recruitment

Due to fears over rising debt, up to 120 teenagers are competing for each job offered by Britain’s biggest companies as more school leavers opt to skip university and head straight for the job market. Figures show a large increase in the number of 17 and 18 year-olds applying directly to the workplace just as the cap on annual tuition fees almost triple to £9,000. P.10 of The Daily Telegraph

SHIP comments on the findings of the Health Select Committee’s Report on Social Care

Andrea Rozario, Director General of SHIP, the trade body for equity release, comments on the findings of the Health Select Committee’s Report on Social Care.

“The Report addresses some of the key questions surrounding health and social care.  First and foremost, it recognises the need for the Government to identify the issue of the “funding gap”* in social care services.  This is extremely important; how are the Government and financial services industry to come up with solutions to funding care without a full idea of the scale of the problem? 

“As part of this, we support the Report’s call for the Government to clarify the likely market for financial products that are designed to pay for care.  By identifying the possible take-up of these products amongst consumers, the financial services industry will be better equipped to develop suitable products.  The Report emphasises the need for the Government to clarify how exactly it will work with the industry to stimulate the market for these products, so that both sides are working towards a common goal.

“The Report also urges the Government to take on board the recommendations made by the Dilnot Commission in July of last year (2011).  Andrew Dilnot told the Committee that establishing a cap on care costs will provide a “major opportunity for behaviour change”.  Indeed, if people know the amount that they will be expected to contribute towards any potential care costs it is possible that they will be more likely to plan for how to meet them.

“It is extremely welcome to see equity release included within the Health Select Committee’s Report and recognised as an “attractive and viable approach” to funding care**.  When giving evidence to the Committee, along with other figures from the financial services industry (November 2011), SHIP highlighted that a person’s home is usually their most valuable asset and it can be frustrating to see its potential ignored by people who might really benefit from the assistance it can offer.  A cap on the amount that individuals are expected to contribute towards the cost of any care they need will help people to plan ahead, but there needs to be clarity over these costs and any other associated ones. Many may still struggle to save for potential care costs – which is where equity release can play a part in funding a range of options including domiciliary care”