Demand for remortgage lending is rising as homeowners are seeking to lower their repayment amounts due to a lower interest rate. Lenders have been idle in allowing cheap deals to remain in their offerings for many months now. The competitive environment in which lenders are doing business could soon be ending as demand grows for both remortgage and mortgage deals.

While remortgage lending is showing more growth than mortgage lending, both may be on an upward trend as there is evidence of demand from first time buyers possibly on the rise. This is due to low interest rates, growing consumer confidence, warnings of higher house prices in the near future, and government programmes assisting with lower deposits.

According to LMS, more than two-fifths of homeowners looking for a remortgage consulted an independent adviser or broker in the month of April which is up from 39% that did the same in March. Thirty per cent of homeowners took out remortgage deals that increased the size of their loan, with one in five increasing their loan amount by £10,000. Two-fifths of remortgagers reduced their monthly repayments by at least £500 by getting a new deal.

Reasons for remortgaging ranged from home improvements (22%) to paying off debt (10%). A small number of homeowners sought a remortgage (2%) to give their children a deposit for a new home purchase.

Less than half of the remortgagers were close to the end of their current mortgage deal which reveals that many are seeking to take advantage of low interest rate opportunities. They are shopping around for the best deals, too, as almost 80% switched lenders for their remortgage.

Andy Knee, chief executive of LMS, said “Finding the best rate is only part of the battle, with brokers also able to help borrowers prepare for the more detailed checks and processes now required. As well as proving a useful resource for borrowers, brokers are also helping lenders handle increased levels of business.

“Gross remortgage lending is at its highest since July 2009 - this is clearly being driven by savvy consumers more aware of the economy, a boost in stability following the decisive election result and sunny prospects in the market for the rest of the year.”