It is not surprising that homeowners sought out remortgages in 2020. The interest rates were low and offered savings for those that chose to get a deal when their mortgage term ended. Rather than pay more than necessary when being moved to the lender’s standard variable rate (SVR), homeowners shopped for remortgages and took advantage of the benefits available. Lower interest rates could save money, a fixed interest rate could lock in the savings for months or years, and for those that wanted to cash out their built up equity, it could put money into hand during the pandemic.

According to the LMS Remortgage Health Check report carried out with the Centre of Economics and Business Research (CEBR), the third quarter of 2020 marked the first positive overall score in remortgaging in five years. Using an indicator scoring system from 1 to 100, the score climbed from 48.5 in the second quarter to 60.2 in the third quarter. The score reveals a strong recovery in the market outlook despite the impact of the pandemic.

LMS reported that the improvement was driven by the growth in the housing market and in turn the increase in equity value of homeowner’s properties.

Nick Chadbourne, the CEO of LMS, remarked, “House prices rising mean more borrowers qualify for better loan-to-value products, and bigger loans mean they have more control over their biggest asset, their home.

“Many have been hit hard by the pandemic, but the vast majority have more cash in the bank as hospitality and travel spending has dropped. Growing loans for home improvements are a sign of confidence as homeowners are prepared to spend those savings.

“It is also promising to see an increased number of cases being approved by lenders, as credit availability will be key to the continuing economic recovery.

“It’s likely that a lot of these cases were product transfers, which undoubtedly provide an easier journey, but don’t often give the best value for money. If the ultra-low Bank of England base rate, high demand and government incentives like the stamp duty cut continue over the next months, we could see even more improvement, but those who just product transfer might lose out in the long-term.”