Remortgage demand has increased according to a recent report from the Mortgage Advice Bureau (MAB).  The MAB national mortgage index indicates that there was an increase in remortgage applications in May.  The increase when comparing May 2011 to May 2012 amounted to 21 per cent and mortgage applications overall grew by 16 per cent.

The increase is likely a result of lenders increasing their standard variable rates (SVR).  When a homeowner’s mortgage deal ends and they do not secure a remortgage then they convert to their lender’s SVR.  With lenders raising their SVR levels the only escape is to remortgage.

The increase in remortgage demand could also be credited to the fact that lenders are offering more attractive fixed rate deals and better incentives with remortgages.  The ability to grab a fixed rate at a cheap level and get free legal work and /or a free valuation is an offer that few homeowners would turn away from.

Brain Murphy, head of lending for the MAB, said, “Average two-year fixed rate mortgages having risen month-on-month since September 2011 and three and five-year fixes also both having risen month-on-month from December 2011.

“Add to this the fact several lenders have raised their SVRs recently, and it is not surprising we have seen an uplift in the number of remortgage borrowers.”

Remortgages are likely to increase in demand as homeowners continue to see attractive deals being offered by lenders.  Lenders are not attracting the same level of first time buyers that were coming to the market in the beginning of the year when the stamp duty holiday was due to expire.  Without those borrowers their attention should focus on those that are more likely to want to borrow which are homeowners looking for a cheap remortgage deal.