March was a month of decline in remortgaging activity according to the latest LMS data.  The number of homeowners securing a remortgage declined to 19,287 from the same month in 2013 at a level of 19%.  March 2013 remortgaging was at 23,900.  The decline for March in comparison to the same time period last year is the lowest monthly total in remortgaging since 2005.  The total value of remortgage loans declined in one month by 14%.  March resulted in remortgages valuing at £3.02 billion while February saw a higher value level at £3.5 billion.  In comparison to the same month last year the value level was down by 3%.

The March remortgaging level accounted for 20% of the entire mortgage lending sector which is down by 24% from the previous month and 27% less than March 2013.

The average remortgage loan was £156,626 in March which is 1% higher than in February and 12% higher than the average remortgage recorded in March 2013.  It is also the highest remortgage average since record keeping by LMS began in 2002.

The reason for the decline could be as simple as the fact that many homeowners may have rushed out to find a cheap remortgage deal before the stricter lending guidelines went into effect on 26 April.  The Mortgage Market Review (MMR) is expected to make borrowing more responsible but in the process it will mean that many will not qualify for loans when the stress test required by the MMR proves they cannot afford a new deal should the interest rates increase.

On the other hand, homeowners may have rushed out to take advantage of the low interest rate remortgages on the market in the beginning of the year.

Homeowners that have converted to their lender’s standard variable rate (SVR) may need to consider if they can afford not to remortgage as interest rates are due to increase next year.  By shopping around now, while deals are attractive, rather than later as rates begin to increase, a homeowner could find the best deal is out there for saving substantially over their lenders SVR.