Cheap interest rates persuading home owners to embrace re-mortgaging

Home owners taking advantage of cheap interest rates re-mortgaged for an average of £15,000 more in 2016 than they did two years ago, according to analysis.

Conveyancing services provider My Home Move found people typically borrowed £181,000 for a re-mortgage loan in 2016, up from £166,000 in 2014.

The research, using over 10,000 re-mortgage records across England and Wales, also found in 57% of cases last year, loans were being taken out to raise extra capital.

The figures could be a reflection of people looking to improve their property rather than move, with recent housing market reports pointing to a lack of choice for would-be buyers.

Figures from the British Bankers' Association (BBA) showed last week that the number of re-mortgage approvals being made surged to an eight-year high in December 2016.

Some 30,774 re-mortgage approvals were recorded in December - the highest monthly figure seen by the BBA since October 2008.

The BBA suggested the re-mortgaging surge reflected borrowers' desire to lock in lower interest rates ahead of a potential rise later this year.

Doug Crawford, chief executive of My Home Move, said: "Our research has revealed that 57% of cases from 2016 were re-mortgaging to raise capital, compared to pound-for-pound borrowing, suggesting people were looking to consolidate debt, release equity to fund home improvements or to pay their children's university tuition fees or first-time buyer deposit, as the bank of mum and dad was raided again."

Despite the general trend towards home owners borrowing more, My Home Move found that in London, the South West, the West Midlands and Yorkshire, people borrowed less in 2016 typically than they had two years earlier.

Meanwhile, in the East Midlands, home owners borrowed £69,000 more on average on a re-mortgage loan in 2016 than they did two years earlier, while in the Home Counties surrounding London, home owners borrowed around £55,000 more.

Here are the average re-mortgage sums borrowed in 2016 according to records analysed by My Home Move, followed by the increase or decrease compared with 2014:

- East of England, £179,887, £37,218

- East Midlands, £139,380, £69,380

- London, £240,813, minus £1,436

- Home Counties £211,530, £55,656

- North East, £82,615, £1,869

- North West, £121,189, £34,081

- South East, £154,372, £30,194

- South West, £125,009, minus £12,082

- Wales, £83,715, £4,965

- West Midlands, £103,407, minus £34,730

- Yorkshire, £93,660, minus £46,898