Monthly mortgage repayments jump £236 in June: LMS

Borrowers who remortgaged in June saw their average monthly payment jump by £236, according to LMS.

The conveyancing services company’s Monthly Remortgage Snapshot adds that 52% of borrowers increased their loan amount last month to an average of £22,644.

The average mortgage amount in London and the South East was £301,982, while the average for the rest of the UK was £147,780, bringing mortgage amounts to 104% higher in London and the South East than in the rest of the country.

The report is coming after the NSO reported this inflation rose to 9.4% in June, setting a new high in 40 years, due to rising fuel and food prices. The Bank of England has raised the base rate five times in a row since December, from an all-time low of 0.1% to 1.25%, a 13-year high.

The mortgage investigation says the most popular product on the market was a five-year fixed-rate loan used by 67% of customers, with 30% saying the main purpose of the remortgage was to lower their monthly payments, which was the most popular reason.

However, there were 35% fewer remortgages completed last month and 13% fewer instructions. Although the survey indicates that the mortgage pipeline increased by 10% in June compared to the previous month.

LMS Managing Director Nick Chadbourne said: “There will be an increase in remortgage activity as more consumers turn to remortgage to offset their cost of living challenges.

“While the numbers show that instructions and completions have dropped, there is a strong pipeline of activity as June saw the largest monthly increase in pipeline cases since the start of 2022. With the upcoming prepayment date in July we expect instructions will resume.

“In contrast to previous months, when consumers remortgaged primarily to reduce their monthly payments, nearly a third, or 30%, of those who remortgaged in June did so to borrow more money.

“More consumers may be looking to longer-term fixed-rate products to improve financial security and manage cost-of-living challenges.

“As this crisis intensifies further and fears of a recession increase, this trend is expected to continue and the industry will face increased demand.”

Previous Average rent in the UK up 8% per year: DPS
Next Gap between maximum and minimum loan sizes widens: MBT