At the end of last year, remortgaging started to grow. Months prior, the demand for a remortgage was less than demand for new mortgages from new home buyers and home movers. In the lending market, the data revealed that homeowners were choosing new dwellings rather than staying put. The reasoning was that the pandemic and lockdowns were leaving a homeowner lacking in the space and opportunity to make their current home also a school, a work place, a fitness area, an entertainment area, and the spot where the family would eat the majority of their meals.

Demand grew in the housing market and the lending market last year. It was surprising to experts how resilient the housing market was in the midst of a global pandemic.

However, the activity in the lending market wasn’t from homeowners seeking to save money with a lower rate, or locking in low rates with a fixed rate remortgage, or cashing out their built up equity. The higher demand in the lending market was for mortgages.

At the end of the year, remortgaging began to grow in demand. According to the UK Finance’s household finance review for the final quarter of 2020, remortgages received a boost, including remortgages that had equity withdrawn. 

Homeowners cashing out their built up equity were making home improvements and paying down debt. Others saw it as an opportunity to save money with a lower interest rate and have cash in hand for needs brought on by further lockdowns and employment changes due to the pandemic. 

An interesting detail emerged that large amounts of cashed out equity was being used to buy a second property for a holiday home or to invest in a buy to let property. In the last three months of 2020, the buy to let market saw the highest activity since the first quarter of 2016.

The stamp duty holiday caused a rush to buy before the initial deadline of 31 March. Homeowners purchasing a second home would have had to pay an additional 3% on top of their normal property stamp duty rates. The stamp duty relief offered savings on properties purchased below £500,000.

The stamp duty holiday due to expire this month was extended to the end of June and then will be reduced to properties up to £250,000 through September. This could signal more demand in the housing market as further homeowners seek to buy holiday homes and investors buy rental properties.

With rising house prices and property values increasing, the opportunity to remortgage and turn equity into cash could push remortgage borrowing into higher levels than seen last year. Low interest rate remortgages could offer substantial savings as well, with the latest reports revealing £200 or more per month could be saved.

Experts encourage all home owners to shop online for quick access to information showing what remortgages, savings, and other opportunities are available.