Remortgaging activity has hit record levels

Remortgaging activity has hit record levels, according to financial services company Moneyfacts.

Low mortgage rates are encouraging more homeowners to switch to a better deal and save money in the process. They also want to guard against a potential interest rate rise in the coming months.

Remortgaging is reported to be responsible for a record proportion of valuations in August, with this sector accounting for 37% of the valuations market - up from 34% at this point last year.

Figures from UK Finance also show the boost in remortgaging activity, with the number of remortgage approvals hitting a seven-month high in August – a total of 27,768 remortgage approvals being granted.

Moneyfacts also said that, while many of the record low mortgage rates are for those with a sizeable deposit, the higher loan-to-value (LTV) market is going from strength to strength.

All-time low

Average 90% LTV rates have plummeted in the last five years.

The average two-year deal was 5.47% in September 2012, but is now down to 2.63%, while the number of such deals on the market has surged from 101 to 275 in the five years.

Charlotte Nelson, a finance expert at Moneyfacts, said: "This is great news for borrowers with small deposits who have felt almost ignored by the market, as not only have rates at 90% LTV fallen to an all-time low, but the number of two-year fixed rate mortgages available has seen a 29% increase in just one year.

"A lot of the boost in deals could be down to the fact that borrowers may be under the impression that a 95% LTV deal is a rare occurrence, opting to save a little bit extra to put them into the next LTV band instead, and this extra demand is now being catered for.

"Not only that, but with lending at higher LTVs now more the norm, the 90% tier has become a key target for lenders who are looking for a new avenue in which to compete and stand out from the crowd, as other parts of the market start to become saturated."

However, Moneyfacts said it isn't all positive news, as those looking for a 95% deal will find that the choice remains small, with just 89 mortgages currently available at this level. Rates are significantly higher, too, with the average two-year deal at 95% LTV standing at 4.16%.

Mortgage experts

With mortgage rates at record lows, many people can save substantial sums of money each month by remortgaging.