The remortgaging rush is expected to continue in 2017, with almost a third (31%) of eligible homeowners planning to cash in on low interest rates.

One in four (25%) of those plan to act now and remortgage in January. The potential savings they could be making, however, are being underestimated by nearly half, according to a new report from TSB.

According to the survey of 2,000 homeowners, the average saving they expected to make from remortgaging their property was estimated at £49 a month. This compares with an actual average of £96 per month**, or £2,300 across the life of a two-year fixed term on a £100,000 mortgage.

A third (33%) of JAMS*** are planning to remortgage in 2017, with the majority (88%) doing so to free up monthly income, lock in at a fixed rate to better manage their money, or take advantage of the low interest rate environment.

Ian Ramsden, Director of Mortgages at TSB, said “Mortgage payments are often the biggest outgoing for many households. By remortgaging, homeowners stand to save up to £96 per month on average, which can make a huge difference to family finances. It could mean being able to afford a family holiday, carry out much needed home renovations, or simply help ease the pressures on household finances each month.”

TSB, which has witnessed a 27.5 per cent increase in remortgage applications in 2016 compared to 2015, has launched its Stay Nation Britain report to explore the outlook for remortgaging in 2017.

By remortgaging at a lower fixed rate, homeowners have been able to free up extra cash for other uses:

  • Go on holiday:  39 per cent would use the extra money to go on holiday, and a quarter (24%) of these homeowners said they would go on three or four holidays in the year with Greece and Florida proving popular.
  • Higher mortgage repayments: More than a third (37%) of those surveyed say they would use the extra money to overpay their mortgage payments, with the aim of becoming mortgage free faster.
  • DIY:  A third (30%) plan to carry out DIY jobs and one in five (21%) would use the cash for a major home renovation like a loft conversion or extension. These plans include adding more bedrooms for a growing family (21%), creating space for a home office (13%) and making their home open plan (16%).
  • Spruce up the garden: 16% would spend the money on doing up their garden, with most wanting new paving or raised flower beds.
  • Big ticket item:  A further 11% would buy a big-ticket item like a fridge or new TV.
  • Buy a new car: 9% would buy a new car with around half (48%) opting for a family sized car.

Despite these potential savings, some homeowners remain unaware of the opportunity altogether. More than half (54%) aren’t able to correctly identify the Bank of England base rate as 0.25 per cent  and 15 per cent of homeowners who aren’t considering remortgaging say they won’t be doing so because it’s too much effort or it hasn’t crossed their mind.

Ian Ramsden, continued: “Remortgaging might not be right for everyone, but it’s important to understand your options. It doesn’t have to be complicated or time consuming to remortgage so it’s well worth investigating if people are looking for ways to make their finances go further in 2017. At TSB we’ve helped almost 6,000 people remortgage onto lower rates since the Bank of England lowered the base rate.”

among 2,000 UK homeowners in December 2016. Additional data and research has been provided by TSB.

*According to industry figures from the Council of Mortgage Lenders there are 3.04 million mortgage owners who are not buy-to-let or fixed in the UK.

TSB has calculated that based on a £100k repayment mortgage over 20yrs (TSB rate 1.79% with £0 product fee fixed until 28/02/2019) a customer could save £96 a month and £2,313 over the 2 year fixed rate period. This is compared to a lender revert rate of 3.74%.

3,040,000 (number of mortgage owners able to remortgage) x £1,152 (average annual savings from remortgaging) =  £3,502, 080,000 (rounded to 3.5 billion).

** TSB has calculated that based on a £100k repayment mortgage over 20yrs (TSB rate 1.79% with £0 product fee fixed until 28/02/2019) a customer could save £96 a month and £2313 over the 2 year fixed rate period. This is compared to a lender revert rate of 3.74%.

*** JAMS constitute those homeowners who identified their financial situation as ‘just about managing to cover monthly costs and outgoings’, when responding to the survey conducted by One Poll.