Loans for remortgages at 13-year low in 2010
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Loans for remortgages were at a 13-year low in 2010, the latest figures from the Council of Mortgage Lenders reveal.
Remortgages totalled 313,200, worth £39.3bn, in 2010, down 23% by volume and 24% by value from 2009.
There were 529,300 loans advanced for house purchase in 2010, worth £77.1bn, an increase of 3% by volume and 11% by value compared with 2009.
House purchase lending in 2010 accounted for 57% of all mortgage activity, up 9 percentage points from 2009, and loans for remortgage accounted for 29%, down 7 percentage points from 2009.
In December, the number of house purchase loans advanced totalled 39,900, worth £5.7bn, down 4% by volume and 5% by value from November and down 37% by volume and 33% by value from December 2009.
Some 23,400 loans for remortgage, worth £2.9bn were advanced in the month, down 16% by volume and 17% by value compared to the previous month and to December 2009.
The drop in house purchase lending from December 2009 can be explained by the distortionary effects arising from the artificial boost in activity in December 2009 to beat the stamp duty holiday deadline.
There were 14,500 loans to first-time buyers advanced in December, worth £1.7 bn. This was down 3% by number and 6% by value from November and down 42% by number and 41% by value from the previous December. The typical first-time buyer in December 2010 had a deposit of 23%, a slight tightening in criteria from 21% in November.
They also borrowed 3.23 times their income and spent 12.9% of their income on interest payments, the lowest proportion since February 2004. For 2010 as a whole, first-time buyers took out 194,600 loans, worth £23.3bn, down 1% in number and up 6% in value from 2009.
The CML says since 2007, there has been a clear shift away from interest-only mortgages, in particular for first-time buyers. In December only 6% of first-time buyer loans were interest only, compared with pre-2007 when around 30% of all mortgages to first-time buyers were interest-only.
Michael Coogan, director general of the CML, says: “2010 was about the mortgage market continuing to adapt to the post-credit crunch environment, and the full year data shows that the lending industry is now on a more stable footing but at historically low levels of activity.
“House purchase lending held up, and shows the market is open for business. However, it is still not serving all customer groups that may want to borrow, in particular those without a significant deposit.
“Access to funding for lenders is expected to stay under pressure this year, but it will now be matched by lower consumer demand due to the economic backdrop and a range of uncertainties which will impact the timing of borrowing decisions. We conclude that this will lead to gross lending levels in 2011 staying flat compared to 2010, with downside risks.”
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Readers' comments (16)
Swanny | 11 Feb 2011 10:26 am
Now let me think why
Hmmmmmmmmmmmmmm
Change of lending criteria
Lack of appetite to lend
Dodgy credit scoring
Affordability excuses
etc etc etc
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Anonymous | 11 Feb 2011 11:07 am
Add to that the low base rate and it's no surprise at all
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Robert White | 11 Feb 2011 11:50 am
credit scoring,a joke,client with perfect credit history ,next time buyer ,declined on credit score 72% ltv ,decrease the loan to 65% and its accepted,what chancce do first time buyers have at 90%ltv?
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Luke Atkinson | 11 Feb 2011 12:53 pm
And the large fees charged by lenders / intermediaries....
Hardly makes it worth while. Perhaps a return to picking a lender and sticking with it for the term?
Hopefully this will push those businesses out whose models rely on extortionate broker fees. How can they justify charging £1000 + for arranging a mortgage? Most also push their own legal referrals and some are earning up to £300 on referral fees per case, which is of course a cost passed on to their customers. And the firms that do this, don't even give advice!
Get them out and let the professional advisers whose moral fees reflect the work they do continue to offer first class mortgage advice.
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Anonymous | 11 Feb 2011 2:19 pm
Luke, you sound a bit bitter and twisted.
Wouldn't have had to leave the industry by any chance?
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Lee Chester | 12 Feb 2011 10:06 am
Anon @ 2.19pm - I believe Luke's point is valid albeit maybe lost in emotion.
The remortgage bubble has popped. Many businesses that grew into large machines churning out hundreds of remortgages a month have grinded to a halt or disappeared and it will never return to that.
These businesses also charged/charge high fees to justify the complex and unnecessary staffing structures they built. They also charge these fees to enable them to buy in large volumes of leads as they fail to service their book of customers as any smaller, professional firm would. TCF was never at the forefront of what they did or continue to try to do.
Those that still exist haven't changed their business models and try to squeeze every last pound out of a customer, fortunately they will dwindle out as the year goes on and their model becomes even more outdated.
In their place will be left professional advisers, who charge a justifiable fee for their advice.
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Ancient Wisdom...is a mortgage broker in N3 | 15 Feb 2011 9:25 am
..i know of some brokers still charging 1% fees and taking commission - and advising to remortgage away from low trackers.
Anything more than £500 is surely not treating customers fairly if they receive a commission as well?
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Grey Haired Underwriter | 15 Feb 2011 10:43 am
To Swanney
Hmmmmmmmmmmmmmm
Lending criteria changed because it had been liberalised too far
Lack of funding to lend
Credit scoring actually being caught out by a down turn in the market which was inevitable
No more self cert and excessive unsecured credit taken out by the borrower
No more two year products being churned for a good fee
Same money being re-circulated amongst lenders except that there are fewer lenders
Etc etc etc
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Anonymous | 15 Feb 2011 11:29 am
A volume re-mortgage market is some way away yet. Any clients who took either a Self-Cert, Sub-Prime, Fast Track or High Loan to Value loan will not be able to re-mortgage. Anyone on a low SVR or Lifetime Tracker will not be motivated to change. The only "volume" for the next year or so is still the purchase market...
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Anonymous | 15 Feb 2011 11:29 am
A volume re-mortgage market is some way away yet. Any clients who took either a Self-Cert, Sub-Prime, Fast Track or High Loan to Value loan will not be able to re-mortgage. Anyone on a low SVR or Lifetime Tracker will not be motivated to change. The only "volume" for the next year or so is still the purchase market...
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