Slump in remortgages continues

The slump in remortgage lending continued in July, with volumes down 15 per cent year-on-year, according to figures published last week by the Council of Mortgage Lenders.

A total of 25,100 remortgage loans were advanced in July compared with 28,900 loans a year earlier. The value of remortgage loans reached £3.9bn, down 5 per cent from £4.1bn a year earlier.

A total of 30,200 loans were made to borrowers purchasing their first home in July, representing a 25 per cent rise from the 24,160 first-time buyer loans advanced in July 2013. First-time buyer loans totalled £4.6bn in July, 39 per cent higher than the £3.3bn advanced in the same period last year. Home movers also saw an increase in gross lending, with 37,500 loans advanced in July, up 19 per cent from 31,500 last year. By value, home mover loans totalled £7.2bn last year, 31 per cent higher than July 2013’s total of £5.5bn.

Total gross lending in July grew to £19.7bn up by 18 per cent on July last year, when £16.6bn was advanced.

Legal & General Mortgage Club director Jeremy Duncombe says: “For many existing mortgage borrowers remortgaging needs to be high on the agenda. While it is encouraging to see lending to first-time buyers increase, there is a rate rise around the corner and so we would expect to see remortgage volumes rising too. Attractive deals may now be coming to an end and borrowers should move quickly to secure the best rates. Speaking to an adviser is a good first step in the right direction.”  

Anderson Harris director Jonathan Harris says: “Given rates are so competitive, it is surprising remortgaging continues to be muted. This may be down to borrowers fearing they won’t be able to remortgage as a result of the new mortgage rules or simply enjoying such good SVRs that they don’t see the point. Until a rate rise is imminent, many borrowers who are reluctant to remortgage are unlikely to feel the urge to do so.”