The Council of Mortgage Lenders has revealed that remortgaging has reached its lowest level for five years.
Figures for September show that remortgaging accounted for 30% of the market by value, the lowest level since August 2001. Figures for the third quarter of this year reflect this trend, with remortgaging accounting for just 31% of the market.
This drop in popularity over recent months reflects the fact that lenders are managing to retain more customers for longer by reducing the incentive to remortgage with other lenders. Retention and exit fees are also seen as reasons for the decline.
Michael Coogan, director-general of the CML, says: “The downward trend in remortgaging shows how lenders are reacting to competitive conditions and offering attractive retention products and policies to their customers.
“Slowly but surely the market is cooling as we approach the end of the year in an envir-onment of higher interest rates.”
Alan Cleary, managing director of edeus, says: “The retention policy is key to all this.
“I have been predicting this for a few months. I know of one lender that has taken 10bn from retention fees – that’s 8% of the entire industry in two months.
He adds: “There has been a spike in exit fees recently, and proc fees too. My prediction is that this is just the beg-inning – remortgaging activity will diminish further in 2007.”
Nigel Stockton, managing director of HBOS Intermediaries, says: “It’s too early to say if these figures represent a trend. Ultimately brokers and consumers will vote with their feet.
“Product transfers have already improved the reputation of the mortgage market by enhancing both choice and value.”