Remortgage business falls 28% in April

The number of loans advanced for remortgage fell by 28% by number and 27% by value in April, data released by the Council of Mortgage Lenders shows.

There were 24,700 remortgage loans worth £3bn advanced in April, down from 34,100 loans worth £4.1bn in March, but up fractionally on April 2010, up 1% by number.

The CML says that with remortgage activity currently linked to expectations of interest rate movements, future activity will be subdued as an imminent increase in the bank rate is now looking less likely.

It adds there was also a fall in remortgage approvals in April so remortgage completions are likely to remain modest in the coming months.

The data also reveals the number of loans advanced for house purchase increased by 8% in April to reach 40,900, but this represents a fall of 2% compared to April 2010 and the CML points out that there could be a lull in house purchase completions in the next few months because Bank of England data shows a fall in house purchase approvals in April.

The figures show there were £5.9bn worth of loans for house purchase advanced in April 2011, up 7% by value on March’s figure but down 2% on April 2010.

Meanwhile, the number of loans to first-time buyers increased by 8% in April, from 14,700, worth £1.7bn, in March to 15,800, worth £1.9bn.

Loans were also up slightly from 15,700, worth £1.9bn, in April 2010, while the average LTV for first-time buyers was 80% in April, up from 79% in both March 2011 and April 2010.

Mortgages to home movers also increased in April, with 25,100 advances, worth £4bn.

This is an increase of 8% by number and 5% by value compared to March, but unlike lending to first-time buyers, a fall of 4% by number and 2% by value compared to a year ago.

Home movers have typically borrowed just below 70% of their home’s purchase price since the middle of 2009 – in April it was 69%.

For the second month running, only 4% of first-time buyers took out an interest-only

mortgage in April, which the CML says represents a clear shift away from interest-only mortgages, as before 2008 it was typical for around 30% of loans to first-time buyers to be on an interest-only basis.

Michael Coogan, director-general at the CML, says: “The market continues on a stable footing and the increase in house purchase lending is a good sign that stability will continue throughout 2011.

“However, the economic outlook, coupled with Bank of England subdued approvals data for April, suggests a muted summer for mortgage completions so we do not expect further increases in lending over the coming months.”