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Remortgaging hits 12 year low

Remortgaging accounted for the lowest proportion of gross mortgage lending since 1999, in August, according to the latest figures from LMS.

Gross remortgage lending now represents just 25 per cent of total gross mortgage lending. Lending remained largely unchanged on July, falling 1 per cent, or by £32m, to reach £3.17bn.

The LMS Remortgage Report suggests that borrowers are waiting for more attractive remortgage deals to appear.

LMS chief executive Andy Knee says: “Whilst completion levels last month were disappointing these represent cases that started life some time ago.

“In August we saw a significant uplift in new business and this is now beginning to flow through into completions. Therefore September and October are expected to be much stronger months for remortgage lending as customers complete their switches to one of the numerous long term fix rates at below 3 per cent. With September new application levels having stabilised at this higher run rate we can expect a strong end to the year for the remortgage market.

“However remortgage lending as a proportion of overall lending may still appear subdued as we are also seeing a significant uplift in house purchase activity driven by the government’s New Buy scheme. Many of these customers and the builders they are buying from will be highly motivated to complete their purchase before the end of the year so I am anticipating a strong end to the year for purchase lending too.”

The average remortgage loan amount rose £2,600 to reach £135,427 in August, up 11 per cent on the average of £125,000 recorded for the same time in 2011. The average LTV remained unchanged compared to July, at 58 per cent.

LMS estimates that the number of remortgage loans will decrease by 3 per cent to 23,400 in August, from 24,100 in July.


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  • Chris Batten 26th September 2012 at 10:48 am

    Whilst I respect the opinion of the LMS Chief Exec I doubt that he spends his days and evening talking to the public about mortgages and re-mortgages. In my opinion (as a mortgage broker of 27 years)the market is subdued due largely to the market forcing interest only loans / borrowers to refinance onto unaffordable repayment mortgages. Whilst maybe 5% of interest only mortgages will cause a problem (eventually)the other 95% have logical, well thought out reasons for being an interest only borrower. This (combined with some pretty stupid underwirting requirements from the lenders) is forcing borrowers to stick with their current deals. Until the lenders (and regulator)realises that interest only is a legitimate financial planning approach to property purchase / ownership the market cannot recover. Underwriting should revert back to the “security and servicability” basis which was the basis of lending underwriting.