Remortgage slump continues with 15% drop in July

Remortgage lending continued to decline in July, with a 15 per cent decline in volumes from a year earlier, according to 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, 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. In value terms, 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% on July last year, when £16.6bn was advanced.

CML director general Paul Smee says: “There have been many factors over the past year that could have caused disruption but the market has remained resilient and lenders have shown themselves adaptable to all this change. The CML will continue working towards making sure future initiatives affecting the market, such as the European mortgage credit directive, are introduced with equally minimal disturbance to borrowers and lenders.”

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