Remortgages only bright spot as number of mortgages tumbles month to month

The number of mortgages taken out by home movers was down 46% month to month, with landlords taking out 64% fewer mortgages in April compared with March.
First time buyers also took out fewer mortgages, with 9% fewer month to month. However year on year, the number of mortgages taken out by FTBs in April according to the Council of Mortgage Lenders was up 7%.

However due to continuing low interest rates and perhaps the impending vote on the UK’s membership of the EU, the number of remortgages taken out rose 25% month to month, and 40% year on year. April saw the highest volume of loans for remortgage in a month since July 2009, and the highest lending value for remortgage since January 2009.

Paul Smee, director general of the CML, said: “There is a sense of calm after the storm this month, as lending eased back, following the significant rises in activity in March as borrowers looked to beat the second property stamp duty deadline. We expect the market to take several months to return to its previous levels after the lending surge.”

Andy Knee, chief executive of LMS, said: “Brexit or no Brexit, remortgaging keeps plugging away, driving growth in the home loan market. Not only were the number of remortgage loans up by almost a third from the year before*, this is the greatest number of people remortgaging since July 2009 – almost seven years ago.”

“It’s great to see homeowners taking advantage of the favourable environment for remortgaging: record-low interest rates have improved affordability and homeowners are sitting on huge amounts of housing equity that they may have been wary of capitalising on previously. The Government is also consulting on seven-day switching for faster transactions, the ease of which could drive the incentive for borrowers to revisit their mortgage faster.”

“First-time buyer borrowing fell, as the market approached June with caution and uncertainty of a referendum decision. According to ONS figures, a year-on-year growth in prices** has also continued, so first-time buyers still remain disadvantaged. There are signs of encouragement in the first-time buyer market, such as a greater range of high loan-to-value products, but we’ll have to wait patiently for the year to unfold to be able to gauge the impact of this on the market.”

Richard Sexton, director of Chartered Surveyor e.surv, said: “Concerns about a potential ‘Brexit ‘ could account for a slight lending market slowdown, with May seeing house purchase loans total 65,113 – down 1.7% from April. Alongside this, lenders are adapting to much calmer market conditions after the rush of buy-to-let activity at the start of the year.

“Lending to first-time buyers in particular has eased off slightly on a monthly basis, as a temporary caution enters the market. But lenders are committed to helping first-timers get a foot on the property ladder in the long-run. Since last year, significant effort has been made to support first-timers, through a variety of flexible mortgage deals offering low rates and even enabling family support.

“Buy-to-let borrowing may also be taking a breather, but the lending market remains buoyant. A remortgaging rush shows no sign of slowing as we approach summer, with homeowners taking advantage of more mortgage options, rising wages and a static interest rate. All this activity suggests that the next couple of months will see an increasingly resilient and balanced lending environment.”

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