Mortgage lending increases but remortgages decline

Mortgage lending has increased by a third compared to twelve months ago however the number of remortgages has declined n the same period.

The mortgage market is showing two faces at the moment – renewed interest in taking out mortgages from house buyers, but a dwindling demand for remortgages.

New mortgage lending in August this year was up by 29% compared to August 2008 and was double the number of new loans taken out in January.

There were 19,200 loans to first-time buyers and 33,400 loans to home movers this August.

Restrictive lending is impacting heavily on the remortgage market, however. There were 32,000 remortgage loans advanced in August, a 22% decrease on July, and a 57% decrease on August last year, according to the Council of Mortgage lenders.

Commenting on these figures, CML economist Paul Samter remarked:

“House purchase activity has revived from its moribund state at the beginning of the year. It will be a drawn out recovery process with seasonal ups and downs, but house purchase activity is now on a firmer footing.

“But remortgaging demand has fallen away in the low interest rate environment and this is dragging down gross lending levels overall.”