Published based on Remortgaging drops to decade low record
Remortgaging drops to decade low record
Remortgaging accounted for only a quarter of home loans in August, the lowest proportion in more than a decade,
according to the figures published by the Council of Mortgage Lenders.
Just 25,000 loans were approved for house purchase in August, down 13 per cent on the previous month and 19
per cent lower than a year earlier.
Banks have tightened their lending criteria in recent months amid fears that higher unemployment will result in
home owners defaulting on their loans.
It means many home owners are unable to remortgage and are moving onto their lender’s standard variable rate
at the end of their initial deal. in some cases, the SVR will be more attractive that remortgage rates.
The Council of Mortgage Lenders said the low levels of remortgaging would result in a “quiet” housing market in
the coming months.
Michael Coogan, director general of the CML, said: “The problem of excess capital, that led to record lending and
borrowing in 2007, has self corrected and will not return."
“August is a traditionally slow month for mortgage lending and it was no different this year. we expect a quiet
market to continue for the foreseeable future. while we do not know what the impact of the comprehensive
spending review will be on our sector, it will clearly contain austerity measures that will likely further dampen
consumers’ appetite to borrow.
“we would expect lending to slow more significantly, year on year, as we head towards the end of the year, and it
is unlikely that the uncertain environment will encourage a tick up of mortgage activity in 2011.
“With some uncertainty surrounding future house price trends, we would expect a muted market in the next few
Melanie Bien, of mortgage brokers Private Finance, said: “'Borrowers hoping that lending conditions return to the
heady days of 2007 where deposits were not required and income didn't need to be proven, are in for a
disappointment. The market has changed, and is unlikely to return to what is now regarded in some instances as
'reckless lending'. Borrowers now need bigger deposits and good credit histories before lenders will look at them,
with many first-time buyers priced out of the market until they are well into their thirties.”
The CML’s figures also showed a drop in the number of mortgages approved for new buyers to 51,600 in August,
8 per cent lower than the previous month, but 3 per cent higher than a year earlier.
Jonathan Moore, director of easyroommate.co.uk, said: “The drop in the number of house purchase loans is more
than just a seasonal drop-off. The lending market remains in ill-health, and first-time buyers are bearing the brunt
of lenders’ caution.”
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pages brokers private finance, comprehensive spending review, fears, foreseeable future, good credit histories
, many home owners, remortgaging drops to decade low record, standard variable rate, svr, unemployment.
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