Remortgage approvals down

Robyn Hall

January 30, 2013

However the number of approvals for remortgaging decreased slightly in December to 28,196 but still kept ahead of the previous six month average of 27,301.

In contrast the number of loan approvals for house purchases increased to 55,785 in December which was higher than the previous six month average of 50,058.

Paul Hunt, managing director of Phoebus Software, said: “The mortgage market in 2012 finishes on a strong note with loan approvals for house purchases having climbed progressively in the six months up to December.

“It’s great to see banks are sustaining efforts to encourage cheaper mortgage finance as illustrated by Lloyds’ announcement that it is committing £6.5bn to helping people get on the housing ladder in 2013.”

Adrian Anderson, director of mortgage broker Anderson Harris, said: “The government’s Funding for Lending Scheme continues to make more money available at cheaper rates to lenders and this is trickling through to borrowers.”

But Anderson said the fall in remortgaging was “surprising” given the raft of excellent rates now available.

He said: “Even so the numbers were still higher than the previous six-month average indicating an upwards trend nevertheless. Some borrowers will no doubt be waiting to see whether mortgage rates fall further before taking the plunge and remortgaging.”

Danny Waters, chief executive of Enterprise Finance, agreed that remortgages were suffering because mortgage rates were continuing to hold their position at the bottom end of the scale.

He said: “The traditional way to finance home improvements or consolidate debt is to remortgage but many people are on mortgage rates so low that they are not prepared to jeopardise those rates.”

Waters added: “There is also an LTV factor in all of this. People are instinctively aware that if they remortgage, their loan to value will also rise, which will potentially push them into a more punitive rate range. This can make other forms of credit or debt more attractive.”

Overall total lending to individuals, excluding student loans, rose by £1.7bn in December compared to the previous six-month average increase of £0.5bn.

Consumer credit increased by 0.6bn in December compared to the last six-month average of £0.2bn resulting in a 12-month growth rate of 0.9%.

Credit cards increased by £0.2bn and other loans and advances rose by £0.4bn.

Shoaib Bux, director of the peer to peer mortgage lender Mayfair Bridging, said: “With a triple-dip recession in prospect and consumer confidence still fragile the best that can be hoped for the mortgage market’s progress is to be respectable, not irreversible.”

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