Remortgage lending starts to climb

Sarah Davidson

August 11, 2015

In the second quarter gross lending came to £52.2bn, up 17% on the previous quarter and a 2% rise on the second quarter 2014.

Overall in June, the value of homeowner loans for house purchase accounted for 54% of gross lending, while remortgage activity accounted for 25%.

Remortgage activity showed a sudden sharp rise in activity in June after a muted beginning of the year, rising in both volume and value by over a third compared to both the previous month and June last year.

Second quarter remortgage activity also saw increases compared to the first quarter and the same period last year although the rise was not as sharp.

Buy-to-let as a proportion of total lending remained at around 17% but still makes up a larger portion of total lending compared to the same time last year.

While buy-to-let house purchase rose significantly, the overall rise in buy-to-let lending was driven more by strong buy-to-let remortgage activity.

Paul Smee, director general of the CML, said: “Notable this month is the uptick in remortgage activity among home-owners, perhaps reflecting an increased desire to lock into competitively-priced mortgage deals in advance of any rise in rates.

“It is likely that people are now beginning to feel a rate rise is a realistic prospect and not just a distant theoretical possibility.

“After a slower than expected start to the year, lending now appears to be picking up as we expected, and in line with our recently revised forecasts.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “More remortgaging activity comes as no surprise given recent comments from the Bank of England over interest rates.

“A few lenders have increased their fixed-rate pricing but there are still plenty of excellent deals available and will continue to be, as lenders compete for business. Lenders continue to struggle to meet volume targets and will absorb much of any underlying increase in swap rates via lower margins.”

Brian Murphy, head of lending at Mortgage Advice Bureau, added: “Looking at the Bank’s latest quoted interest rates, there is no sign of lenders suddenly pushing up their rates in anticipation of a base rate rise.”

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