Remortgage market performing poorly
Across the UK in 2012 remortgage lending fell by as much as 29% year-on-year against the back drop of surging first-time buyer numbers up and down the country.
Ben Thompson, managing director of Legal & General Mortgage Club, said the balance of the market is correct with first-time buyers leading the way.
He said: “If the bulk of the money is going towards first-time buyers and home movers then that is actually a really good thing because that will get the housing market moving creating future remortgage customers .”
The CML reported that in 2012 remortgage lending fell year-on-year in Scotland and Wales by 19%, in Northern Ireland by 29% and London by 3% although across all four parts of the country, quarter four of 2012 showed signs of recovery.
Thompson said he thought the remortgage market has been through its most difficult period.
He added: “The remortgage market has bottomed. I would be very surprised if the numbers does not start to rise as the year goes on from this point onwards.”
If the first month of 2013 is any bench mark by which to measure the months to come then an uplift in remortgage lending seems highly probable as LMS’s remortgage report showed lending in January increased by 6.2% month on month to £2.9bn.
Thompson said the improvement in the remortgage market will be largely driven by the improvement in new business pricing.
He said: “Going back some 10 months ago some people would have been sat on a rate which they could not better because new business rates were not noticeably cheaper. But since the Funding for Lending Scheme has come into play the costs of funds has fallen in particular over the last four or five months. Those with the equity have some crazy rates being thrown at them but there are a lot of people who are mortgage prisoners so they can’t switch from lender to another. As these improvements in pricing filter up the LTV curve, interest in remortgaging will rise.”