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Remortgaging rises 29pc in a year

Sarah Davidson

September 29, 2015

The number of loan approvals for house purchase was 71,030 in August, compared to the average of 65,594 over the previous six months.

The number of approvals for remortgaging was 40,931, compared to the average of 35,811 over the previous six months.

The number of approvals for other purposes was 11,685, compared to the average of 10,477 over the previous six months.

Total lending to individuals increased by £4.3bn in August, compared to the average monthly increase of £3.5bn over the previous six months.

The three-month annualised and twelve-month growth rates were 3.5% and 2.7% respectively.

Lending secured on dwellings increased by £3.4bn in August, compared to the average monthly increase of £2.4bn over the previous six months.

The three-month annualised and twelve-month growth rates were 2.9% and 2.1% respectively. Gross lending secured on dwellings was £19.1bn and repayments were £15.6bn.

Ed Stansfield, chief property economist at Capital Economics, said: “While low rates and rising incomes should support mortgage demand, the lack of homes being put up for sale may curb lending growth for some time yet.

“The number of loans approved for remortgaging purposes has jumped by 29% over the past year. That rise has almost certainly been fuelled by the drop in the interest rates associated with a new loan.”

Last August, average interest rates on new and outstanding loans were more or less identical, at 3.21% and 3.22% respectively.

Today, however, at 2.57% the average interest rate on new loans is roughly 50bps lower than for outstanding loans.

Stansfield added: “This has provided existing mortgage holders with a much stronger incentive to remortgage than a year ago.”

Meanwhile consumer credit increased by £0.9bn in August, compared to the average monthly increase of £1.1bn over the previous six months. The three-month annualised and twelve-month growth rates were 7.8% and 7.4% respectively.


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