Remortgaging soars as total lending dips in September: UK Finance

Rozi Jones
14th November 2017
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"Over the last year, the number of loans for remortgaging has been higher than in any period since 2009."

Total mortgage lending declined in September, although remained higher on an annual basis, while remortgaging remained strong ahead of an anticipated rate rise, according to the latest UK Finance data.

On a seasonally adjusted basis, UK Finance data shows that remortgaging held up month-on-month and was 16% than a year ago as borrowers sought to fix their mortgage costs ahead of a widely anticipated increase in Bank base rate.

First-time buyers borrowed £5.1 billion, down 11% on the previous month but 4% higher than in September 2016. This equated to 31,100 loans, down 10% month-on-month and 1% year-on-year.

Home movers borrowed £6.9 billion, down 18% on August but 6% higher year-on-year, while gross buy-to-let lending totalled £2.9 billion, down 9% on August but 4% higher than in 2016.

On a seasonally adjusted basis, lending to first-time buyers and movers was higher than in August, and there were year-on-year increases by volume and value.

Seasonally adjusted borrowing totalled £38.2 billion, up 11% on the second quarter of the year and 12% on Q3 2016.

UK Finance's head of mortgage policy, June Deasy, said: “Although lending slackened in September, it remained higher than a year ago. Remortgaging was particularly strong, with borrowers seeking to lock into historically low interest rates in advance of the widely anticipated rise in Bank base rate at the beginning of November.

"Over the last year, the number of loans for remortgaging has been higher than in any period since 2009. Low borrowing rates mean that mortgage repayments as a proportion of income remain at or close to their historic low point. While this ratio may edge upward in the coming months, monthly mortgage payments will remain affordable for the vast majority of borrowers.”

Harry Landy, Managing Director of Enterprise Finance, commented: “With recent widespread economic and political uncertainty, it was to be expected that buy-to-let and remortgage activity would feel the effects. We are yet to see how the industry will adapt to the PRA-enforced changes in underwriting of buy-to-let mortgage applications, and how this will affect lending activity.

"As the impact of new regulation becomes clear, it is as important as ever for brokers to be aware of all the different financing options available to them, including alternative, specialist buy-to-let lenders who can operate on a more flexible basis. Improving education and awareness in this area will be crucial if people are to be able to capitalise on the market opportunities.”

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