Monthly gross remortgage lending increased by £276 million in September to £3.18 billion, up 9.5% on August’s £2.90 billion, according to LMS.
This new estimate for September, which is based on LMS’s conveyancing transactions for the month, suggests that the remortgage market is beginning to pick up having hit rock bottom in August.
This new trend contrasts with CML’s latest estimate for September’s total gross mortgage lending, which is down 10% to £11.6 billion (from £12.9 billion in August). This drop is totally attributed to a fall in purchase activity.
However, the value of gross remortgage lending in September remains 27.8% lower than this time last year (£4.4 billion in September 2011). The uplift is from August’s lowest proportion of total mortgages for 12 years (since December 1999).
The average remortgage loan amount has risen by over £2,000, to £137,437 in September, the highest it has been since the beginning of the year. Average loan amounts have been gradually rising since February and September’s figure is the highest it has been since December 2008 (£138,350).
Although loan amounts continue to be below the peak of £143,126, recorded in January 2009, they are up 4.3% on this time last year (£131,826).
LMS estimates that the number of remortgage loans has increased by 6.5% in September, rising from 21,700 (August) to 23,106. This remains well below the more typical 30,000 advanced during 2011.
“Notwithstanding the considerable increase in September, in historic terms, the remortgage lending figure is still relatively low,” said Andy Knee, chief executive of LMS.
“In our last Remortgage Report, we accredited the low remortgage lending figures to borrowers holding back, waiting to take advantage of the current very attractive 3% mortgage deals. This theory is reflected in the rise in remortgage activity that we have witnessed in September.
“Competitive remortgage deals, combined with future prospects of tighter mortgage pricing, due to the government’s Funding for Lending Scheme, leads us to expect sustained improvements in the remortgage market for the remaining months of this year.”
