Monthly gross remortgage lending in March saw a monthly fall of 14%, LMS has reported, down to £3.02bn from February’s £3.5bn reported by the Council for Mortgage Lenders (CML) last week as the effects of MMR comes into play.
LMS also estimates that the number of remortgage loans fell by 19% to 19,287 in March. This represents the lowest number recorded since 2005 and is down from 23,000 in February. This figure is also down by 19% from this time last year, when there were 23,900 remortgage loans recorded.
The remortgage market share has subsequently dropped to 20% of the total market down from 24% last month and 27% in March last year.
However, the average remortgage loan amount has seen a continued increase over the past month and now stands at £156,626 (a 1% increase from last month). This figure is 12% higher than March 2013 and is the highest since CML monthly records began in 2002.
Andy Knee, chief executive of LMS, said: “With the onset of the game changing Mortgage Market Review, we’ve seen lenders tighten up in anticipation and get their systems in place during March. Remortgaging felt the brunt of these effects with fewer loans due to tighter criteria and a creeping up of mortgage rates.
“This fallout has occurred slightly ahead of the rest of the mortgage market, as house purchase decisions typically take longer. We therefore expect the rest of the market to follow suit in April as lenders turn the tap off.
“However despite a decrease in the number of remortgage loans in March, the average amount of equity released increased by 20%. This indicates that savvy borrowers are still benefiting from the remaining competitive deals on offer.
“Borrowers are clearly adept at searching for the best deals around with 61% remortgaging to take advantage of a new, lower mortgage rate, yet 10% are remortgaging to pay off other debts – a signal that many households budgets are still squeezed.
“The introduction of MMR and continued debate about a Bank of England interest base rate rise will have significant implications for homeowners and will drastically reduce the offers currently available as has already been shown and the fluidity of the market is tested, further stretching already hard-pressed purse strings.”