The number of remortgage loans last month fell by 15% to 23,505, according to latest figures from LMS.
This is also down 21% from this time last year, when there were 29,700 remortgage loans recorded and is the lowest number ever recorded in the month of October. It is also the smallest number on record since February 2013.
LMS estimates that that monthly gross remortgage lending also saw a decrease of 20% in October to £3.5bn, down from the £4.4bn in September reported by the Council for Mortgage Lenders (CML). This is the lowest value of remortgage lending recorded since June 2013 and the worst October since 2010, when the UK was in the depths of the recession. This is despite the CML reporting the best gross mortgage lending figure in October since 2008.
The average remortgage loan has fallen to £149,715 – a 6% decrease from last month and just 0.3% higher than the average loan of £149,282 in October 2013.
The remortgage market share now equates to 19% of the total market, 5% lower than last month and down from 24% in October last year.
Andy Knee (pictured), chief executive of LMS, said: “Despite signs of resurgence in the market last month that remortgaging had taken a turn for the better, this month saw that assumption come crumbling down with the worst October we’ve experienced since during the midst of the recession.
“Even with the competitive rates on offer, customers appear hesitant to take advantage of these perhaps, in part, due to the increased regulation of MMR or the introduction of loan to income (LTI) caps.
“Recent months have witnessed evidence of a wider cooling in the market as house price growth and loan approvals slow but it awaits to be seen whether this is a permanent trend, or simply a slowdown in the lead up to Christmas.
“Hopes for greater stability in 2015 across the remortgage market are likely to be thrown off course by uncertainty ahead of the election, changing attitudes towards a base rate rise from the Bank of England and, potentially, the impact of greater economic instability in the Eurozone on the UK market.
“That income has dropped slightly this month, after several months of increases, and repayment as a percentage of income has increased to over a fifth of income is a worrying sign this close to Christmas. It is a time of year when finances face increasing pressure. Remortgaging to reduce your monthly payments by taking advantage of the competitive offers available at the moment could provide some welcome relief.”
