Remortgages give mortgage market a much needed boost, reveals BBA

26 February 2008 / by Joy Tibbs
According to the British Bankers’ Association, remortgaging approvals were particularly strong in January, accounting for 49 per cent of total mortgage lending, while general mortgage lending rose slightly.

The value of approved mortgage loans rose 4.6 per cent compared with January 2007 figures, and also saw a significant monthly rise from £17.3 billion in December to £19.6 billion in January. The value of approved house purchase loans fell 27 per cent year-on-year, but on a monthly basis rose from £6.6 billion to £7.2 billion.

Statistics director, David Dooks, comments: "Higher gross mortgage lending in January largely reflected very strong remortgaging activity, as borrowers sought out the best deals available.

"Although house prices and new loans for house purchase, appear to be subdued as the housing market slows, the strength of remortgaging would suggest competition for mortgage business and switching remains high."

While the number of house purchases rose from 42,343 in December to 44,288 in January, the number of remortgages approved leapt from 67,535 to 79,016 over the same period. Mortgages for equity withdrawal and other purposes also increased from 37,867 to 39,172.

"While first-time buyers may be struggling to find finance to get a foot on the residential ladder, there are increasing opportunities to refinance for those who already own property," said Simon Rubinsohn, RICS chief economist.

"This reflects the greater willingness on the part of lenders to pass on base rate cuts to this group of borrowers. It does however throw into sharp relief the claim that a weaker housing market will necessarily be good news for first-time buyers," he continued.

Meanwhile, the report – which also covers consumer credit – found that annual credit card borrowing grew 6.2 per cent in January. However, while new spending on credit cards fell from £7.4 billion in December to 7.3 per cent in January, repayments remained flat at £7.6 billion.

"Despite strong volumes of retail sales, card transaction volumes were little changed and spending was more than offset by repayments. Overall consumer credit remained subdued," explained Mr Dooks.

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