The number of remortgages approved by banks fell to its lowest level in 15 years in January, figures from the industry’s trade body have revealed.
Figures from the British Bankers’ Association (BBA) show that just 13,696 remortgages were approved during the month, the lowest number since January 1998 and just a sixth of the number recorded in March 2004, when the remortgage market was booming.
Seasonally adjusted figures tell the same story, with remortgaging at a 15-year low. The figures come despite a flurry of record-breaking low mortgage rates and signs that lenders are becoming increasingly willing to grant mortgages.
David Hollingworth of mortgage broker London & Country said banks were still offering many of the best remortgage deals, so the figures were likely to be a fair reflection of homeowners’ appetite for switching loans.
“There will be some people who are on very low tracker rates or on a low standard variable rate, perhaps 2% over base rate, who will think it is not worth remortgaging. There will also be people who are looking at their property and thinking the value has gone backwards, so they are not in a position to move to one of these deals for people with a lot of equity,” he said.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said he was surprised that the current raft of competitive rates had not attracted more borrowers.
“Of course, there is a lag between the positive press coverage of such deals and the time it takes to get one of these, so we expect to see these numbers improve as the year goes on.
“It may also be that some homeowners are holding off waiting for rates to fall further before taking the plunge. However, rates should be looked at in a historical context: two-year fixes for less than 2% and five-year fixes for less than 3% are by far the best rates we have ever seen.”
The BBA figures also showed a fall in the number of approvals for house purchases in January after six months of increases.
Seasonally adjusted figures from the British Bankers’ Association show the number of house purchase loans dropped to 32,288, a drop of 14% on the same month in 2012.
Analysts said the wintry weather over the month could have deterred would-buyers from house-hunting. The average value of a house purchase loan dropped to £145,300 on a seasonally adjusted basis, bringing the total value of homebuyer mortgages approved down to just under £5bn.
The BBA’s figures show that net mortgage borrowing from the banks grew by 0.2% in the year to January, while unsecured borrowing through loans, credit cards and overdrafts contracted by 1.6% over the year.
The fall in unsecured borrowing was driven by consumers repaying loans and overdrafts, with outstanding debts dropping by 7%, while credit card borrowing grew by 5.5% year-on-year.
The BBA’s statistics director, David Dooks said: “January’s severe weather impacted adversely on what was already a subdued picture of borrowing demand from households and businesses.
“While general economic growth stalls, low consumer and business confidence generates a natural tendency to restrain borrowing appetite, repay borrowing where possible and to build up cash and savings as a buffer.”
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