Remortgaging takes up 49% of home loans

The British Bankers’ Association (BBA) has reported a rise in the number of mortgage approvals in January.

The value of approved mortgage loans rose 4.6% on January 2007, to £19.6 billion; by monthly comparison, the December figure stood at £17.3 billion.

However, the value of approved house purchase loans fell 27% year-on-year in January, leaving remortgaging approvals for the month accounting for 49% of total lending.

The number of remortgages approved rose to 79,016 (from 67,535 in December) while mortgages for equity withdrawal and other purposes also increased, from 37,867 in December, to 39,172 in January.

According to David Dooks, the BBA’s statistics director: “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.”

Commenting on the data, Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors says: “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.”

Adding: “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.”

Discuss this in the Finance Markets forums

Story link: Remortgaging takes up 49% of home loans