Remortgaging activity to resurface in 2011

Lenders are shunning the remortgage market, and the situation is unlikely to change until 2011, according to housing intelligence outfit, Hometrack.

The firm’s strategy, risk and economics director, Gary Styles, explains that lenders have been focusing their attention on house purchase lending, in some cases because they have government targets to hit.

In addition, remortgaging activity has plummeted as low interest rates encourage borrowers coming to the end of fixed deals to stick with their lenders’ relatively attractive reversion rates.

Mr Styles therefore believes that better remortgaging deals could be available in 2011, when interest rates are expected to begin rising.

Last week, the Council of Mortgage Lenders (CML) released mortgage approval figures for November.

House purchase approvals showed a seasonal dip, falling 4% on October to 53,000, but were still 66% up on a year earlier.

However, the number of remortgages sanctioned declined 6% on the previous month and 39% year-on-year, to 31,000.

CML director general, Michael Coogan, commented: “With refinancing still unattractive or unnecessary for many borrowers due to continuing low rates, we are now seeing a much more house purchase-focused market, a profile much more like the beginning of the Noughties than its latter years.”

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