Remortgages Hit Ten Year Low

The amount of home remortgages sank to their lowest level for more than a decade in August, according to figures from the Council of Mortgage Lenders.

Only a quarter of new loans were remortgages, out of around 25,000 loans by people switching to new deals – that’s 19 per cent fewer than in August 2009 and 13 per cent down on July this year.

Mortgage figures are normally lower in August during the holiday period, but since interest rates remain low (and are expected to stay down for some months) there is little incentive for people to take up new, higher interest deals by moving away from their current deals.

Falling values also mean that some lenders are getting squeezed by high loan to equity ratios, as banks have tightened their lending criteria.

Michael Coogan, director-general of the CML, said: “We expect a quiet market to continue for the foreseeable future. While we do not know what the impact of the comprehensive spending review will be on our sector, it will clearly contain austerity measures that will likely further dampen consumers' appetite to borrow.”

The group expects lending to slow more significantly year-on-year during the final months of 2010, while it is unlikely to pick up during 2011.

“With some uncertainty surrounding future house price trends, we would expect a muted market in the next few years. The problem of excess capital, that led to record lending and borrowing in 2007, has self-corrected and will not return,” says Coogan.

First-time buyers were able to put down slightly lower deposits in August this year, at 21%, compared to 24% in June and July.

And with housebuilding still stuck in a quagmire, the value of property is unlikely to fall far. So now’s as good a time as any to buy.

Original comment can be found at: http://www.theadvisory.co.uk/quick-house-sale-blog/2010/10/remortgage-levels-...

via Posterize