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Remortgage lending at £3.5bn in July – LMS

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  • 23/08/2012
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Remortgage lending at £3.5bn in July – LMS
Monthly gross remortgage lending increased by £400m in July to £3.5bn, up 13% on June’s £3.1bn, a surveying firm has found.

LMS said remortgages now represented 25% of all gross mortgage lending, down from 32% in July last year.

The average remortgage loan amount has risen by over £5,000 to £133,244 in July, the highest since the beginning of the year.

Andy Knee, chief executive of LMS said the low monthly figure reflects the fact that many borrowers, already on competitive existing rates, have had little incentive to remortgage.

“Indeed, most new deals which borrowers could have taken out and completed in June or July would not reduce monthly repayments sufficiently to encourage people to remortgage so borrowers have held off taking any action. However, the good news is that better deals have materialised. Lenders have recently launched a number of sub 3% rates with terms of four or five years. This has led to a surge in remortgage applications in late July that has continued into August.

“We had been expecting this to be a disappointing time with the distraction of the Olympics but the reverse has happened. These applications should become completions in late August and September and suggest that we will see a sharp rise in remortgage lending later in the year.”

In separate research, the British Banking Association found that the number of remortgaging approvals in July 2012 was some 41% lower than in July 2011 and approvals for other secured lending were 25% lower. It also said that gross mortgage lending of £7.1bn in July was below the recent monthly average and reflected continued low levels of activity in the housing market.

Jonathan Harris, director of mortgage broker Anderson Harris, said: “More borrowers are choosing to overpay on their mortgage and reduce their outstanding debt and borrowing costs where they can, rather than take on new loans.

“We are also seeing more remortgaging, with borrowers moving off lenders’ rising standard variable rates onto cheaper fixes and trackers. However, this assumes a certain level of equity in their homes which not all borrowers are fortunate enough to have. Those with little or no equity are mortgage prisoners, trapped and faced with the prospect of rising mortgage rates.”

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