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Remortgage surge ahead of interest rate hike but new lending takes a tumble

  • 14/11/2017
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Remortgage surge ahead of interest rate hike but new lending takes a tumble
Homeowners rushed to remortgage in September ahead of an interest rate hike, but lending in other sectors of the market tumbled from August, industry figures have showed.

Remortgage loans worth £6.4bn were rearranged in September, up by almost a fifth year on year and a similar level to the previous month, according to trade body UK Finance.

However, first-time buyer, buy-to-let and home mover lending all took a significant hit from the previous month on a non-seasonally adjusted basis, but were still higher than September last year.

Home movers borrowed £6.9bn, down 18% on August but six per cent higher year-on-year, the figures showed.

At the same time, first-time buyers borrowed £5.1bn, down 11% on the previous month but four per cent higher than in September 2016.

And overall buy-to-let lending in September totalled £2.9bn, down nine per cent from August but four per cent higher than a year earlier.

UK Finance head of mortgage policy June Deasy said:Although lending slackened in September, it remained higher than a year ago.

“Remortgaging was particularly strong, with borrowers seeking to lock into historically low interest rates in advance of the widely anticipated rise in Bank base rate at the beginning of November.

“Over the last year, the number of loans for remortgaging has been higher than in any period since 2009.

“Low borrowing rates mean that mortgage repayments as a proportion of income remain at or close to their historic low point.

“While this ratio may edge upward in the coming months, monthly mortgage payments will remain affordable for the vast majority of borrowers.”

On a seasonally adjusted basis, lending to first-time buyers and movers was higher than in August, and there were year-on-year increases by both volume and value.


Buy-to-let hit

And buy-to-let borrowing for house purchase declined in September but are at the same level year-on-year.

Lea Karasavvas, managing director of Prolific Mortgage Finance, said: “Homeowners have been grabbing low rates while they can while the response from landlords has been far more muted.

“This demonstrates a sustained shift as many turn their backs on the market.

“Landlords are waving the white flag after a severe tax bashing from the Treasury over the last two years.”

The typical loan size for a first-time buyer fell from £140,000 in August to £138,016 in September, according to UK Finance.

And the average amount borrowed by home movers in the UK edged down from £182,785 the previous month to £180,000, while the average mover household income fell month-on-month from £56,102 to £55,581.

This meant the average income multiple went down from 3.40 to 3.39.

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