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Remortgage surge drives housing market

A dip in the number of mortgage approvals for house purchases in September was offset by a sharp rise in remortgaging.

The Bank of England Money & Credit report for September counted 68,874 loan approvals for house purchase, down from 70,664 in August.

This was still higher than the average of 66,900 over the previous six months.


The number of approvals for remortgaging stood at 41,163 in September, up from 40,922 in August.

It was notably higher than the average of 37,194 over the previous six months.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said remortgaging has performed “spectacularly" lately, rising 11% above its six-month average.

“UK households are sitting on a record £5 trillion worth of housing equity, and the limited window to secure a low rate indicates the possibility of a much-awaited resurgence in remortgage lending.”

Williams forecast a fresh push by lenders for more business towards the end of the year with intermediaries playing a vital role to help them achieve their targets.

He also urged the government to avoid introducing more regulation that might curb a recovering market.

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “Total mortgage lending in September rose both monthly and annually, demonstrating growing consumer demand and a strong level of confidence in the market among lenders.

“Remortgage activity was particularly high in September, with gross lending up by £700 million over the month and the largest number of loans approved for existing homeowners in a single month since October 2008.”

Murphy said savvy homeowners are remortgaging before rates start to creep up.

Jeremy Duncombe, director, Legal & General Mortgage Club, said that mortgage approvals have fallen month-on-month due largely to an inadequate supply of properties.

"This is in part due to a lack of housebuilding, but also as an increased number of people are choosing to stay in their current homes – either because of the prohibitive costs of moving, or simply because there are too few suitable options for them to move to.”

This has driven up house prices and forced borrowers to take on larger mortgages, leading to the biggest net lending increase since April 2008, Duncombe said.


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