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Remortgaging hits two-year low

The value of remortgage lending slumped to a two-year low in March after falling 8% over the last 12 months.

Total gross remortgage lending of £3.3bn was the lowest figure since £3.1bn in March 2013, according to latest figures from LMS.

Separate figures from the British Bankers' Association showed a rise in house purchase approvals but a fall in lending activity year-on-year.

The figures present a mixed picture for the mortgage market, which is struggling to repeat the highs seen at the start of 2014.

LMS said the number of remortgage loans fell 11% year-on-year to 22,340 in March, down from 25,100 in the same month last year.

And the average remortgage fell in value by 6% to £147,484 over the year, the lowest number recorded since July 2013.

Andy Knee, chief executive of LMS, said remortgage figures remain well down on last year, prolonged by the uncertainty of a looming election.

“At a time when interest rates and offers are at a record low, it is surprising to see that borrowers are remortgaging less often and are failing to capitalise on these offers.

“Stricter lending criteria and uncertainty around the election may be dissuading people from remortgaging more frequently.”

The average amount of equity withdrawn for each remortgage rose by 31% over the last year to £21,755. "Despite higher incomes and lower interest rates than this time last year, this suggests many families are struggling to make ends meet," Knee said.

Commenting on the BBA figures, Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “House purchase approvals are trending upwards with higher demand seen in the first quarter of the year.

“While numbers are down on the same month last year for house purchases and remortgaging, that was a frenzied time for the market and we now see a more considered phase, which is also likely to be more sustainable."

Harris said borrowers continue to take advantage of record low mortgage rates. “Lenders have ambitious targets for the year and in order to achieve them will either have to compete on rate or loosen criteria.

“While many are not yet prepared to do the latter, they are tightening margins and cutting rates across the loan-to-value curve.”


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