Remortgage market "springs back into life"

The number of remortgages grew strongly in May as homeowners took advantage of rising house prices and the lender price war to find cheaper deals.

The Bank of England Money & Credit report for May, published yesterday, also showed growth in the number of loan approvals for house purchases.

Total lending secured on dwellings increased by £2.1 billion in May, compared to the average monthly increase of £1.8 billion over the previous six months.

There were 36,003 remortgages in May, up nearly 9% from an average of 33,090 over the previous six months.

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said the figures showed the remortgage market has "sprung into life", with the highest monthly total since January 2014.

“Low rates and rising house prices are giving many homeowners a stronger incentive to switch their loan than they have had for years.

“The best prices are available to borrowers with the most equity in their homes.”

Murphy noted that overall loan approvals in May fell slightly on April, but said the clear-cut General Election result bodes well for the rest of the year.

He added: "Our own data shows a rise in mortgage applications last month and lender appetite remains strong.”

The Bank of England's figures also showed 64,434 loan approvals for house purchases in May, up 4% from the average of 61,844 over the previous six months.

Danny Waters, chief executive officer of Enterprise Finance, said growing economic confidence had given people fresh appetite for borrowing.

"While the economic forecast looked uncertain some spending was postponed. Now the picture has become clearer, people are forging ahead with their spending plans.”

David Whittaker, managing director of Mortgages for Business, said strong numbers for buy-to-let and remortgaging made up for disappointing first-time buyer lending figures.

He said life will remain difficult for first-time buyers. "Sadly, the reality remains that Britain faces a serious shortage of housing, and an inevitable race between household earnings and house prices.”

Richard Sexton, director of e.surv chartered surveyors, warned that the housing market could be hit by external events, such as a Greek exit from the eurozone and a UK referendum on EU membership.

“However, for homebuyers in Britain right now, the market is looking stable and positive, with rates at record lows, plenty of support for small deposit borrowers in the form of Help to Buy, and wages starting to build momentum.”