Remortgage Lending Outpaced Mortgages for New Home Buyers
Remortgage lending and approvals outpaced mortgages for house purchases in the May year on year data from the Bank of England. Remortgage demand has grown with continued low interest rates being offered by lenders as well as continued increases in equity levels with growing house prices. With higher equity levels, homeowners have been keen to get cash equity release remortgages to pay off debt, pay for large ticket items, and do remodeling or complete updates of homes.
Remortgage lending grew to £4,731 million for May in comparison to £4,497 million recorded in May 2014. House purchasing declined from the £11,215 million in May 2014 to £10,330 for May 2015. The remortgage approvals increased by 22% to 34,561 from the year’s previous May level of 28,324.
May’s overall gross lending declined in May with a non-seasonal adjusted level of 5% from £16,768 million to £15,877 million.
Brian Murphy, head of lending at Mortgage Advice Bureau, remarked, “Today’s figures show that the remortgage market has sprung into life over the last year. Remortgaging accounted for almost one in three loans approved last month as more people were given the go-ahead to switch than at any point 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 housing market is expected to experience a boost in the summer as there has been heightened interest from first time buyers and home movers visiting property listing websites. Buyers in the housing market will find continued attractive interest rates just like remortgaging homeowners with little expectation of the Bank of England increasing the standard base interest rate before the summer seasonal interest in property ends.