Demand dips for house purchase loans but rises for remortgages

Christina Hoghton
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Christina Hoghton

Demand is up for remortgage business and lenders expect it to grow further this year

Lenders have said that demand for mortgages for house purchase fell in the third quarter of this year, and is expected to decrease further in the last three months of 2021.

But the Bank of England’s Credit Conditions Report also revealed that demand for remortgages increased over the last three months and lenders expect it to grow further.

Lewis Shaw, founder of Mansfield-based independent mortgage broker, Shaw Financial Services, said his experience echoed the findings: “We’ve seen demand for mortgages increase over the past quarter as lenders continue to relax their lending policies and rates become more competitive by the day. The amount of remortgaging has seen a particularly strong surge.”

Growth in mortgage availability

The availability of mortgages is also expected to remain high, with lenders reporting an increase in the three months to the end of August and forecasting further growth.

Scott Taylor-Barr of Shropshire-based mortgage broker, Carl Summers Financial Services, said: “On the supply side of the mortgage market, it’s full steam ahead right now. The availability of mortgages is improving as each week goes by, with many lenders having removed, or at least reduced, the additional checks and lending rules introduced at the height of the pandemic.”

Despite the clear growth in availability of mortgages, alongside some super-low rates being launched, some market experts think interest rates could be set to rise in the coming months.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, warned: “We may be reaching the end of a golden age for cheap mortgages. Right now, mortgages have been getting cheaper, and banks are increasingly willing to lend, so there’s never been a better time to consider remortgaging onto a cheaper fixed rate deal if you can.

“But with the threat of interest rate rises around the corner, you’ll need to be quick.”