Remortgage lending continues to struggle
Figures released by LMS showed that the level of remortgage lending completed in May was 13% lower than the previous month.
The total value of remortgage loans was £3.6bn in May, the firm reported.
The number of deals completed also dropped, falling from 25,200 in April to 23,620 in May. This represents a 6% drop.
Compared to the previous month the total amount of equity withdrawn by remortgage customers grew 9% to reach £26,863. This is also 19% higher than a year ago.
The total amount of equity withdrawn through remortgaging was £634m.
Andy Knee, chief executive of LMS, said it was a mystery why the remortgage market continued to stall compared to other sectors.
“It’s concerning to see the remortgage sector taking a step back in May after receiving a much-needed boost in April. A fall in the number of loans, accompanied by a minimal rise in average loan amount, shows a general sense of apathy among homeowners,” he said.
“Meanwhile, according to figures by the Council of Mortgage Lenders (CML), remortgaging actively drove buy-to-let sector growth, so it’s perplexing why homeowners are yet to be swayed to take advantage of record low interest rates and the competitive deals available in the market.
“The average amount of equity withdrawn reached £634m, the highest amount taken out since December when Britons broke the record trying to cover up for their Christmas costs. Equity withdrawn at similar levels as April could be the sign of a continuing trend, and a warning that despite rising house prices, growing employment and a general sense of post-election prosperity, people are still needing to free up extra funds by remortgaging.”