Remortgage lending hits two-year low
LMS found that £3.3bn of gross remortgage lending was completed in March, the lowest figure recorded since March 2013.
In the past year the average remortgage loan has shrunk by 6%, with the typical borrower now remortgaging a £147,484 loan – the lowest amount recorded since July 2013.
More borrowers are taking advantage of low rates by fixing their mortgage for a number of years. The average mortgage term grew by six months to reach five years in March.
The amount of equity withdrawn from a property fell 19% month-on-month.
LMS estimated the actual number of remortgage loans grew by 4% to 22,340 in the month but were down 11% compared to March 2014.
Andy Knee, chief executive of LMS said the remortgage market remained stagnant.
“Despite a recent boost to mortgage lending as we head into summer, remortgage figures remain lower than last year, prolonged by the uncertainty of a looming election,” he said.
“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.
“With the election round the corner, housing is high up the political agenda and a possible point of settlement for a coalition. While government intervention and policy is welcome to encourage stability, an artificial prop for the housing market is not a permanent solution.
“This is something parties should bear in mind: supply remains the major chink in the housing market armour and urgently needs addressing before a sustainable market can flourish.”