Mortgage trap ends as remortgage market picks up

Mortgage trap ends as remortgage market picks up

The number of loan approvals for house purchases was 64,343 in May, compared to the average of 61,844 over the previous six months, according to the Bank of England.

Meanwhile, the number of approvals for remortgaging was 36,003 - compared to the average of 33,090 over the previous six months.

Industry commentators were quick to herald the remortgage statistics as a sign of a “healthy” market returning following the introduction of the Mortgage Market Review requirements.

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Richard Sexton, director of e.surv chartered surveyors, commented that since the election, growth in mortgage approvals has since returned to its long-term steady course, with the monthly dip settling back into this wider pattern.

“However, there remain several obstacles looming on the horizon, which could create some political uncertainty again. The prospect of a Greek exit has serious potential to upset the financial applecart in the Eurozone, while further into the future an EU referendum in the UK may also cause tension closer to home.

“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.”

Richard Pike, sales and marketing director at Phoebus Software, said that the increase in approval levels for both purchase and remortgage compared to the previous six months average shows continued consumer confidence following the election at the beginning of May.

“It appears that lenders are becoming more eager to lend and rates have never been more competitive,” he stated.

“It is encouraging to see remortgage levels increasing year on year, a positive for the whole of market and maybe a turning point for people that have been caught in a mortgage trap since MMR came into effect. This has to be a healthy sign and long may that continue.”

The Bank of England statistics also showed the number of approvals for other purposes was 10,693 - compared to the average of 9,665 over the previous six months.

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

The three-month annualised and 12-month growth rates were 1.9 per cent and 1.8 per cent respectively. Gross lending on secured dwellings was £16.6bn and repayments were £15bn.