Remortgaging drives July lending growth

Remortgaging drives July lending growth

Remortgaging drove a growth in lending in July as borrowers rushed to lock in rates in anticipation of the base rate rise.

UK Finances's latest household finance update reported £24.6bn gross mortgage lending across the market in July - the highest figures this year and 7.6 per cent higher than the same month last year.

Of this figure, high street banks lent £15.6bn - an increase on last year but there was also a 0.8 per cent drop in mortgage approvals by high street banks in July compared to that a year earlier.

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In July, remortgage approvals grew by 2.8 per cent on last year’s figure, increasing from 27,514 to 28,294 - but this figure was down on the three preceding months of this year.

Despite approvals being down on April, May and June, Peter Tyler, director at UK Finance, said remortgaging largely drove July’s steady growth in gross mortgage lending as homeowners locked into attractive deals in anticipation of the recent base rate rise.

Jeff Knight, marketing director at Foundation Home Loans said remortaging activity also helped maintain momentum and overall growth in the buy-to-let sector, as landlords chose to maintain the size of their portfolios, waiting for a more opportune time to expand.

He said: "Growth can also be attributed to the burgeoning specialist sectors within both residential and buy-to-let - those lenders that can cater to those borrowers who don’t fall within the ‘standard’ category.

"It is this recognition of the need to be flexible with funding that will ultimately keep the market moving forward."  

Richard Pike, sales and marketing director at Phoebus Software, said the market has been propped up by the continuous buoyancy in remortgaging but, with few people now left on variable or tracker rates, this was likely to slow.  

He added: "As we approach the deadline for Brexit even the threat of a no deal is likely to weigh heavy across our economy, how that will manifest itself in the housing market is difficult to predict, but it could bring along a stagnant period while people wait to see what happens."

Mr Pike said July is traditionally a busy month in the property world and it was encouraging to see even modest growth compared to the same month in 2017.

He said: "However, with so much speculation regarding the Brexit deal, or no deal, everywhere you turn at the moment it is likely to be reflected in the housing market in the coming months.

"When house buying is such a huge financial undertaking, the decision to move or buy has to be affected by consumer confidence, which is likely to be dented amongst the constant barrage of ‘deal or no deal’ speculation."