Remortgaging continues to drive market

Remortgaging continues to drive market

Remortgage approvals continued to drive the mortgage market in August as gross lending dropped slightly on last year, according to the latest figures from UK Finance.

In its household finance update for August, UK Finance reported gross mortgage lending dropped slightly on last year’s figure by 1.2 per cent to £24.1bn.

The trade body found high street banks accounted for £15.5bn of this lending, with their total number of mortgage approvals rising by 0.7 per cent compared with the same period a year earlier.

Within this figure, the number of remortgage approvals rose by 9.2 per cent to 32,457 cases - but house purchase and other secured borrowing approvals dropped by 4.3 per cent and 2.1 per cent respectively.

Peter Tyler, director at UK Finance, said remortgaging continued to dominate as homeowners took advantage of a competitive market.

He added: "However, the overall economic outlook remains mixed as household incomes continue to be squeezed by rising inflation."  

Jeremy Leaf, London estate agent and a former RICS residential chairman, said the figures reflected a flat mortgage market.

He said: "At first glance these figures look quite encouraging but when you appreciate that a substantial part of the increase in lending is to do with remortgaging in anticipation of higher interest rates, the picture is not so rosy.

"Mortgage approvals for house purchase are lower compared with this time last year, which was not a particularly impressive time anyway."

Mr Leaf said he believed confidence was in short supply unless new market conditions were recognised.

He added: "Having said that, we are seeing more viewings and more realism as the summer period is now behind us - it is now up to sellers to recognise that the market is unlikely to change for the better for some time."