Remortgaging hit a seven-year high in October as borrowers rushed to take advantage of the low deals currently on offer.
According the Council of Mortgage Lenders, remortgage activity for the month grew 11% to £6.1 billion, up 7% compared to a year ago and the highest amount since 2009.
In August, the Bank of England cut the base rate for the first time in seven years to 0.25%, prompting mortgage lenders to slash rates.
The CML said the lower volumes of buy-to-let activity the market is currently seeing is likely to continue into next year as a result of incoming regulation changes.
Despite landlord borrowing rising 7% to £3 billion in October, this figure is still down 21% from last year.
Paul Smee, director general of the CML, said: “Buy-to-let house purchase lending remains weak following the change to stamp duty on second properties in April. With lenders now tightening affordability criteria ahead of the Prudential Regulation Authority’s stress tests and the forthcoming tax relief changes next year, these lower volumes are likely to be the new normal.”
Mortgage lending is 11% down on last year, with homeowners borrowing £10.5 billion for house purchase, a drop 8% for the month.
Monthly lending to first-time buyers fell 8% to £4.5 billion, equating to 28,900 loans.
Remortgage activity for the month grew 11% to £6.1 billion, up 7% compared to a year ago and the highest amount since 2009.
“Homeowner and buy-to-let remortgage lending, however, has recovered and is running at its strongest levels since 2009. This appears to be linked to borrowers taking advantage of the re-pricing of mortgages following the base rate cut,” said Smee.
Peter Williams, executive director of IMLA, said: “October’s lending figures are indicative of a market that is still finding its feet after a tumultuous year. It has had to cope with significant changes to Stamp Duty along with the ongoing ramifications of Brexit. Considering all that it has had to contend with, the market has proven itself to be remarkably robust, with lending figures roughly the same as they were at the beginning of the year.
“The remortgage market has taken off this year with the total value of such loans now at their highest rate since the beginning of 2009, as consumers continue to take advantage of the historically low interest rates. However, with swap rates rising, now is probably a good time to remortgage as the best deals might not be around for too much longer. The strong remortgage figures will come as no surprise to IMLA’s members, who earlier this year predicted that the remortgage market had the best prospects for growth.
“The buy-to-let market has clearly been badly affected by the raft of changes that have been made this year. Changes which may yet have unintended consequences. With a slow-down in buy-to-let lending, it is likely that the supply of high quality housing in the private rented sector could suffer. This is not good news for those renting through choice or those forced to do so while they wait to get onto the property ladder.”
Loading ...