The number of mortgage applications approved by high street banks increased by 3% in the year to May, new data from UK Finance has revealed.
This rise was driven by remortgaging numbers growing said UK Finance, which reported an 18% rise in approvals in this area since May of the previous year.
However the number of mortgages approved for house purchases decreased, falling by 3.8% on the previous year.
The Household Finance Update also revealed gross mortgage lending was at £22.2 billion in May, which is 8.8% higher than in the same month the year before.
Eric Leenders, managing director, personal finance at UK Finance, explained the growth in remortgaging was a result of a large number of fixed-term mortgages coming to end and homeowners taking advantage of a competitive market to shop around for attractive deals.
He added: “Increased efforts by lenders to contact their customers before their current mortgage deal expires have also contributed to this rise.”
‘Spring Bump’
Meanwhile, Jeremy Leaf, north London estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chairman described the growth as ‘more of a spring bump than a bounce’.
He explained: “Approvals for house purchase were lower at a time when we would have expected increased activity, even though gross lending is considerably higher, boosted by remortgaging.
“Many buyers and sellers are sitting on their hands and those that are recognising the new reality in this price-sensitive market are negotiating hard but transactions are taking longer as a result.”
Specialist lenders
Jonathan Sealey, CEO at Hope Capital, said that while the figures related to high street banks, the amount of lending outside of this sector was 39% of the total market. He said many borrowers, because of their specialist needs, often needed to look away from the high street to get the funding they need.
He added: “More challenger banks and specialist lenders are entering the market offering alternative solutions for people the major banks don’t want to touch because they do not fit mainstream criteria.
“More people have specialist borrowing needs either because they need short-term lending, lending for development or even are self-employed or no a zero hours contract.”
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