Remortgaging deals down 57 per cent

Monday 12th October 2009

The number of remortgage deals in August was down 57 per cent on a year ago, new figures show.

However, there is some good news for homeowners with the number of home purchase deals going through up 29 per cent.

A five per cent drop in homebuyer lending was recorded in August from July – as the market saw a summer dip, according to Council of Mortgage Lender data.

A total of 19,200 first-time buyer mortgages went through in August – on an average loan-to-value rate of 75 per cent.

This means the average first-time buyers now must raise a £38,200 deposit for a £152,000 property.

A year ago the average LTV value was 85 per cent.

The average income multiple has also dropped from 3.21 a year ago to 3.03 times salary now – as lenders tighten up lending to first-time buyers.

While the mortgage market has picked up strongly from the start of the year, mortgage lenders are not promises great further improvements.

CML economist Paul Samter said: “House purchase activity has revived from its moribund state at the beginning of the year.

"It will be a drawn out recovery process with seasonal ups and downs, but house purchase activity is now on a firmer footing."

He added: "Remortgaging demand has fallen away in the low interest rate environment and this is dragging down gross lending levels overall."

Many homeowners are now not choosing to remortgage – instead remaining on low standard variable rate deals with their lenders.

Many buyers from over the last two or three years are also finding house price falls have eaten away at their equity and left them unable to access better remortgage deals at low LTV levels.

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