Remortgages drop by 28% in April
Loans advanced for remortgages saw a drop of 28% by number, and 27% by value in April this year, according to the Council of Mortgage Lenders. 24,700 mortgage loans totalling £3billion were advanced, down from 34,100 in March, but with a slight increase of 1% from the same period last year.
The Council of Mortgage Lenders puts the activity down to the predicted changes in interest rates, and suggests that the numbers would fall further in the next few months due to a stagnant bank rate. Remortgage completions could also stay at lower levels, if Aprils remortgage approvals are anything to go by. Advanced loans for house purchase increased by 8%, but overall this was a drop of 2% from April in 2010, the Council also warned that there could be a drop in house purchase completions in the coming months because house purchase approvals fell in April.
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First time buyer loans grew by 8%, rising from 14,700 to 15,800 March to April, and loans were slightly up from 15,700 in April 2010, the average for a FTB loan-to-value was 80% in April this year, up 1% from the previous month and the previous year. Home movers also saw mortgages increase for them, with 25,100 advances taking place, totalling £4billion, and have generally borrowed less than 70% of their homes value since mid-2009, however, this dropped by 1% in April, to 69%. For the second consecutive month, 4% of first time buyers purchased interest-only mortgage deals, which the Council see as a shift away from this type of mortgage – before 2008 first time buyers taking out interest-only mortgages accounted for about 30% of loans.
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Director General for the Council of Mortgage Lenders, Michael Coogan, said that the market was making an effort at recovery, and that the growth of lending for house purchases was a move in the right direction, pointing to further increases over the next twelve months. Mr Coogan went on to say that it could be too premature to expect an explosion in the mortgage market, saying; ‘the economic outlook, coupled with Bank of England subdued approvals data for April, suggests a muted summer for mortgage completions so we do not expect further increases in lending over the coming months.’
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