Remortgage Demand Falls and Remortgage Lending Levels Out
Remortgage demand has fallen as homeowners have had less incentive to get a new deal. There are no warnings of rising interest rates by the Bank of England’s Monetary Policy Committee (MPC) and most of the lenders’ variable interest rates are cheap. Homeowners that have had their current mortgage deal end are content to pay on their lender’s variable rate rather than grab a new remortgage. Mortgage lending did however rise in January by 10 per cent when compared year to year to £10.5 billion. In comparison month to month there was a decline of 14 per cent in December according to the Council of Mortgage Lenders (CML).
This was the sixth consecutive month with a year on year increase. Much of the mortgage lending is due to first time buyers trying to rush to a purchase before the Stamp Duty holiday ends in the middle of March. The reaction to this increase by experts is one of reserved optimism.
David Brown, commercial director of LSL Property Services, believes the data reveals a strengthening housing market. Mr. Brown said: "Mortgage rates are more affordable than ever and this is helping to sustain demand from both home buyers and investors. The resurgence of the buy-to-let market has also been key to the consolidation of the mortgage market and will continue to be so. Investment in the private rented sector looks increasingly attractive and it is these fundamentals that are drumming up demand for buy-to-let mortgages."
Remortgages may not be in demand as highly as they were this time last year but homeowners should consider the cheap rates available and move off of their lender’s variable rate which is considered a risky interest rate to be paying. Remortgages are likely to remain attractive for the next few months despite any further problems in the economy as inflation is falling and the MPC is not expected to raise the standard base interest rate.