Business

Remortgaging numbers drop sharply, says CML

Mortgage application form
Image caption The number of first-time buyers who were handed mortgages picked up in June

Expectations of falling borrowing rates pushed down the number of households remortgaging in June, lenders say.

There were 23,400 remortgaging loans advanced during the month, more than 20% down on the previous month and on June 2011.

But the Council of Mortgage Lenders (CML) said that first-time buyer activity had held up during the month.

Mortgages advanced to this group were at one of the highest levels of the last year, the lenders' group said.

Rate hopes

The CML said that the fall in the number of remortgaging loans - down 20.9% compared with May, and 24.5% lower than June 2011 - might have been driven by predictions of cheaper borrowing in the future.

The double-dip recession is continuing, with the Bank of England recently forecasting that UK economic growth would be close to zero in 2012.

The data had fuelled anticipation for an interest rate cut, but the Bank's governor, Sir Mervyn King, has dismissed calls for a reduction in the near term.

The number of loans advanced for house purchases stood at 47,500 in June, the CML figures show.

This was up 1.7% on the previous month, but 0.8% down on a year earlier.

Bank of Mum and Dad

Paul Smee, the CML's director general, said that the lending figures had "see-sawed" in the first half of the year, with more fluctuations expected in the coming months.

However, he welcomed the comparative strength of first-time buyer activity, despite this group no longer having the benefit of a concession on stamp duty when buying homes priced between £125,000 and £250,000.

"First-time buyer activity is showing some signs of resilience as we move away from the obvious effects of the stamp duty concession, a trend that it would be good to see maintained," he said.

Some 19,200 loans were handed to first-time buyers, up 9.1% on May and up 3.8% on the same month a year earlier.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "There were more first-time buyers than we might expect given how tough it is for them to drum up a big enough deposit to get on the housing ladder.

"It is encouraging that this sector is showing some resilience but many first-time buyers will inevitably be relying on their parents to help with a deposit."

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