CML: remortgage activity up 41% year-on-year

24th October 2016

According to data from the Council of Mortgage Lenders (CML), remortgage activity totalled £5.9 billion in August, down 2% on July but up 41% compared with August 2015. The total number of remortgage loans advanced was 34,900, up 4% month-on-month and 40% year-on-year.

Homeowners borrowed £12.2 billion for house purchase in August, up 14% month-on-month and 11% year-on-year. Homeowners took out 66,000 loans, up 13% on July and 9% on August 2015.

First-time buyers borrowed £5.1 billion, up 13% on July and 24% on August 2015. This equated to 31,800 loans, up 12% month-on-month and 19% year-on-year.

Home movers borrowed £7.1 billion, up 15% on July and 3% on August 2015. This equated to34,200 loans; up 14% month-on-month and 2% year-on-year.

Landlords borrowed £3 billion, unchanged month-on-month but down 12% year-on-year. The total was 19,400 loans, up 4% compared with July but down 13% compared with August 2015.

Paul Smee, CML director general, said: “House purchase activity bounced back from a dip in July, reflecting resilience in first-time buyer activity. Mortgage rates remain at or close to historic lows, and the repricing of mortgages following August’s base rate cut should help to underpin a continuing, strong appetite for home-ownership over the coming months.

“Buy-to-let by contrast continues to operate at lower levels five months after the stamp duty change on second properties. This appears to be a long-term trend, and with lenders potentially tightening affordability checks ahead of the tax changes in April 2017, activity on the buy-to-let house purchase side may well remain at current levels.”

Responding to the CML figures, Henry Woodcock, principal mortgage consultant at IRESS, said: “The gross lending trend since the summer has been in an upward trajectory, so I’m surprised the market has stumbled, with gross lending down 7% to £20.5 billion from August.

“There was a 7% rise in gross lending in August, but the month saw a drop in approvals which has followed through into September, effectively wiping out that gain. In spite of the fact that positive movements in the market all pointed to a continued recovery from the post-referendum and summer lull, borrower sentiment has not matched market expectations. However, I think this is just a blip.

“The total number of mortgage products has increased over the last 19 months to an eye watering 24,415, pointing to fierce competition. House prices fell by 0.5% in Q3 2016, the first quarterly decline seen in four years according to Halifax’s House Price Index which – combined with the August base rate cut – may still tempt borrowers to remortgage or move house. The impending closure of help to buy at the end of the year will also likely see a last minute rush by low deposit borrowers to secure those attractive deals.

“No doubt we’ll see lower numbers as we head into the mid-winter seasonal slow-down in activity; however the signs for October still look pretty positive.”

*2 year fixed with TSB 1.09% then 3.59% - APRC is 3.3% Max LTV is 60%. Quoted on 27th May 2020.