UK Finance reports “flurry in remortgage activity”

27th November 2017

Homeowner remortgage activity, combined with stronger first-time buyer numbers, drove mortgage lending in October, according to UK Finance.

Its estimate showed that £23.1 billion was borrowed during the month, up 14% compared with October 2016. Two-thirds of mortgage lending was agreed by high street banks, accounting for £15.3 billion of the total.

At 7.1%, the total amount of outstanding credit grew at a slower pace in October compared with September, while the growth in credit card borrowing remained strong, partly driven by inflation rate. Growth in outstanding credit by high street banks was 5.1%, which also represents a slower pace than in September.

The latest figures from the high street banks suggest that businesses continue to exercise a cautious approach to borrowing, with survey indicators showing demand for credit from smaller and medium-sized businesses falling in the third quarter.

UK Finance’s senior economist, Mohammad Jamei, said: “The anticipated bank rate rise saw a flurry of remortgage activity as many homeowners took advantage of the competitive rates on offer. Borrowing was also boosted by stronger first-time buyer activity as this segment benefitted from good credit availability, lower rates and government housing schemes.

“In terms of saving, consumer deposits grew at a slower rate in October, while businesses have continued the trend of bolstering their cash reserves amidst a cautious business landscape due to Brexit uncertainties.”