The proportion of remortgage loans in August reached a 10-year low, according to the latest data from the Council of Mortgage Lenders.
August saw lenders advance 25,000 remortgage loans, worth £3bn. The number of loans fell 13 per cent – from 28,000 to 25,000 – and the value of the loans fell 14 per cent – £3.5bn to £3bn – from July. Both were 19 per cent lower than a year ago.
The trade body says there is little prospect of a rise in the number of remortgages until base rate increases.
There were 51,600 house purchase loans, worth £7.7bn, advanced in August, a fall of 8 per cent by volume and value from 56,000 and £8.4bn respectively.
There were 18,300 loans advanced to first-time buyers, which were worth a combined £2.3bn, This is a fall of 5 per cent in volume – from 19,300 the month before – and 4 per cent by value – down from £2.4bn.
Loans advanced to home movers in August stood at 33,200, worth £5.4bn, which was down 10 per cent by volume and value from the month before. In July the number of loans to home movers stood at 36,800, with a value of £6bn.
CML director general Michael Coogan says: “August is a traditionally slow month for mortgage lending and it was no different this year. We expect a quiet market to continue for the foreseeable future. While we do not know what the impact of the comprehensive spending review will be on our sector, it will clearly contain austerity measures that will likely further dampen consumers’ appetite to borrow.
“We would expect lending to slow more significantly, year on year, as we head towards the end of the year, and it is unlikely that the uncertain environment will encourage a tick up of mortgage activity in 2011. With some uncertainty surrounding future house price trends, we would expect a muted market in the next few years. The problem of excess capital, that led to record lending and borrowing in 2007, has self corrected and will not return.”