The Council of Mortgage Lenders claims that lenders’ retention strategies are already having a dramatic impact on the remortgage market.
It says levels of remortgaging is at a five-year low as figures for September show it accounted for 30 per cent of the market by value – the lowest figure since August 2001 and down from 42 per cent in September last year.
Figures for the third quarter of this year reflect this trend, with remortgaging accounting for just 31 per cent of the market, compared to 39 per cent in the third quarter of last year.
The CML says the sharp drop over recent months reflects the fact lenders are retaining more customers.
Hamptons International Mortgages managing director Kevin Duffy and Edeus’ Michael Bolton and Alan Cleary have all recently warned that retention strategies could see the remortgage market contract.
The number of people taking out fixed-rate deals has also shown a sharp fall. They accounted for 60% of all loans in Q3, compared to 70% in the second quarter.
CML director general Michael Coogan says: “The downward trends in remortgaging illustrates how lenders are reacting to competitive conditions, and offering attractive retention products and policies to their customers. Today’s figures show that slowly but surely the market is cooling as we approach the end of the year in an environment of higher interest rates.”