CML: Remortgages soar 33% year-on-year

The number and value of remortgages taken out in August increased by more than 30% on the same period of last year, as the market showed “welcome signs of life”, according to the CML.

Its latest figures revealed that the number of remortgages in August rose 33% on the same month of 2010 to 34,100, up 31% in value to £4.2bn.

This was also up 9% in number and 5% in value on July.

While house purchase mortgages increased at a more modest rate, lending to first-time buyers and home movers was at its highest for more than a year, the CML said.

The number of house purchase loans increased 2% year-on-year and 7% on July to 52,000, while the value of house purchase deals grew to £7.9bn - up 10% on July and 3% on August 2010.

Lending to first-time buyers grew 5% to 19,000, compared to July and August 2010. The average LTV for first-time buyers held steady on previous months at 80%, with 13% of their income dedicated to mortgage interest payments.

Home movers took out 33,000 loans in August, worth £5.5bn, up 8% by number and 10% by value on July, and up 1% by number and 2% by value on August 2010.

The average LTV of home movers was 69%, while 9.4% of their income went on mortgage interest payments - the lowest the CML has recorded since its records began in 2002.

Paul Smee, director general of the CML (pictured), said: "Even though it is impossible to ignore the knocks to confidence emanating from the eurozone, August lending showed welcome signs of life.

"With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low rate environment is a benefit to those with mortgages, even against the backdrop of the gloom in the wider economy."

Paul Hunt, managing director of Phoebus Software, said: "By pre-recession standards, August wasn't a bumper month for mortgage lending, but by any more contemporary measure, it was very strong indeed.

"Lending increased for remortgagers, home movers and - most importantly - first-time buyers. It is all based on growing lender confidence as a result of the prospect of ultra-low interest rates for the foreseeable future."