New buyer mortgage deals 'creep up' as remortgaging drops

May data from the Bank of England confirm the trend lenders have been seeing.

With standard variable rates so low, home owners are happier to stick there, rather than remortgage onto high fixed rates – despite warnings that the moment the Bank of England increases rates variable rate deals will jump, as will fixes.

Fixed-rate mortgage deals have already started to rise.

Falling house prices putting some homeowners in negative equity or leaving them with very little equity is also creating a brake on remortgaging.

Last week rating agency Fitch warned 35 per cent of borrowers do not have enough equity to secure a remortgage.

In May there were 30,984 remortgage deals – 9.8 per cent down on the six-month average.

Andrew Montlake, at mortgage broker Coreco, said: "I am concerned that the number of remortgages has fallen. Fixed rates are rising and anyone settling for short term gain on a lender's SVR could be in for some long-term pain.

"People wanting to have their cake and eat it could fix part of their mortgage and leave the rest on a tracker, which will at least give some level of security without substantially upping their current payments."

The number of house purchase deals stood at 43,414 – up 21.7 per cent on the six-month average.

However, high deposits needed to make a purchase are still holding back many first-time buyers from taking advantage of low house prices.

The mortgage market as a whole, however, remains anaemic, with lending growth dropping from over ten per cent two years ago to 1.4 per cent now.

Mr Montlake added: "Slowly but surely, the number of new home loans being approved is creeping upwards, reflecting the growing confidence in the UK property market.

"Some people were expecting better figures but let's not kid ourselves, it's still very difficult to secure mortgage finance at higher LTVs."


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