Remortgage lending in August at highest level for seven years

The number of remortgage loans being handed out to home-owners reached its highest levels since 2009 in August as borrowers snapped up cheap loan rates.

Some 34,900 loans were taken out for remortgage purposes, marking the highest monthly figure since July 2009, the Council of Mortgage Lenders (CML) said.

There were also signs of house purchase activity bouncing back following a dip in July in the weeks following the vote to leave the EU.

Some 31,800 loans were handed out to first-time buyers purchasing homes in August, up 12% month on month and a 19% increase compared with the same period a year earlier.

Home-movers took out 34,200 loans for house purchase, up by 14% month on month and by 2% compared with August 2015.

The CML said the numbers of both first-time buyer and home-mover loans were the second strongest monthly figures seen during 2016.

But buy-to-let activity remained relatively subdued in August, following a stamp duty hike for this sector which came into force on April 1.

The CML said landlords took out 6,500 loans in August for house purchase, up 8% compared with July but down by 38% on August 2015.

A separate report from Rightmove has suggested that interest in the buy-to-let market may be starting to pick up.

The estate agent said the number of inquiries from landlords and investors about buy-to-let property purchases was up by nearly a third (30%) in September compared with May.

But the CML suggested the lower buy-to-let lending figures could be the start of a longer-term trend.

Paul Smee, director-general of the CML, said: "House purchase activity bounced back from a dip in July, reflecting resilience in first-time buyer activity. Mortgage rates remain at or close to historic lows, and the re-pricing of mortgages following August's base rate cut should help to underpin a continuing, strong appetite for home-ownership over the coming months.

"Buy-to-let, by contrast, continues to operate at lower levels five months after the stamp duty change on second properties.

"This appears to be a long-term trend, and with lenders potentially tightening affordability checks ahead of the tax changes in April 2017, activity on the buy-to-let house purchase side may well remain at current levels."

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "House purchase activity bounced back from July's dip as borrowers took advantage of cheap mortgage deals. With base rate also being cut in August, the low interest rate environment we have been in for some time looks unlikely to change any time soon."