Figures for September 2006 indicated that remortgaging accounted for 30% of the market by value, the lowest figure since 2001 and a 42% decrease from the same period the previous year.
The sharp fall in the popularity of remortgaging has been suggested to reflect the fact that lenders are retaining more customers for longer by reducing the incentive to remortgage to other lenders.
Figures from the Council of Mortgage Lenders (CML) also indicate that the number of people taking out fixed rate mortgages has dropped. The average interest rate for a fixed rate mortgage has increased to 5.24% in September from 5.18% in August.
The number of loans to first time buyers fell to 31,100 in September 2006, down 34,700 from the same time the previous year. Loans to home movers continued this trend and fell from 57,300 in September to 2005 to 56,700 in September 2006.
The downward trends in remortgaging illustrate how lenders are reacting to competitive conditions, and offering attractive retention products and policies to their customers, CML director general Michael Coogan said. 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.
