Homeowners are, on the whole, less likely to consider looking for a remortgage, as it seems an imminent rise in the base rate is also less likely.
So says the Council of Mortgage Lenders (CML): 'Looking ahead, interest in remortgaging is now also likely to be less pronounced, as expectations of higher interest rates this year recede.'
At the June meeting of the MPC (Monetary Policy Committee - the group that decides when to change the base rate), it was decided to keep the base rate at its all-time low of 0.5% for the 27th month.
Remortgages
The rate fell to that level on March 5th 2009, having plummeted from 4.5% just five months earlier. Since then, many experts have argued that the rate should rise, including members of the MPC itself - most notably Andrew Sentance, who has recently left the MPC.
However, the arguments against raising the rate have so far won out. A rise in interest rates could have a serious impact on all kinds of areas. In particular, as far as millions of homeowners are concerned, it would lead to an increase in the monthly cost of repaying their mortgage.
The reduction in their available spending money would obviously have an impact on spending in the high street, something which the economic recovery is largely dependent on.
Among those who'd like to see a rise in the base rate, meanwhile, are many of the savers who are seeing much smaller returns on their savings these days.
Then, of course, there are the people who have both savings and a variable-rate mortgage...
Monday, 27 June 2011
Remortgages down as rate fears ease
BRITAIN’S banks have reported a big drop-off in remortgaging activity as expectations of interest rate rises begin to fade.
The British Bankers’ Association (BBA), whose members account for two-thirds of all UK mortgage lending, said its figure of 21,519 approvals for remortgages in May was well down on the average of 24,571 for the previous six months.
House purchase approvals were slightly higher than in April at 30,509 but 15% lower than a year ago. The average value of £147,700 was 1.9% lower on May 2010.
Many homeowners were prompted to seek fixed-rate mortgages earlier this year amid expectations of an imminent hike in the Bank of England’s base rate from a record low of 0.5%. Recent economic uncertainty now means many economists are not expecting rates to rise until next spring.
The BBA said gross mortgage lending was largely stable but, with homeowners stepping up repayments amid the low interest rate environment, net mortgage lending increased by just £1.2 billion in May.
Demand for loans and unsecured borrowing has remained weak, with repayments continuing to outweigh new lending, while the squeeze on household finances meant deposits and savings rose by just £100 million, compared with £800 million in April and the average of £1.9 billion over the previous six months.
BBA statistics director David Dooks said: “Consumer spending was flat in May after the boost Easter and the royal wedding provided in April. Money is still tight and people continue to pay off debt rather than save or borrow.”
Remortgaging drops as house purchase approvals remain static
Britain's banks have reported a big drop-off in remortgaging activity as expectations of an interest rate rise begin to fade.
The British Bankers' Association (BBA), whose members account for two-thirds of all UK mortgage lending, said its figure of 21,519 approvals for remortgages in May was well down on the average of 24,571 for the previous six months.
The figures contradict those from the Council of Mortgage Lenders, which earlier this week said remortgaging had supported a rise in gross mortgage lending in May.
House purchase approvals were slightly higher than in April, rising to 30,509 from 29,747, but remained 15% lower than a year ago. The average value of £147,700 was 1.9% lower than May 2010.
Many homeowners were prompted to seek fixed-rate mortgages earlier this year amid expectations of an imminent rise in the Bank of England's base rate. But recent economic uncertainty now means many economists are not expecting rates to rise until next spring.
The BBA said gross mortgage lending was largely stable, but with homeowners stepping up repayments amid the low interest rate environment net mortgage lending increased by just £1.2bn in May.
Demand for loans and unsecured borrowing, meanwhile, has remained weak, with repayments continuing to outweigh new lending while the squeeze on household finances meant deposits and savings rose by just £100m compared with £800m in April and an average of £1.9bn over the previous six months.
BBA statistics director David Dooks said: "Consumer spending was flat in May after the boost Easter and the royal wedding provided in April. Money is still tight and people continue to pay off debt rather than save or borrow."
The British Bankers' Association (BBA), whose members account for two-thirds of all UK mortgage lending, said its figure of 21,519 approvals for remortgages in May was well down on the average of 24,571 for the previous six months.
The figures contradict those from the Council of Mortgage Lenders, which earlier this week said remortgaging had supported a rise in gross mortgage lending in May.
House purchase approvals were slightly higher than in April, rising to 30,509 from 29,747, but remained 15% lower than a year ago. The average value of £147,700 was 1.9% lower than May 2010.
Many homeowners were prompted to seek fixed-rate mortgages earlier this year amid expectations of an imminent rise in the Bank of England's base rate. But recent economic uncertainty now means many economists are not expecting rates to rise until next spring.
The BBA said gross mortgage lending was largely stable, but with homeowners stepping up repayments amid the low interest rate environment net mortgage lending increased by just £1.2bn in May.
Demand for loans and unsecured borrowing, meanwhile, has remained weak, with repayments continuing to outweigh new lending while the squeeze on household finances meant deposits and savings rose by just £100m compared with £800m in April and an average of £1.9bn over the previous six months.
BBA statistics director David Dooks said: "Consumer spending was flat in May after the boost Easter and the royal wedding provided in April. Money is still tight and people continue to pay off debt rather than save or borrow."
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