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December 23, 2010

Remortgaging activity continues revival

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by Gill Montia

Remortgaging activity continues revival

The UK’s High Street banks approved 29,991 mortgages for homebuyers in November, down slightly from October’s total of 30,689, according to the British Bankers’ Association (BBA).

The average value of a house-purchase loan rose slightly to £145,000, showing a 1.9% increase on a year earlier.

Remortgaging activity improved, with 27,045 loans sanctioned, compared with 24,785 a month earlier, and a previous six month average of 23,345.

Approvals for equity withdrawal and other purposes continued to falter, with the total at 17,270.

Net mortgage lending (gross lending with repayments and redemptions stripped out) increased by £1.5 billion in November, the lowest increase since August 1999, although mortgage repayments were strong in November, reflecting the recent increase in remortgage approvals.

After a couple of years of declining activity the UK’s remortgaging market appears to be receiving a shot in the arm over fears of interest rate rises.

Last week, the Confederation of British Industry forecast that the base rate will begin “rising gently” in the Spring, to hit 2.75% by the end of 2012.

Then, in today’s Daily Telegraph, the Bank of England’s executive director for markets, Paul Fisher, tells the newspaper that rates need to return to a “normalised” position of around 5%.

Mr Fisher, who is a member of the Bank’s rate-setting Monetary Policy Committee, also suggests that a “new mindset” needs to be adopted by homeowners when it comes to interest rates.

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