Remortgaging drives lending up

The number of homeowners remortgaging their properties has pushed up mortgage lending to a new high, while first-time buyers continue to struggle with ever-increasing house prices, according to research by analysts Datamonitor, out today.

Mortgage borrowers took out a total of ?102.2bn in remortgage advances between January 2003 and October 2003, compared to ?65bn in the same period of 2002. More than 45% of all home loans are now accounted for by remortgaging.

Homeowners have taken advantage of increases in the prices of their properties by cashing in on equity building up to pay off other debts at cheaper interest rates or to fund home improvements. Borrowers' enthusiasm for remortgaging for a better deal has been keeping lenders on their toes, forcing them to offer competitive mortgage products in order to keep hold of customers.

Meanwhile, first-time buyers are finding it more and more difficult to get a foothold in the property market. According to Datamonitor, the average deposit put down by first-time buyers increased from ?10,000 in 1998 to over ?23,000 in 2002. There were huge disparities between different regions, with Londoners putting down more than ?40,000 on average to secure their first home, while people in the north-east paid average deposits of just ?9,381. The Council of Mortgage Lenders said that only 26% of mortgage borrowers were first-time buyers in November last year, and has predicted that this group will make up just 29% of borrowers in 2004.