Mortgage borrowing and remortgages are remaining under demand as borrowers seek to pay off debt rather than borrow.  According to the recent information released from the British Bankers’ Association (BBA) in February consumers paid off more debt than borrowing and that produced the highest net repayment level since January 2011.  Repayments minus borrowing resulted in a net repayment amount of £305 million.

There has been a surge in first time buyers returning to the housing market to take advantage of the stamp duty holiday that ends today but overall mortgage approvals for February fell back from the two year high that was recorded in January.  There were 33,103 mortgage approvals for February and slightly less than 38,000 in January.  Remortgage demand is expected to grow now that some lenders have announced they will be raising the interest rate on their standard variable rates (SVR).  Mortgage borrowing may be helped by the launch of the NewBuy scheme that is designed to help get buyers into new build homes with just a 5 to 10 per cent deposit.

BBA statistics director David Dooks said, “Businesses and households continue to be cautious about their finances in the face of difficult economic times and this shows up in a reluctance to take on new credit, or where possible, seeking to pay back bank borrowing.”

Remortgage offers are still very cheap and many homeowners are expected to choose fixed rate remortgages due to the fact that lenders are pushing their SVR up and are starting to replace their best remortgage deals with slightly higher ones.