Remortgage lending has failed to show a marked demand increase from homeowners.  This is despite the fact that remortgage interest rates have dropped considerably since the same time last year.  The Funding for Lending (FLS) scheme put into place by the government in August of last year has helped lenders offer lower interest rates.  The lending market is actually in a competitive mode currently as lenders make attractive offers to gain the attention of homeowners. 

According to conveyancer LMS, which process approximately 28% of UK remortgages, the total remortgages decreased from January to February.  LMS reported a 12.4% decrease from the reported 20,332 remortgages in January to 17,812 remortgages in February.  The value in remortgage lending fell by 11.3% to £2.6 billion.  The average remortgage loan value increased by 6.6% to £143,333.

Holidays and winter weather are blamed for the lull in remortgage lending that produced a decrease. 

Andy Knee, LMS chief executive, said, “However, the fact that it was still annually down by 1.8% suggests that the Funding for Lending Scheme still needs more time to bed in and we would urge the government to continue with the scheme in its current form.

“This is hopefully now looking more likely in light of the Chancellor’s Budget statement.

“An extension of the FLS, together with continuing falls in mortgage rates for both new and existing borrowers, suggests that all types of mortgage lending should grow strongly over the coming months.”

Remortgage demand is expected to grow in the coming months as lenders continue to be in a competitive mode and offer attractive remortgage deals.