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Brits sticking rather than remortgaging

Homeowners are choosing not to remortgage and sticking on standard variable rates (SVRs).

2010 kicked off with record low levels of remortgaging, according to lenders’ figures.

Remortgaging in January fell 15% compared to December 2009 and 47% from the level in January 2009, according to new data from the Council of Mortgage Lenders (CML).

A total of 24,000 remortgage deals were sold, according to the CML which represents most of the UK’s mortgage-lending banks and building societies. The average remortgage deal was worth £125,000.

Low interest rates are pushing down remortgaging levels as borrowers coming off fixed rates are finding it easier to revert to a lender’s standard variable rate (SVR).

A CML spokesperson said: “The average SVR has fallen from 4.9% to 3.62%. When people reach the end their fixed-rate deals and look at the costs, they find it may be a better option to go onto the SVR and sit there.”

For borrowers looking for stability and security that prices won’t rise, it could be an option to look at a new fix, added the spokesman. But he also said remortgaging levels are unlikely to rise until mortgage rates start to rise.

Homebuyers were also down in numbers in Janaury, but up from the same period a year ago.

32,000 mortgage deals were concluded by home buyers, a rise of 38% on the year before, although 49% down on December 2009, according to the CML. The average mortgage size was £146,875.

The drop from December was put down to the lowering of the stamp duty threshold, as buyers rushed at the end of the year to buy and avoid the tax.

The change to stamp duty particularly affected first-time buyers looking at cheaper properties – with a 54% drop in the number of loans from December.

The average first-time buyer mortgage was at 75% loan-to-value requiring a £38,350 deposit, with lending an average at 3.08 times income.