Banks approve more remortgages

The number of remortgages being given the thumbs up by the main high street banks soared in January, new statistics reveal.

Remortgage approvals rocketed from 67,535 in December to 79,016 last month - a 39 per cent rise on the figure for the same month last year, according to the British Bankers' Association (BBA).

Mortgage approvals for new house purchases, however, plunged by 31 per cent from the previous year although it did strengthen a little in January compared to December rising from 42,343 to 44,288.

The fall will come as no surprise as the BBA also revealed remortgaging made up 49 per cent of all approvals while new house purchase approvals had been "fairly constant and low" for four months. Loans for equity release had also gone into decline.

The BBA's figures also show gross lending was stronger in January than in recent months. It attributes this growth to the strong remortgaging approval levels which feed through to gross lending figures much sooner than figures for house purchases.

Net mortgage lending was also stronger in January, the BBA said, but the average growth rate had stabilised to around 13 per cent in recent months.

David Dooks, BBA statistics director, said the high remortgaging approvals meant despite conditions there was still plenty of competition in the mortgage market.

He said: "Higher gross mortgage lending in January largely reflected very strong remortgaging activity as borrowers sought out the best deals available.

"Although house prices and new loans for house purchase appear to be subdued as the housing market slows, the strength of remortgage would suggest competition for mortgage business and switching remains high."