UK Remortgages Held Back by Market Conditions

As we have already reported, the figures published by the Council of Mortgage Lenders suggest that the number of mortgage loans taken out by UK borrowers in October 2009 hit the 2-year high as the activity on the British property market has been vigorous.
According to the CML data, an average of 55,000 mortgages were granted to borrowers for home purchases in October 2009; the figure is almost double of that seen in January 2009, when the number of mortgages stood at 23,000, and also a 9% increase on the figure seen in September 2009.
Meanwhile, the number of mortgages taken out by first-time buyers and people wishing to remortgage remained unchanged from September.
The situation, however, can be explained by favourable market conditions (such as house price rises and low interest rates), of which cash-rich borrowers are taking advantage. The number of people moving homes rose by 15% between September and October, with many of them targeting tracker mortgage deals.
Commenting on the figures, director general of the Council of Mortgage Lenders, Mr. Coogan, said that the UK still sees a “two-speed mortgage market”, where cash-rich borrowers are set to move homes or buy properties, while few borrowers are encouraged to refinance their loans. Little incentive for people to remortgage, says Mr. Coogan, holds back the recovery of the UK remortgage market.
The recent improvements on the UK mortgage market, however, have not yet been reflected in housebuilders’ activity. According to official figures, the number of private housing orders fell by 1% in the 3rd quarter of 2009 compared to the same time last year.
Meanwhile, social housing construction grew by 10%, suggests the report of the Office for National Statistics. Such a sharp rise in social housing construction can be easily explained by extensive investments of the UK Government into affordable housing.