Rising remortgage applications could create an opportunity for alternative lenders to work with brokers, as consumers show an appetite for borrowing once again.
The latest Bank of England Money and Credit Statistics report showed that net mortgage borrowing by UK rose to £4.6bn in December 2019, up from an average of £4.2bn over the previous six months. Meanwhile, approvals for remortgage rose by 49,700 in December, month on month.
These figures, couple with a recent survey indicating that brokers are feeling more positive about working with lenders, suggests that new opportunities may be available for alternative lenders in the property sector.
Rob Barnard, director of intermediaries at Masthaven said that the central bank statistics show that customers are refusing to let wider uncertainty quell their moving plans, and advised brokers to work with alternative lenders to help serve this new customer base.
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“The number of remortgage applications have also continued to climb over the year,” said Barnard. “Brokers told us they have seen this area climb over the last two years, more than any other type of lending. Clearly more and more homeowners are opting to ‘improve not move’ or release equity or funds.
“Given the growth in remortgaging numbers, brokers would be wise to work with lenders who offer good alternatives such as second charge loans and those who have a wide range of lending products in their arsenal to ensure they are offering the best option available to their customer”.
According to the Money and Credit Statistics report, households and businesses started to borrow more money towards the end of last year.
The net flow of consumer credit was £1.2bn – up from £0.7bn in November; while the annual growth rate of consumer credit rose to 6.1 per cent in December, up from 5.9 per cent the previous month.
Meanwhile, UK businesses repaid £2.9bn to the financial markets in December – with £2.7bn of this money coming from net repayments of bonds.
The Bank of England also revealed that the annual growth rate of bank lending was weaker than expected, at just 3.2 per cent, largely due to a lack of borrowing by small- and medium-sized enterprises (SMEs).