Following the 13% decrease in gross remortgage lending on November’s figures remortgaging now accounts for 23% of the CML’s estimated total gross lending of £11.7bn for December.
Andy Knee, chief executive of LMS, said: “The remortgage market contracted in 2012 owing to exceptionally low levels of activity in the second half of the year.”
There were a total of 310,000 transactions last year, down from 374,000 in 2011, with the total value of these loans falling to its lowest level since 2005 at £2.7bn.
And December’s figure was not only the lowest recorded in 2012 but also the lowest monthly value since the end of 1999.
Knee said this stagnation is reflected across the mortgage market and can partly be attributed to a seasonal lull in homeowner activity.
LMS estimated that the total number of remortgage loans advanced fell by 14.2% to 19,279 in December, down from 22,470 in November.
Knee said: “The drop in activity in the second half of 2012 was widely anticipated due to the introduction of the Funding for Lending Scheme which is widely expected to bring a pick up to the mortgage market in 2013.
“December’s drop can also be attributed to savvy homeowners holding off for more competitive products in the New Year combined with the normal seasonal lull in activity in the months leading up to Christmas.”
However the average remortgage loan amount increased for the fifth consecutive month in December, rising by £1,980 to £140,553.
December’s figure is 6.1% higher than the same time in 2011 at £132,528 and the highest it has been since January 2009.
While total lending is down those remortgaging are borrowing more.
Knee added: “We expect FLS to increase competition between lenders and this should result in better deals for the mortgage customers and a restoration of growth in the market in 2013.”
