Although there has been a steady increase in the number of people applying for a new home owner loan or mortgage for house purchase over the course of the year so far, this has been more than compensated for by the decrease in activity in people remortgaging their homes in order to obtain a better deal on their loan.

The main reason for this decline in remortgage activity is due to the fact that lenders are not offering attractive loan deals which are able to compete with borrower’s existing home owner loan products which may be on their existing lender’s standard variable rate or on a tracker rate loan.

The Mortgage Advice Bureau, one of the country’s largest home owner loan brokers, has seen a dramatic decrease in the number of borrowers looking for a better deal on their existing home owner loan.

In September this year, remortgages made up just 28.9 per cent of the company’s overall loan deals, compared with 59.3 per cent over the same period twelve months ago. The number of remortgage applications has now fallen for 9 consecutive months and shows no signs of improvement while lending criteria remains as it currently is.

Brian Murphy of Mortgage Advice Bureau said “These latest figures show that lenders still remain extremely cautious with the best deals being largely focused on borrowers with significant deposits and/or equity. Many would be remortgage borrowers are unable to switch due to little or no equity in their properties.

As a consequence, many are reverting to their lenders standard variable rates, which in many cases currently offer good value. The dilemma for many will be, if and when interest rates do rise, the effect that those rises will have on their ability to service their mortgages if they are unable to remortgage to more attractive rates.”