The number of homeowners remortgaging dropped to a ten year low in August as a result of low interest rates and a lack of appropriate mortgage deals.
The Council of Mortgage Lenders (CML) said that only around 25,000 remortgage loans were advanced during the month, 13% lower than in July and 19% down on a year earlier.
By accounting for only a quarter of loans advanced in August, the CML said it was the lowest proportion of remortgaging activity it had witnessed in over 10 years.
With interest rates expected to remain low for some time to come, the CML explained there was little incentive for borrowers to move away from the low standard variable rates they revert to at the end of their mortgage tie-in periods.
It added that remortgaging activity was also likely to remain low in the coming months as a result of the ongoing tightness of credit conditions which meant that some borrowers were unable to access new refinancing deals.
Meanwhile, the number of loans agreed for people purchasing homes also dropped over the month, but rose slightly compared with a year earlier.
First time buyers also continued to struggle to get on to the property ladder during August, with the number of loans agreed falling compared with July and a year earlier.
However, the size of the deposit first time buyers are having to find dropped slightly to 21% during the month, down from 24% in July.
Despite mortgage deals not being as freely available as they once were, there are still some competitive deals available if you search hard enough.
Yorkshire Building Society currently has a fixed rate remortgage deal available at 3.29% to 30 November 2012, while first direct has a variable rate remortgage on offer at 2.59% for term.
Meanwhile, for first time buyers, Yorkshire Building Society has a number of mortgage deals available to borrowers with only a 10% deposit. Northern Rock and first direct are also offering deals to those with a 15% deposit.
The director general of the CML, Michael Coogan, said he expects a quiet mortgage market to continue for the foreseeable future, warning that the comprehensive spending review would contain austerity measures likely to further dampen consumer appetite to borrow.
"We would expect lending to slow more significantly, year on year, as we head towards the end of the year, and it is unlikely that the uncertain environment will encourage a tick up of mortgage activity in 2011," he added.
"With some uncertainty surrounding future house price trends, we would expect a muted market in the next few years."
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