Robust remortgage volumes represent a truer reflection of the current mortgage market than current newspaper headlines, says Hometrack.

The housing intelligence and risk business says a wide disparity in lenders’ performances hides the true picture of a much healthier mortgage market than some headlines suggest.

Hometrack says that in contrast to the widely reported Bank of England figures of mortgage approvals falling by 44% year-on-year, the reality is that there has been just a 3% fall in remortgage volumes since this time last year.

It says total mortgage approval volumes are in fact only 24% down during the same period.

Hometrack warns that some of the gloomy assessments in recent weeks could result in self-fulfilling downward spiral in house price expectations.

Gary Styles, strategy, risk and economics director at Hometrack, says: “The wide variation in the performance of lenders across the different sectors highlights the fact that the situation is not as bleak as some may lead us to believe.

“It’s true that lenders are struggling to fund and maintain a good supply of affordable mortgages to the market, but the latest total volumes figures show that the banks are continuing to maintain remortgage lending volumes.”

He adds: “Analyzing the full data reveals a different picture to the headlines.”

With banks continuing to maintain remortgage lending volumes, and an estimated 1.4m borrowers needing to refinance or remortgage their fixed rate deals in 2008, Styles says competition in the sector will intensify.

Styles adds: “HSBC’s decision to match existing borrower current deals if they choose to remortgage to HSBC is a recent example of this.

“As competition increases, I expect to see far more of this risk-based pricing with lenders choosing to focus on lower risk remortgage deals, as opposed to higher LTV house purchase loans.”

Source: http://www.mortgagestrategy.co.uk