Savvy homeowners are remortgaging their properties to get the best new deals on the market, new figures have revealed.
Mortgage borrowing fell by 25% in January, the Council of Mortgage Lenders (CML) has revealed in its latest report, although remortgages were up 35% on the previous month.
Home-owners borrowed £8.4bn for house purchases in January, down 25% month-on-month. They took out 46,200 loans, down 27% on December but up 5% on January 2015.
First time buyers took out 21,400 loans totalling £3.3bn over the same period. This was down 28% month-on-month but up 6% year-on-year.
Those moving home borrowed £5.1bn, down 24% on December but up 11% on last year's figures. Altogether they took out 21,400 loans, a decrease of 28% month-on-month but an increase of 3% on January 2015.
However, remortgagors borrowed £5.8bn, up 35% on December and 32% compared to a year ago. This totalled 33,100 loans, up 28% month-on-month and 19% compared to a year ago.
The buy-to-let market also performed well. January 2016 figures show lending was up 9% month-on-month and 42% year-on-year. This came to 23,100 loans in total, of which £13,400 were for remortgages, up 3% compared to last December and up 31% compared to January 2015.
After introducing seasonally adjusted figures for the first time, CML director general Paul Smee said: "While the unadjusted data appears to show large falls in January compared to December, stripping out the usual January lull we see a general picture of flat house purchase lending but a significant uptick in remortgage activity, as borrowers continue to seek attractive new deals despite the lower-for-longer expectations for interest rates."
The figures also revealed the number of first-time buyers was at its lowest monthly level since February 2015. What's more, the proportion of income first-time buyers are committing to capital and interest repayments remained at its lowest level since records began in 2005.
The CML insist the fall in new purchasers in January was down to seasonal factors. Home mover activity was also affected by the seasonal lull, with January experiencing the lowest number of home mover loans advanced for house purchase since February 2015.
In contrast to house purchase lending, increases in remortgage lending to home-owners resulted in the highest lending borrowed in a single month for remortgage in the UK since January 2009.
The CML's members undertake around 95% of all residential mortgage lending in the UK. There are currently 11.1 million mortgages in the UK, with loans worth over £1.3 trillion.