Remortgaging figures driven to 10 year high by rate rise

The latest data and analysis from UK Finance has revealed that during July there were 46,900 new homeowner remortgages completed in the month - a 23.1% against the same month a year earlier. The £8.7bn of remortgaging in the month was 26.1%more year-on-year.

Related topics:  Finance News
Warren Lewis
12th September 2018
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UK Finance reports that there were 32,600 new homemover mortgages completed in the month. This figure is 3.8% down when compared to the same month in the previous year. The £7.3bn of new lending in the month was the same year-on-year. According to UK Finance data, the average homemover is 39 and has a gross household income of £57,000.

First time buyer numbers were up slightly in July with 31,400 new first-time buyer mortgages completed. UK Finance revealed that this was a 1% rise against the same month a year earlier. The £5.4bn of new lending in the month was 5.9% more year-on-year. UK Finance suggests that the average first-time buyer is 30 and has a gross household income of £42,000.

There were 5,500 new buy-to-let home purchase mortgages completed in the month, some 14.1% fewer than in the same month a year earlier. By value this was £0.8bn of lending in the month, 11.1% down year-on-year.

There were 14,700 new buy-to-let remortgages completed in the month, some 7.3 per cent more than in the same month a year earlier. By value this was £2.4bn of lending in the month, 9.1%more year-on-year.

Jackie Bennett, Director of Mortgages at UK Finance said: “The residential remortgaging market saw its strongest July in over a decade, as homeowners pre-empted the latest Bank of England rate rise by locking into attractive fixed-rate deals.

There was also considerable growth in remortgaging in the buy-to-let sector, showing that while recent tax and regulatory changes are impacting on new purchases, many existing landlords remain in the market. The number of first-time buyers has returned to modest year-on-year growth. However, affordability remains a challenge for many prospective borrowers, underlining the importance of clarity over the future of schemes such as Help to Buy.”

Suchit Sethi, of cashbackremortgages.co.uk, comments: “It is little surprise that the residential remortgaging market had the strongest July in a decade, as savvy homeowners looked to lock in the best rate ahead of August’s interest rate rise. The MPC’s decision was effectively a formality with the weeks preceding the decision full of hints, briefings and well-informed chatter.

Those who failed to remortgage missed the boat this time, as lenders have sought to pass on the interest rate rise in full. However it is important to consider the fact that new homeowner mortgages are down again compared to last year, painting a concerning picture of the state of the UK housing market.

Buy-to-let mortgages are also down, further evidence that the Government’s tax changes have led to the sledgehammering of the BTL industry - arguably perpetuating the housing crisis at the worst possible time.

The crucial question is will we see any kind of recovery in the housing market before the country gets real clarity over Brexit? Seeing as that might not come until late March, the situation could be grave.”

Ross Boyd, founder of mortgage platform, Dashly.com, said: “With the prospect of an August rate rise focusing their minds, July saw a mass remortgage mobilisation among UK homeowners.

It was the month UK homeowners collectively woke up and smelled the coffee of rising interest rates. While the base rate is rising, borrowing rates for now remain historically low and homeowners are increasingly choosing to fix the roof while the sun is shining.

The stampede to remortgage is now reaching fever-pitch, with the more hawkish monetary policy outlook in the US rippling across the Atlantic to the UK. Homeowners are aware that the rate narrative of the past decade is changing. They understand that they need to act or risk exposing themselves to rising rates and the increased pressure on their finances that this will bring.

Meanwhile the buy-to-let market continues its steady decline with a huge loss of appetite for this kind of investment thanks to punishing changes to the tax regime. That trajectory is unlikely to change any time soon and for many the sector is terminal."

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