Mortgage Advice Bureau’s National Mortgage Index for October reveals that homeowners who remortgaged in October had £140,611 of equity on average, compared with £111,783 in October 2013: a rise of more than a quarter (26%) or almost £30,000.
At the same time, remortgage applications rose 17% since September and 34% year-on-year, suggesting equity gains are prompting more homeowners to seek a better mortgage deal.
However, a gradual cooling of house price growth (ONS data shows a monthly increase of just 0.5%) has also reassured many consumers that they can still afford to buy – purchase applications rose 11% since September and 17% since October 2013.
As a result of significant increases in both remortgage and purchase activity, monthly loan applications reached the highest point of the year in October.
Brian Murphy, Head of Lending at Mortgage Advice Bureau, comments:
“House price growth has often been billed as a cause for concern over the last year, but for many of the UK’s homeowners – including more than 11 million* mortgage holders – the recovery has delivered a long awaited boost to their housing equity. Recovering property values are giving many the leverage they need to negotiate a better mortgage deal with lower monthly repayments, so it’s unsurprising that remortgage applications are rising as a result.
“The fact that annual house price comparisons still remain in double figures might seem detrimental to first-time buyers, but there has been a visible cooling in the rate of house price growth in recent months. This has helped to maintain consumer demand, with purchase applications up by almost a fifth compared to this time last year. Overall year-to-date mortgage applications have also already surpassed the 2013 year total.
“However, it is important that the industry does not become complacent and forget its responsibility towards first-time buyers who are not able to save for a hefty deposit. Widespread availability of higher loan-to-value (LTV) products on new builds as well as existing properties will be vital to give potential buyers the leg-up onto the property ladder they need.”
