Remortgaging activity increased 18% between January and February. The number of remortgage deals has increased 35% since February 2013.
John Bagshaw, Corporate Services Director of Connells Survey & Valuation, comments:
“We are expecting further good news on the economy when official forecasts from the OBR are released later this week. At the same time, the Chancellor will want to make plenty of political capital out of any other improvements he can announce on Wednesday afternoon. But as more good news rolls in, expectations about the likely timing of an interest rate hike may change, too. It’s likely that forecasts will start to predict an earlier rise, which will increase the cost of mortgages.
“Household budgets are still recovering from the last half decade of wage freezes and economic stagnation. Remortgages are making up a large part of the market as people struggle to make budgets add up – they’re remortgaging to keep monthly payments down. As the likelihood of an impending interest rate hike increases, so will the number of homeowners looking to remortgage as they try to ensure they will still be able to pay the bills in the future.”
The total number of valuations for all purposes has grown by 21% month-on-month, bringing mortgage market activity to levels 27% ahead of February 2013.
John Bagshaw continues:
"We expect double-digit growth to be the norm for some time, as the property industry continues to thrive throughout 2014. But, even at this blistering pace, there is still a long way to go before the backlog of remortgagors, first time buyers, and homeowners who haven’t been able to move is finally cleared.”
While seeing substantial growth, the number of valuations carried out on first time buyer purchases increased more slowly than the rest of the housing market in February, growing 13% month-on-month. However, first time buyer valuations grew 22% compared to the same month in 2013.
The number of buy-to-let valuations increased faster than most other areas of the market in February, reaching levels one third (33%) ahead of February 2013, and one quarter (25%) ahead of January this year.
John Bagshaw comments:
“First time buyers have had a very bad run at it over the last five years. There’s a huge backlog of them wanting to get on the property ladder. A slight moderation in the pace of annual growth this month illustrates this is steady, sustainable growth – this is not a market spiralling out of control. The surge in buy-to-let activity reflects the difficulties still facing many potential new buyers, and the associated strength of demand for rental properties. Raising a deposit still feels like a Sisyphean struggle for millions, and will remain so until wage rises and interest rates start to reward savers again.”
In contrast, the number of valuations carried out on behalf of established home movers accelerated by 32% on a month-on-month basis – the fastest of all market sectors.
John Bagshaw concludes:
“People who, until a few months ago, might have been put off by the economic climate have started to think more seriously about moving. For most of the UK, the spectre of negative equity has receded, and in many parts – not just the South East – there is a palpable sense of optimism.”
