Residential remortgage searches jumped 44% year-on-year in September as borrowers returned to the mortgage market following the quieter summer period, new data from Twenty7tec reveals.
Twenty7tec recorded 1,912,458 mortgage searches during September, up 23% from August and 15% compared with the same month last year. Residential activity increased 22% month-on-month and 19% year-on-year, but the most significant movement came from remortgaging.
Twenty7tec recorded 860,951 residential remortgage searches during September, an increase of 40% in a single month and 44% year-on-year. The surge comes as borrowers face renewed uncertainty over mortgage pricing. The Bank of England held the Bank Rate at 3.75% in September, but three members of the Monetary Policy Committee voted for an increase. The Bank also reported that quoted two-year fixed mortgage rates were around 95 basis points higher than before the recent energy shock.
Major lenders subsequently increased fixed mortgage pricing during September, with some rates rising by as much as 0.30%.
Bank of England figures published at the end of September provide further context to the changing market. The effective interest rate on newly drawn mortgages increased from 4.45% in July to 4.60% in August, while the rate on the outstanding stock of mortgages rose to 4.00%.
Previous market analysis has also suggested around 700,000 further households could need to refinance before the end of the year, following approximately one million borrowers whose fixed deals had already ended since February.
The picture for homebuyers was considerably more measured. Residential purchase searches reached 617,709 in September, increasing 8% from August but just 1% year-on-year. First-time buyer searches rose 3% month-on-month to 138,791 but remained 4% below September last year.
Buy-to-let also recorded a substantial month-on-month increase during September. Overall buy-to-let searches rose 27% to 295,007, while buy-to-let remortgage searches increased 34%.
However, the annual picture remained divided. Overall buy-to-let activity was 4% lower than September last year and purchase searches remained 21% down year-on-year. Buy-to-let remortgage searches, by comparison, were 4% higher.
Nathan Reilly, chief customer officer at Twenty7tec, said: “Remortgaging is doing a huge amount of the work. Searches increased 40% in a month and are 44% higher than this time last year. When we see growth on that scale, it tells us that existing homeowners reviewing their borrowing are becoming an increasingly important part of adviser workloads.”
