There was strong growth in remortgaging in April 2018, with new homeowner mortgages up 36% and buy-to-let remortgages up 32.4% compared to the same month a year earlier, UK Finance’s Mortgage Trends Update has found.
UK Finance thought the large number of customers reaching the end of their mortgage deal rates and speculation that the Bank of England may raise interest rates has driven this rise in remortgaging.
Jackie Bennett, director of mortgages at UK Finance, said: “Remortgaging activity bounced back to strong levels in April, as both homeowners and landlords put their house in order by locking into attractive fixed-rate deals ahead of an anticipated interest rate rise.”
Mark Harris, chief executive of mortgage broker SPF Private Clients,felt increased competition between lenders has bolstered remortgaging.
He said: “Remortgaging is where it’s at with owner-occupiers and landlords taking advantage of competitively-priced mortgage deals.
“With the challenger banks eager to carve out market share, and the big lenders realising they need to offer attractive deals in order to compete, it is good news for borrowers.
“The threat of an interest rate rise may have provided the impetus for many to remortgage but it is looking increasingly unlikely that there will be a rate rise anytime soon.
“The remortgage spike was also caused by a large number of two-year fixes coming to an end. We are finding that a lot of borrowers are locking into five-year money in order to protect from future rate rises and take advantage of cheap 5-year deals.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, agreed the likelihood of interest rates rising was one reason for the spike.
He said: “The strong remortgaging figures are more likely to be the result of borrowers taking defensive positions in anticipation of an interest rate rise which didn’t materialise, whereas the homeowner and first-time buyer numbers are much more encouraging.
“We are seeing a little more property coming onto the market and some realism when it comes to negotiation, which has been sadly lacking for some time.”
There were 26,700 new first-time buyer mortgages completed in the month, some 3.5% more than in the same month a year earlier. The £4.4bn of new lending in the month was 4.8% more year-on-year. The average first-time buyer is 30 and has a gross household income of £42,000.
Jackie Bennett added: “The number of first-time buyers has grown year-on-year, outstripping the number of homemovers. This may reflect the impact of measures such as the recent stamp duty cut and the Help to Buy scheme that are focused on getting more people onto the housing ladder.2
There were 25,100 new homemover mortgages completed in the month, 4.2% fewer year-on-year while the £5.4bn of new lending in the month was 3.6% down year-on-year. The average homemover is 39 and has a gross household income of £55,000.
There were 40,800 new homeowner remortgages completed in the month, some 36% more than in the same month a year earlier. The £7.5bn of remortgaging in the month was 44.2% more year-on-year.
Jon Hall, managing director at Masthaven, said: “It’s been an impressive quarter for lending. This growth can be largely attributed to the increasing number of first-time buyers who are now able to access the property ladder.
“This is testament to the number of solutions now available to this group of borrowers who were traditionally underserved by the market. However, more can still be done as more innovative products are developed.”
There were 5,000 new buy-to-let house purchase mortgages completed in the month, some 5.7% fewer than in the same month a year earlier. By value this was £0.7bn of lending in the month, down12.5% year-on-year.
There were 14,300 new buy-to-let remortgages completed in the month, some 32.4% more than in the same month a year earlier. By value this was £2.3bn of lending in the month, 35.3% more year-on-year.