Remortgaging drives valuation activity
Remortgaging now accounts for 17% of Connells’ valuations – the highest proportion since January 2009.
Overall activity fell month-on-month, with total valuations down by 16% compared to September. Connells said this was largely due to October being a shorter working month than October. The monthly fall was lower than last year’s, when activity fell by one fifth between September and October.
Ross Bowen, managing director of Connells Survey and Valuation, said: “We may be seeing the approach of winter dampen the number of buyers on the market, but valuation activity is in better shape than last year. And that’s including the surge in late 2009 when buyers rushed to buy properties before the end of the stamp duty.
“Higher remortgaging levels are playing their part. Thousands of homeowners, concerned over the direction of house prices, are delaying purchases. Instead, many are getting their finances in order for a longer stay. With cheaper fixed rate deals on the market and concerns over a potential interest rates hike, those who can afford to are remortgaging to avoid a future jump in monthly mortgage repayments.”
First-time buyer activity dipped in October, with the number of valuations for first timers down 23% compared to September. This represented a fall of 29% compared to October 2009.
Bowen added: “We are still seeing many first-timers being reined in by strict lending criteria. And confidence is also a factor, given the uncertainty over employment situations and the impact of the comprehensive spending review. But there’s also a growing supply of properties available as well as signs that vendors are beginning to become more flexible over the prices sought.”
The number of valuations for buy-to-let dropped slightly in October, falling by 14%, although October’s activity represented a 45% increase on last October – albeit from a low base. The number of homeowners on the move also slowed, falling by 11% – although October’s activity was on a par with last October.
“The housing market has shown a strong resilience in the past year, but it is facing strong headwinds in the medium term,” said Bowen. “Unemployment will rise, with public spending cuts slashing nearly half a million jobs in the next four years.
“Whilst there have been some positive developments recently, with lenders increasing activity and some new entrants, lending is unlikely to loosen much in the near short-term given the uncertainty around the repayment of the government’s special liquidity scheme.”