UK Finance reveals strong remortgage activity in October
Remortgage activity surged in October compared to the month and year before, UK Finance data has found.
Homeowner remortgage lending reached £7.3bn in October 2017, an increase of 17.7% year-on-year and 15.9% month-on-month.
Buy-to-let remortgaging activity reached £2.4bn, an increase of 20% both month-on-month and year-on-year.
It’s likely homeowners were persuaded to remortgage in October owing to speculation that the Bank of England would finally raise the base rate, which it did in November.
June Deasy, UK Finance’s head of mortgage policy, said: “Over the last year, the number of loans for remortgaging have been at record levels; this trend looks set to continue further as we head towards the end of 2017 and borrowers seek to take advantage of low interest rates.
“Mortgage repayments as a proportion of income still remain at or close to their historic low point, and despite the recent base rate rise we can expect monthly mortgage payments to remain affordable for the vast majority of borrowers.”
Harry Landy, managing director of Enterprise Finance, said: “It’s encouraging that appetite for lending has picked up again in October.
“After last month’s drop, the remortgage and buy-to-let markets are beginning to gain momentum, which reflects the fact that borrower confidence is high – even at a time of on-going political and economic instability.
“However, although today’s figures are welcome, 2017 has been a turbulent year for the industry, so it’s important not to get carried away.”
Comparatively October’s homemover activity rose by 2.9% from the month before and by 18.6% from October last year.
Meanwhile first-time buyer activity rose by 2% month-on-month and 13.3% year-on-year.
John Phillips, Just Mortgages and Spicerhaart operations director, said: “Although the market has been propped up by the amount of remortgaging throughout 2017, there are encouraging signs for housebuying too.
“The issue of supply and demand continues to weigh heavy on the overall market, but these figures show increases for homemovers, first-time buyers and even buy-to-let purchasers in October.
“This shows a level of supply that has defied expectation. It may be because those people that have been waiting to see what happened to interest rates and Brexit negotiations decided to get on and do what was right for them, rather than waiting for what might be.
“Whether the winter months will prove to be as active is questionable as many are still wary, preferring to sit and wait to see what will be.”
Jonathan Sealey, chief executive at Hope Capital, said: “It is too early to tell what difference the rise in the Bank of England base rate had on the market immediately after the announcement.
“However, it now looks like the threat of the rise was enough to push people into action in the third quarter, which meant greater activity across the board in October.
“The question of affordability is one that has been answered now that interest rates have increased for the first time. People can now see how much extra their mortgages are going to cost, and many will have realised that the increase wasn’t as painful as they had feared.
“If there are further rises in 2018 there may be a ripple effect on consumer confidence. However, if the government manages to reach its target for new housing this could give the market the boost it needs.”