The latest lending data from the Bank of England suggests that the home mortgage market is recovering with approved loans for properties up 6% in October compared to the previous month.
It suggests that the recovery in buyer demand is underway after a slowdown caused by the run up to the referendum on the European Union and the actual vote to leave with 67,518 mortgage approved.
It means that mortgage approvals are now at the highest level since March when activity reached a peak from which the market has steadily declined which was also attributed to the introduction of extra stamp duty on additional homes in April.
‘Housing market activity faltered in the middle of the year, which is likely to reflect uncertainty surrounding the EU referendum and distortions caused by April’s increase in stamp duty,’ said Martin Beck, a senior economic advisor to the EY Item Club.
‘However, mortgage activity has recovered and is now at similar levels to those seen through much of 2015,’ he added.
According to Mark Dyason, director of independent mortgage broker, Edinburgh Mortgage Advice, believes that Brexit has actually spurred people into action rather than driven them away from property.
‘People are aware that rates have never been better and at the same time are uncertain about what’s coming next politically. As a result, they’re moving now rather than risk getting their plans skewered by some other major development in 2017,’ he said.
‘Brexit has created uncertainty but increasingly that uncertainty is causing people to act rather than do nothing. Uncertainty is emboldening buyers to take action. Prices in many areas, and certainly the south of England, are a lot more attractive than they were a year or so ago. In many cases it’s a buyer’s market and they are increasingly taking advantage of this fact,’ he added.
Meanwhile, figures from conveyancing provider LMS suggest that remortgaging is helping the recover. The value of remortgaging climbed to £6.8 billion in October, the highest amount since November 2008 and up by a fifth from last year.
October also saw the highest number of remortgage transactions since January 2009, rising to almost 40,000 with the firm saying that the remortgage rush is driven by record low rates, anticipation of a rate rise and pre-Christmas jitters.
The data also shows that the number of remortgages increased by 26% from 31,500 in September to 39,547 in October home owners looking to lock into record low rates in anticipation of a rate rise in 2017, amid continued political and economic uncertainty due to r Brexit.
‘The remortgage market has enjoyed a revival since September’s post Brexit low. Home owners are remortgaging at levels that have not been seen for almost eight years, when the recession hit, while the frequency of remortgaging is at a seven year high,’ said Andy Knee, chief executive of LMS.
‘There are several key driving forces behind this revival. Some of this is seasonal. In the run-up to Christmas, families are looking to tighten the purse strings, reduce their monthly bills and prepare for the festivities. But last year, we only saw a 7.5% rise from September to October and this is of a different scale. Record low rates are providing the perfect opportunity for homeowners to remortgage and secure monthly savings on their mortgage bills,’ he explained.
‘Another factor is that home owners are cautious of what the future may hold. Political and economic uncertainty stemming from June’s EU referendum result have affected people’s priorities. Families are seeking long term security. While we wait for the outcome of Brexit negotiations some home owners are locking in low rates and fixing their monthly repayments,’ he pointed out.
‘But perhaps the most important factor is the current anticipation of a rate rise in 2017. LMS found that 23% of remortgagors in October expect a rate rise to occur in the New Year. Coupled with ever increasing uncertainty, the likelihood of a rate rise next year has convinced some homeowners that now is the time remortgage,’ he added.
