Over three quarters, some 76%, of remortgage applications via intermediaries resulted in a completion during the second quarter of 2018, up from 70% in the previous quarter, the latest financial figures show.
For the second time in the last 12 months, the number of home owners acting to protect themselves from the effects of higher rates and secure the most affordable deals on offer increased in the quarter directly before a much anticipated, albeit modest, increase in the Bank of England’s base rate.
The data from the latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA) says that a similar spike in activity occurred in the third quarter of 2017 ahead of the first rate rise in a decade in November, from 0.25% to 0.5%. At that time, 78% of applications led to completions, an increase from 59% in the previous year.
IMLA research suggests that 11% of brokers expect the Bank of England to raise rates again before the end of 2018. Although the majority see no change, 28% of brokers predict the remortgage market will continue to grow significantly in the second half of the year.
The quarterly IMLA tracker report examines consumers’ success rate in securing a mortgage via the intermediary channel, by tracking their progress from initial expression of interest through to completion. In doing so, it compares the outcome of first time buyers, home movers, remortgagors, buy to let borrowers and applicants for specialist loans.
Elsewhere in the market, the picture was generally positive in with 88% of all mortgage applications leading to offers. The vast majority, 95%, of brokers reported having a confident outlook for the mortgage industry.
‘The last 12 months have seen the end of a decade of record low interest rates that many borrowers have become accustomed to. The Bank of England’s response to managing rising inflation had been widely anticipated by the industry and consumers, and it is inevitable that many borrowers will have sought to take advantage of opportunities to lock into very low rate deals while these are available,’ said Kate Davies, executive director of the IMLA.
‘While customers who remain on tracker and standard variable rates are having to adjust to a second increase in monthly loan repayments in 12 months, competition in the market remains strong and should ensure keen and competitive pricing,’ she explained.
‘The enhanced affordability rules introduced in April 2014, following the Mortgage Market Review, were specifically designed to ensure that borrowers would be able to absorb rate increases without suffering detriment,’ she pointed out.
‘For those who took out their mortgages before that date, some may be eligible for further support from the commitment, made by more than 90% of lenders in response to the Financial Conduct Authority’s recent Mortgage Market Report to help borrowers switch to better offers,’ she added.
