Mortgage market in UK saw stronger annual growth in May
The mortgage market in the UK is seeing stronger activity with the remortgage sector in particular recording strong annual growth in the year to May 2019, the latest industry figures show.
There were 30,720 new first time buyer mortgages completed in May, up 0.5% compared to the same month in 2018, according to the figures from UK finance, and there were 29,430 home mover mortgages completed, a fall of 1.2%.
But in the remortgage market there 21,370 new completions with additional borrowing, up 19.8% with an average additional amount borrowed of £52,000. Additionally, 19,650 had no additional borrowing, up 19.7% year on year.
And the buy to let mortgage market is showing signs of shaking off weakness as there were 5,500 new buy to let home purchase mortgages completed, unchanged year on year while there were 15,000 remortgages in the buy to let sector, up 2% year on year.
‘We can see first time buyer completions are starting to settle, although with the huge numbers over the past year or so this is no great surprise, and that home buyer mortgages are up slightly,’ said , Richard Pike, sales and marketing director of Phoebus Software.
‘But the big news here is the remortgage figures. A lot of the straight remortgage activity can be attributed to the fact that many fixed rate mortgage deals are coming to an end, but I think we are also seeing a bit of a reaction to the ongoing political turmoil in the UK. There is still a great deal of uncertainty and many people are looking to fix their deals in now so that they have a bit more of control over their finances for the next few years,’ he pointed out.
‘I think the rise in additional borrowing is likely linked to the relative slowdown in purchase. In the current political climate, people are reluctant to move but are instead looking to borrow more to fund home improvements and extend rather than upsize,’ he added.
It is really promising to see that people are starting to engage more with their finances, according to Dilpreet Bhagrath, mortgage expert at online mortgage broker Trussle, but the firm’s research shows that three quarters of homeowners are unable to correctly define ‘remortgaging’.
‘Many borrowers are being put at a huge disadvantage by not truly understanding the terminology used in their mortgage agreement. Two million home owners across the UK are losing an average of £375 per month on high interest rates because mortgage switching isn’t currently clear or simple,’ said Bhagrath.
Nick Chadbourne, chief executive officer of conveyancing solutions provider LMS, believes that the positive lending activity is good news for the market, and remortgaging continues to help drive overall performance.
‘Longer term fixes remain the most popular products, with LMS data showing 44% of borrowers are opting for a five year fixed rate. As home owners prefer to stay put, it’s no surprise to see lenders offering increasingly competitive remortgage deals,’ he explained.
‘Continuing growth in demand for both new enquiries and completions is expected as we move through the summer with interest rates expected to remain at near record lows. There are great opportunities out there for borrowers to remortgage and save on their monthly repayments,’ he added.