Remortgaging rises as home buyer activity slows in the UK
There was a rise of 8.3% in remortgaging in the UK in June 2019, with some 16,880 new mortgages completed in this sector of the lending market, the latest industry figures show.
The data from UK Finance also shows that there were 32,760 new first time buyer mortgages completed in June 2019, down 1.5% fewer than in the same month in 2018 while there were 31,000 home mover mortgages, down 3.6% year on year.
There were 5,300 new buy to let home purchase mortgages completed, down 3.6% that in the same month last year and there were 12,500 remortgages in the buy to let sector, down 0.8%.
According to Dave Harris, chief executive officer of equity release lender more 2 life, the figures show that while re-mortgaging continues to be an attractive option for home owners, in the current economic and political uncertainty, some borrowers are adopting a wait and see approach to buying and selling, so re-mortgaging to improve an existing property is becoming increasingly popular.
Daniel Hegarty, chief executive officer of online mortgage broker Habito, also believes that the climate is affecting lending. ‘Even accounting for a seasonal lull, mortgage lending in June was down across nearly all buyer types including first time buyers, home movers and buy to let landlords year on year for June. It’s really no surprise given the current political and economic uncertainty that the only area of growth in lending is from home owners remortgaging for additional borrowing,’ he said.
‘Flat property prices don’t seem enough to tempt people to look in estate agents’ windows. Stamp duty is a hefty charge on top of the purchase price, plus other extras such as estate agent fees and conveyancing fees make the average cost of just moving home around £11,000. In this climate, it’s no wonder that many people are opting to remortgage to release the money to extend or improve their home instead,’ he explained.
‘For many people, remortgaging is a way to realise the dream of upsizing for more space either by extending into the loft, building a conservatory or even digging out the basement. Even small improvements such as an update to a kitchen, bathroom or garden can add value to your home and improve a family’s quality of life,’ he added.
But Mark Gordon, director of mortgages at comparethemarket.com, pointed out that there are some good deals around for those buying. ‘First time buyer numbers have declined slightly, but this group continues to drive activity in the property market,’ he said.
‘Would-be home purchasers would appear to be doing all they can to take advantage of low rates and competitive deals. The boom in remortgages, up more than 8% from this time last year, is in line with the initial fixed rate periods coming to an end, suggesting that borrowers are more actively seeking new fixed term deals rather than rolling onto a standard variable rate,’ he added.