Statistics from the British Bankers’ Association (BBA) showed thousands remortgaged during July to take advantage of competitive deals and motivated by fears of an imminent rate rise.
Alex Smith, mortgage and insurance adviser at Capricorn Financial Consultancy, said the mortgage and protection adviser firm had seen surging demand since the May election.
“This is driven by the low cost products on offer, which make the transition from lender standard variable rates more palatable, also driven by the frequent media reports about the possibility of a base rate increase in 2016,” he added.
Andrew Montlake, director at Coreco, said for brokers, the return of the remortgage market is a much welcome boost to business at a time that a shortage of stock to purchase has started to bite.
“This has also helped boost remortgage levels as more people are staying in their existing properties and extending rather than moving on. Although remortgage numbers have increased there is much more work needed from lenders to ensure that all borrowers are able to take advantage of the current crop of fixed rates.”
However, Mark Harris, chief executive of mortgage broker SPF Private Clients, said fixes were no longer as cheap as they had been, but remain ‘ridiculously low’ from an historical perspective.
He added: “While more people are enquiring about remortgaging, there are many who will sit on their hands and wait until interest rates actually start to rise. Anecdotally, the first rate rise is the trigger point for many people remortgaging but it may even be the second or third increase, as that is when there is a significant impact on a household’s expenditure and people then remortgage to ‘save’ money. However, by then the best fixed rates will have long gone.”
Regional lending figures
Meanwhile, Council of Mortgage Lender (CML) figures out today suggested mortgage lending levels remain subdued in London but Northern Ireland saw the highest activity in years from April to June this year.
In Greater London, remortgage activity grew both quarter-on-quarter and year-on-year, however both first-time buyer and house purchase activity were both down against last year.
London is no longer the engine driving the UK’s housing growth, as despite the quarter-on-quarter rise in house purchase, borrower numbers are still down on both preceding years.
Affordability remains an obstacle to activity in the capital, with first-time buyers in London borrowing 3.81 times income and an average loan size of £224,994 in the second quarter, up 5% on the first quarter. The typical gross income of a first-time buyer household was £58,685, again up 5% on Q1.
In contrast, Northern Ireland (NI), saw its second highest lending figures since 2007, with first-time buyers accounting for 57% of house purchase activity. Remortgage lending also rose by a third year-on-year, pushing quarterly remortgage activity to its highest since 2011. The typical loan size for first-time buyers in NI was £81,275 in Q2, up from £78,300 in the first quarter. The typical gross income of a first-time buyer household was £30,000, against £29,352 in the first quarter.
In Wales, house purchase and remortgage figures have been building since the start of the year and rose again in Q2. House purchase activity saw large quarter-on-quarter increases compared to the first quarter of the year, but a slight decline in volume of loans compared to the second quarter in 2014.
First-time buyer numbers increased significantly from Q1, but have fallen year-on-year.
Julie-Ann Haines, CML chair for Wales, said: “House purchase activity appears to have woken up in Wales after traditionally slower levels in the winter months. The uptick in remortgage is, in particular, striking as levels had remained relatively identical over the previous four quarters.”
In Scotland, remortgage, purchase and first-time buyer activity all rose in Q2. Remortgage volumes rebounded out of a stagnant period to total the highest volumes since Q4 2013.
Kennedy Foster, CML policy consultant, Scotland, said: “After three quarters of consecutive decline, it is welcome to see house purchase levels in Scotland bounce back finally. This quarter saw the highest number of loans to those purchasing a home since the second quarter of 2008. With competitive mortgage deals, better affordability than the UK overall and the replacement of stamp duty with a new taxation system that benefits the majority of borrowers, it appears conditions are relatively favourable at the moment in Scotland for those looking to buy a home.”
First-time buyers in Scotland typically borrowed 3.02 times their gross household income, up from 2.84 the previous quarter but less than the UK average of 3.38. The typical loan size for first-time buyers was £101,515 in the second quarter, up from £94,795 in Q1.
