According to UK Finance, during the first quarter of this year homemover activity increased by 82 per cent compared to the same period last year. This is equivalent to volumes seen in 2007.
FTB numbers also saw strong growth but the report noted that the pandemic rebalanced numbers for the first time in several years. It noted that various support measures for FTBs have buoyed numbers whilst homemover numbers had remained more muted in recent years.
The report said homemover growth outstripped FTB growth in every region, with the strongest rates recorded in the South East, where volumes more than doubled compared to a year ago. Southern regions also recorded increases.
This was attributed to the pandemic increasing homeworking and placing more importance of outside and inside space. This along with the strong equity positions of homeowners led to a “mini exodus”, according to the report.
The report continued that it was unclear at this point whether this was a temporary shift, but it said if it was a more permanent shift this could lead to a rebalancing of property prices across the country.
Managing director of personal finance at UK Finance, Eric Leenders said: “Since the housing market emerged from its shutdown last spring, we have seen a remarkable recovery in demand, which continued through Q1 2021.
“Existing homeowners have taken advantage of the stamp duty concessions, with changing working and living patterns encouraging more to use their existing equity, either to move further afield or to fund further housing purchases for themselves or family.”
Buy-to-let market
The buy-to-let (BTL) market also experienced significant growth in the first quarter with mortgages for purchases increasing by 59 per cent compared to the same period last year.
This was partially attributed to the stamp duty holiday and followed a similar regional pattern to homemovers with London and southern regions recording the strongest growth.
The report said that looking forward, demand from homemovers and BTL landlords would moderate as the stamp duty holiday came to an end in the third quarter, but regional patterns would likely persist.
Refinancing
Product transfers increased by more than a quarter in January compared to the same period last year with 150,000 completed, which the report said was the highest monthly number on record.
UK Finance said remortgaging was typically done at the start of the year as consumers put their finances in order, but that this trend could have been exacerbated by the second lockdown.
It posited that more consumers were using execution-only or online transactions due to the lockdown, and payment deferral on product transfers, meaning that product transfers could be carried out quickly and easily.
The external remortgage market, where extra money is taken out, has also remained robust and accounted for 57 per cent of internal remortgages by March.
There has also been an increased in amounts withdrawn, with average amounts withdrawn in London increasing to £189,000 on average in March.
Deferrals and arrears
Payment deferrals have continued a steady decline since the closure of Covid-19 payment deferral scheme to new applications. Deferrals stood at 80,000 in March.
The report noted that for customers exiting the scheme eight in 10 borrowers capitalised on deferred payments and returned to full payment.
It added that as the scheme is now closed, customers exiting the arrangement was dependent on how the labour market recovered and how the furlough scheme was wound down. It predicted there could be increased volumes of borrowers in need of financial support in the second quarter and beyond.
In the first quarter this year there were 83,600 mortgages in arrears, an increase of just 360 year-on-year.
Early arrears, where the balance outstanding is between 2.5 and five per cent, has fallen. However, this has been offset by growth in higher arrears, where the balance outstanding is more than 10 per cent.
BTL arrears also grew by eight per cent in the first quarter compared to the prior sector, equivalent to around 15,550 landlord mortgages.
