Broker firm Freedom Finance analysed the Financial Conduct Authority’s (FCA’s) product sales data and found this was the first time since Q3 2020 that remortgage sales surpassed other home loans.
There were 92,558 remortgage sales in Q4 2021, the highest since Q1 2020 when 114,503 sales were completed. This was also up from 80,469 sales in Q3 and 72,769 sales in Q2.
By comparison, first-time buyer borrowers made up 89,542 mortgage sales in Q4 while home movers accounted for 75,726 sales.
This indicated a slowdown in the purchase market too, as these numbers were down from the five-year peaks of 112,005 for first-time buyers and 133,890 for home movers seen in Q2 2021
The lower sales to purchasers in Q4 also coincided with impeding rate rises and the withdrawal of the stamp duty holiday.
Andrew Fisher, chief commercial officer at Freedom Finance, said the continued higher-rate environment and slowing property market could drive further remortgage growth in 2022, while debt consolidation could also influence activity in the remortgage and second charge markets.
“Since late 2020, mortgage sales for first-time buyers and home movers rocketed due to pent-up demand from the first lockdown combined with stamp duty cuts, the ability for many households to save more money and a change in working habits driving a race for space,” he said.
Fisher added: “This latest data however indicates that the housing market began to return to pre-pandemic trends in the final quarter of 2021 with remortgage sales outnumbering all other types of home loan.
“The gloomy economic environment and the consecutive rate rises from the Bank of England are only likely to drive further demand in the remortgage market as borrowers look to lock in to fixed rate loans either from variable rate mortgages or as their existing deals come to a close.”
Fisher also said the second charge market was seeing “rapid growth this year” with the value of new business reaching £127m in April, a 54 per cent rise on last year.
He added: “It indicates that as the cost of borrowing rises, squeezing household budgets even further, debt consolidation is rising up the agenda. Second charge mortgages and remortgaging could therefore be an increasingly favourable method of clearing or reducing existing debts for homeowners looking to capitalise on the house price boom from the pandemic and get through the cost-of-living crisis.
“As ever, it is crucial that customers compare products from different lenders to ensure they are getting the best deal they are eligible for and that is the most appropriate deal for their personal circumstances.”