Remortgaging volumes soar while purchases hold steady

The number of remortgages completed in May increased sharply compared to the same month last year, rising almost 20 per cent, while purchases dipped slightly, figures from UK Finance revealed.

For these remortgages, the average additional amount borrowed in May was £52,000. Additionally, 19,650 were pound-for-pound remortgages with no additional borrowing, 19.7 per cent more than in May 2018. This is in line with the initial fixed rate period of mortgages coming to an end which is a prompt for customers to review their mortgage.

Encouragingly, despite the number of purchases falling when compared to May 2018, the figures were still up on April 2019. Meanwhile, the buy-to-let (BTL) market also appears to have stabilised over the last year, following the introduction of tax and regulation changes.

There were 5,500 new BTL home purchase mortgages completed in May 2019, the same number as this time last year. There were 15,000 remortgages in the BTL sector, 2 per cent more than this time last year.

In May, overall, 60,150 residential purchase mortgages were completed, down 0.3 per cent from the 60,350 in May 2018, but up from 53,330 in April.

Furthermore, first-time buyer (FTB) levels were up in May, with 30,720 new FTB mortgages completed in the month, 0.5 per cent more than in May 2018, though homemover mortgages dropped 1.2 per cent to 29,430.

However, while purchase volumes were down on May last year, lending values were over £1bn more, recorded at £11.5bn in May 2019 and up from £10.4bn in May 2018. This figure is also up on April, when lending values were at £10.3bn.

Trussle mortgage expert Dilpreet Bhagrath explained that remortgages “continue to drive lending”, demonstrating that homeowners are starting to “engage more with their finances”. However, she noted that Trussle’s research revealed that three quarters of homeowners are unable to correctly define remortgaging, therefore putting them at a “huge disadvantage”.

“Two million homeowners across the UK are losing an average of £375 per month on high interest rates because mortgage switching isn’t currently clear or simple. This is why we’re campaigning for a Mortgage Switch Guarantee to make mortgage switching easier for borrowers and to ensure that lenders commit to greater transparency and address the loyalty penalty in the mortgage market,” Bhagrath stated.

Vida Homeloans director of sales Louise Sedgwick highlighted that FTBs remained “an important part of the mortgages market”, adding that they accounted for the largest part of the property market in 2018 for the first time in 23 years.

“With the average age of a first-time buyer now 32, the industry must continue to support those facing an uphill climb when it comes to buying a home. By providing affordable and sustainable rates, offering innovative, out the box thinking and diversifying product choices, lenders will continue to do their part in driving the UK FTB mortgage market forward,” she said.

Commenting on the FTB figure, Masthaven sales director Rob Barnard said: “While political uncertainty may be impacting house price growth, the upward trend in first-time buyer home purchases highlights that the mortgage market is remaining resilient and is opening up to those wishing to step onto the property ladder.

On specialist lending, Barnard added: "The specialist lending market has increased activity to ensure borrowers from all backgrounds have access to suitable products, enabling first time buyers to reach their home ownership goals.

“With the specialist market’s gross lending rate continuing to surpass that of gross mortgage lending as a whole, it is clear more people are looking beyond the traditional realms of secured borrowing. As specialist lending becomes the ‘new normal’, we would welcome data which shows the number of mortgage approvals by non-high street banks.”

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