Remortgage activity bounces back in April
Remortgage activity bounced back in April, with strong growth in both the residential and buy-to-let sectors.
The latest figures from UK Finance show residential remortgages are up 36 per cent, with buy-to-let remortgages up by 32.4 per cent when compared to figures for April 2017.
Fears of a future rate rises, plus a number of short-term deals coming to an end is thought to have driven this spike in remortgage activity.
In total there were some 40,8000 new homeowner remortgages in the month, worth some £7.5bn. By value this is a 44.2 per cent increase year-on-year.
In the buy-to-let mortgage market there were 14,300 remortgages completed in April, worth £2.3bn. By value this is a 35.3 per cent increase year-on-year.
But these more buoyant figures were not reflected in the number of mortgages arranged for those purchasing property in the residential or buy-to-let sectors.
There were 25,100 new homemover mortgages completed in the month, 4.2 per cent fewer than in April 2017. These mortgages accounted for £5.4bn of new lending, down 3.6 per cent year-on-year.
According to UK Finance the average homemover is aged 39 and has a gross household income of £55,000.
In the buy-to-let market there were 5,000 new home purchase mortgages completed in April, 5.7 per cent fewer than April 2017. By value this was £0.7bn of lending, 12.5 per cent down year-on-year.
However, there was some more positive news regarding first-time buyers. There were 26,700 first-time buyer mortgages completed in April, a rise of 3.5 per cent on the previous year. By value this was £4.4bn of new lending, up 4.8 per cent on April 2017.
The average first-time buyer is aged 30 and has a household income of £42,000.
UK Finance’s director of mortgages Jackie Bennett says: “Remortgaging activity bounced back to strong levels in April as both homeowners and landlords put their house in order by locking into attractive fixed-rate deals ahead of an anticipated interest rate rise.
“This spike was also driven by a large number of fixed-term mortgage deal rates coming to an end.”
She points out that the number of first-time buyers had grown year-on-year outstripping the number of homemovers. This may reflect the impact of government measures such as the recently stamp duty cut and Help to Buy scheme, she says.
SPF Private Clients chief executive Mark Harris says: “Remortgaging is where it’s at with owner-occupiers and landlords taking advantage of competitive-priced mortgage deals.
“The threat of an interest rate rise may have provided the impetus for many to remortgage but it is looking increasingly unlikely that there will be a rate rise anytime soon.”
He adds that many borrowers who were remortgaging were looking to lock into five-year fixes.
Source: Mortgage Strategy