More borrowers take advantage of lower rates
The number of new remortgages with equity withdrawn rose by 8.3 per cent in June compared to the same month a year prior, according to data collected by UK Finance.
In total there were 16,880 remortgages with extra borrowing completed and 15,230 without extra borrowing in June, the latter coming in 24 per cent lower than in June last year, however.
The number of mortgages for first-time buyers fell by 1.5 per cent in the same time frame, dropping to 32,760, with the total borrowed by this group coming to £5.6bn.
Looking at homemovers, borrowers took out 31,000 mortgages in June, equating to £7bn of borrowing.
Furthermore, there were 5,300 new buy-to-let purchases completed, 3.6 per cent fewer than in June 2018 and there were 12,500 BTL remortgages in the same time frame, representing a drop of 0.8 per cent.
Anderson Harris director Adrian Anderson says: “Many borrowers are taking on extra borrowing when they come to remortgage, with the average increase being just shy of £60,000.
“This is a clear sign that homeowners are staying put and improving or extending, rather than paying the hefty cost of moving home.
“This may be manageable while interest rates are low but it is still money that needs repaying at some point and borrowers should be careful that they do not overstretch themselves.”
Smartr365 chief executive Conor Murphy comments: “Consistent mortgage lending is good news for brokers, as consumer demand remains strong for intermediaries and advice.
“Given the sluggish housing market, the majority of activity is around remortgaging as more and more homeowners choose to improve not move.”
Coreco managing director Andrew Montlake adds: “Homeowners and prospective buyers are wary that lenders could retreat into their shells if it all goes pear-shaped and even raise rates so they are making their move now.
“Lenders are awash with cash and the rates available at present are ultra-competitive. People are worried that could end very quickly if the roof falls in due to a chaotic no-deal Brexit.
“Equally, a lot of prospective buyers are wary that house prices could rebound quite sharply if no-deal proves to be not such a big deal after all, and the balance of power swing back to sellers.
“A lot of households have concluded that there is as much risk to the wait-and-see approach to Brexit as simply getting on with it. Better the Brexit devil you know that the one you do not.”
Source: Mortgage Strategy