Remortgaging activity in the UK increased in August, outperforming all other areas of the housing market, according to the latest research.
The number of valuations for remortgaging rose 25% compared to July and on the back of this growth, the number of remortgage valuations is now up by 102% compared to August 2014, the data from Connells Survey and Valuation shows.
However, total valuation activity was more muted in August. The number of valuations across all sectors, including remortgaging, rose by 7% compared to July, up 48% compared to August 2014, driven in large part by remortgaging.
According to John Bagshaw, the firm’s corporate services director it is concern and media attention about an interest rate rise in the near future is the key driver of this surge. ‘Due to the very low Bank of England base rate, there are currently some very appealing remortgaging deals on offer from lenders. But home owners have been influenced by a powerful perception that these deals will not last,’ he said.
He pointed out that underneath the short term surge, remortgaging is also driven by a longer term shift. People are increasingly looking to upgrade their home rather than trade and so, for a slightly different purpose, are also keen to take advantage of cheaper mortgage deals.
Meanwhile, the wider picture looks encouragingly stable. First time buyers and home owners are far more optimistic about the housing market now than they were at this point in 2014 and this is evident from the strong, steady growth seen throughout 2015 so far.
The data also shows that the number of valuations for existing owner occupiers looking to move home has grown by 3% since July. This leaves activity on behalf of home movers up by 30% compared to August 2014.
A similar picture emerges for first time buyers. The number of valuations carried out in August for those looking to take a first step onto the listing ladder rose 1% month on month and 31% on a twelve month basis.
‘Home mover and first time buyer activity has seen sizeable and speedy growth over the last six months, so a period of more stable growth is a sign of consolidation. It shows that these sectors command long term momentum and demonstrates a more stable optimism from households about the future,’ said Bagshaw.
‘For those moving up the ladder, low mortgage rates are combining with listing price growth as a basis for their next purchase. Meanwhile, first time buyers don’t have the benefit of this natural deposit, but are showing remarkable fortitude in the face of price rises, buoyed by a jobs market that is increasingly showing real wage growth,’ he added.
In the only section of the market to see a drop in August activity, valuations for buy to let purposes dipped by 5% on July. Despite this, compared to a year ago, the total number of valuations carried out for buy to let investors rose by 29%.
The slight slowdown the sector experienced this month is likely due to some investors taking a step back to calculate the cost of the Chancellor scrapping certain tax exemptions for buy to let landlords in the Summer Budget, according to Bagshaw.
‘However, the fundamentals of the rental market remain very strong, driven by tenant demand. Even buy to let is showing signs of settling into a positive pattern of strong and steady growth, a pattern replicated across many other sectors of the mortgage market,’ he concluded.
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Source: Property News Spain