New figures show that for the second quarter of this year remortgage activity in London reached nine year highs, with 16.9% more deals completed than in the same period of 2017.
UK Finance’s latest regional mortgage trends report shows that the capital saw 15,200 new homeowner remortgages, which amounted to £4.84 billion of lending – a rise of 23.2% year on year.
However, first time buyer mortgages were down 3.7% year on year to 10,300, while the number of new home mover mortgages completed in London in the second quarter also fell by 8.1%, with 6,800 completed.
According to Jackie Bennett, director of mortgages at Finance UK, the rise in remortgages can be attributed to the noting that homeowners are shopping around for better deals in anticipation of the recent rise in the base rate of interest.
‘House purchase activity has slowed slightly, with affordability remaining a challenge for many would-be borrowers. This underlines the need for clarity over the future of the Help to Buy scheme after 2021,’ she added.
Shaun Church, director at Private Finance, suggests that the London property market is currently being propped up by the remortgage activity, as purchasing activity has levelled out. ‘After decades of boom, the lack of home-buyer activity and month on month decline of house prices London marks unchartered waters for the capital’s property market,’ he said.
‘Even first time buyer activity, which has performed encouragingly throughout 2018, has now declined. This suggests that despite easing house price growth, stamp duty exemptions and Help to Buy, affordability remains out of reach for many who rent. This may translate to greater activity in the commuter belt as would-be buyers seek more affordable properties within reaching distance of the capital,’ he explained.
‘Lenders are still displaying a strong appetite to lend, resulting in competitive mortgage rates and deals. With house prices easing and rates still favourable, now is an opportune moment for first time buyers to make their first step onto the housing ladder, although they may wish to look outside of the capital for more affordable deals,’ he added.
The Finance UK figures also point to remortgaging growth in Scotland, coinciding with the softening of house purchase activity. North of the border, first time buyer mortgages fell by 3.1%, but there were a total of 8,100 remortgages completed in the second quarter – a 9.5% increase year on year, while the number of home move mortgages fell by 2.1% compared with last year.
But Douglas Cochrane, chair of UK Finance’s Scotland mortgage committee, pointed out that the number of first time buyers has bounced back from the previous quarter, but remains down compared to the same period last year.
‘This reflects continued affordability pressures facing many prospective buyers. While the current funding commitment to Help to Buy in Scotland is welcome, clarity over the scheme’s future after 2021 is now needed,’ he added.
Meanwhile in Wales, there has been a 17.1% year on year increase in remortgaging and other lending, following the trend set by both London and Scotland, while the number of home mover loans and first time buyer mortgages fell by 2.6% and 2.4% respectively.