Mortgage Market Briefing – December 2018

The UK remortgage market continues to soar, with the latest data showing the number of remortgage deals at their highest level for a decade.

Figures published by the UK Finance trade body showed that there were 50,500 homeowner remortgages completed during October 2018. This was 23.2% higher than the same month in 2017.

The value of these loans was also significantly up year-on-year. The remortgage market was worth £9.2bn in October, 22.7% higher than the same stage a year ago.

There was growth in the first-time buyer market too, albeit to a lesser extent. Some 32,900 first-time buyers took out a mortgage in the month, 8.2% higher than a year ago. The value of these loans was £5.5bn, 12.2% higher than the same month in 2017.

Sadly, this growth did not extend to the buy-to-let purchase market. The sector’s recent slump continued with just 6,100 new buy-to-let purchase deals completed in October. This was 9% down year-on-year. The value of this lending was £800m, 20% lower than a year ago.

The buy-to-let remortgage data did show that existing borrowers are still active. With a raft of new deals being launched to tempt landlords into the market, the number of buy-to-let remortgages rose by 5.4% to hit 15,700 in October. The value of this lending was up, growing 4.2% year-on-year to £2.5bn.

The rise in first-time buyer mortgages may be due to the low rates available to new buyers. Research by Moneyfacts showed the average rate charged to borrowers with a 5% deposit has fallen month-on-month.

In December the average rate charged at 95% loan-to-value was 3.63%. This is 0.09% lower than the 3.54% average recorded last month. This is also down substantially on the 4.15% recorded in December 2017, despite the Bank of England base rate being higher today than a year ago.

The number of mortgage products available to borrowers with a 5% deposit has increased sharply in the last 12 months. There are now 304 loans available to these customers, up from 217 last December. By comparison, just 17 loans of this kind were available in 2008 in the wake of the financial crisis.

However, buyers of all types face a much higher purchase price if they are looking to move close to a UK national park. A study by Lloyds Bank found houses close to national parks commanded a £121,383 premium compared to similar properties elsewhere in their county.

The price difference was most notable in the New Forest, where prices in the national park were more than £300,000 more expensive than similar properties elsewhere.

While homeowners across the UK enjoyed an unseasonably hot summer, the cost of the heatwave is now being felt. The number of subsidence claims was four times the average in July, August and September as the hot weather dried out the ground and caused issues with many properties.

The Association of British Insurers (ABI) said payouts of £64m on 10,000 properties were made during the quarter. This is much higher than the typical 2,500 cases, worth £14m.

The trade body said this was the highest number of claims for more than a decade.

Richard Sexton – Business Development Director, e.surv Chartered Surveyors

Sources:

https://www.lloydsbankinggroup.com/Media/Press-Releases/2018-press-releases/lloyds-bank/national-parks-house-price-review-2018/

https://www.abi.org.uk/news/news-articles/2018/subsidence-claims-quadruple-to-highest-level-in-more-than-a-decade/

https://moneyfacts.co.uk/news/mortgages/first-time-buyer-mortgage-rates-at-record-low/

https://www.ukfinance.org.uk/competitive-market-drives-highest-rate-of-remortgaging-in-a-decade/