Mortgage Market Briefing – July 2019

Competition in the mortgage market remains strong, with mortgage rates falling since the turn of the year.

Data published by Moneyfacts shows that the average two-year fixed rate mortgage has fallen from 2.52% in January to 2.49% in July.

There was also a similar fall in the five-year market, where the average rate dropped from 2.94% to 2.85% during the same time frame. Mortgage lenders have repeatedly cut rates as they seek to entice existing homeowners into the remortgage market, and fight for the attention of first-time buyers.

But young buyers continue to find it difficult to raise a suitable deposit. Especially since, despite a recent slowdown, the overall trend in the market has been one of growth.

Figures from the Office for National Statistics showed that the average UK house price rose by 1.2% in the year to May, although this is down on the 1.5% annual growth rate recorded in April.

The average house in the country now costs £229,000, £2,000 higher than 12 months ago.

The major reason for the slowdown has been the London property market. Prices in the capital dropped by 4.4% in the last 12 months, dragging down the national average. The typical home in the capital sold for £457,000 in May, making it the most expensive region to purchase property.

On a national level, house prices in Wales grew by 3% in the last year to hit £159,000, this put it ahead of Scotland, which saw a 2.8% rise to £153,000. Prices in England increased by 1% during the year to hit £246,000 while growth of 3.5% in Northern Ireland left the average price at £135,000.

There was a modest increase in the number of first-time buyers in the last year, according to UK Finance figures. Some 30,720 new deals were completed in May 2019, 0.5% higher than a year ago.

The homemover market saw a slight decline in the same time frame, falling 1.2% to 29,430.

It was the remortgage market that shone this month, as 21,370 new remortgages with additional borrowing were completed, 19.8% higher than a year ago. A further 19,650 pound-for-pound remortgages (with no additional borrowing) were finalised. This represents a 19.7% rise year-on-year.

Meanwhile the buy-to-let market continues to struggle. Just 5,500 new purchases were made during May, flat compared to last year. There was a slight increase in landlords remortgaging, with the market growing 2% in the last 12 months to hit 15,000 completions in May.

Homeowners could be rewarded with cheaper mortgage rates under Government plans to promote “green” lending.

A £5m fund has been established to help promote so-called green mortgages, which offer lower interest rates to customers who make energy efficient upgrades to their properties.

This can include installing solar panels, adding insulation to the property’s walls or taking other energy saving measures. The Department for Business, Energy and Industrial Strategy said it would also try to help owners of older properties retrofit their homes to save energy.

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

Sources:

https://moneyfacts.co.uk/news/mortgages/average-mortgage-rates-on-hold-despite-falling-swap-rates/

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/may2019

https://www.ukfinance.org.uk/data-and-research/data/mortgages/lending-trends

https://www.gov.uk/government/news/homeowners-could-cut-mortgage-rates-bills-and-emissions-with-newgreen-mortgages