Remortgaging levels soar whilst house purchasing slows
Recent figures, published by UK finance, have highlighted a clear correlation between the recent interest rate rises and the property market in June.
The main headline figures are not fantastic reading for the month of June as all house buying statistics suggest that they are down on the month of June from 2017.
The 34,900 first-time buyer mortgages that completed in June were 3.6% fewer than in the year earlier.
Similarly, the 33,700 new homemover mortgages in June were 7.9% down on 2017 figures.
More worryingly still, the 5,400 buy-to-let (BTL) mortgages is a decrease of 19.4%; further highlighting the difficult market for buy-to-let landlords because of recent tax increases and interest rate rises.
However, the 12,600 buy-to-let remortgages completed in June are consistent with figures published in 2017 suggesting that existing landlords have remained in the market, as opposed to fears that they will be leaving in droves because of recent constraints.
In stark contrast to this, remortgaging levels have increased from the figures taken from June 2017. The 37,400 remortgages were an increase year-on-year of 8.4%. It is thought that the interest rate rise was an attributing factor to people looking to remortgage their property.
Jackie Bennett, Director of Mortgages at UK Finance said: “Remortgaging continued to dominate in June with borrowing figures up 13 per cent on the same period last year as existing two and three year products came to an end and borrowers opted for new deals.
“Despite a boost in recent months, speculation of a base rate rise saw the market remain relatively subdued with year-on-year declines in activity among both first-time buyers and homemovers as customers adopted a ‘wait and see’ approach.
“House price inflation has moderated in recent months, yet it still remains above earnings growth, and so affordability is still a challenge for would-be borrowers.
“And although the full impact has yet to be felt, tax and regulatory changes continue to bear down on borrowing activity in the buy-to-let purchase market.”
Recent interest rate rises, stamp duty confusion, hot weather and heat waves are all potential influences to the recent monthly downturn in the property industry.
Should property professionals worry about this recent blip? Or, will the market bounce back once these factors have reached an equilibrium?