The mortgage market, according to Connells Survey & Valuation, is growing at the “slowest annual rate in two years”. Is the double-dip recession taking its toll?
June saw a rise in the total number of residential valuations, up 16 per cent, representing just 2 per cent on an annual basis.
Difficult conditions for potential buyers are being blamed for the low first time buyer numbers which, although they climbed to 19 per cent, are 1 per cent fewer than the same period last year.
Commenting, John Bagshaw, Corporate Services Director of Connells Survey & Valuation, said:
“Despite making a short-term improvement after the post-stamp duty lull, there are signs that the mortgage market is tightening. The eurozone crisis has dampened banks’ ability to lend, while the double-dip recession is taking its toll on buyer finances. Much rests on the success of the Bank of England’s new funding for lending scheme. If it proves successful, lenders will be able bypass increasingly expensive wholesale markets, boosting the supply of finance and giving the valuations and wider mortgage market a shot in the arm”.
A decline of 6 per cent in the number of remortgagor valuations saw remortgages contribute to the slow annual growth, this is despite a 13 per cent month on month increase. Only one fifth of all Connells’ business related to remortgagor valuations, the lowest for over 12 months. The figures indicate that many would-be remortgagors are not yet ready to relinquish their tracker rate mortgage.
Home owners on the move increased, with 23 per cent more valuations in June than the previous month, contributing to a 4 per cent annual increase.
Annual growth for buy to let investors stood at 16 per cent more than the same period last year, providing a bright spot for the remortgage market, with an increase of 32 per cent more investors looking to remortgage than last month.
John Bagshaw added:
“In a subdued market where finance is hard to secure — especially at higher LTVs — those with equity are better placed to move. With low rates and falling house prices in several areas, homeowners looking to upsize are taking advantage. Landlords, too, have been looking to capitalise on the market. Many are remortgaging to unlock funds to re-invest and boost their portfolios, but we’re also still seeing new investors enter the sector to exploit strong yields and historically high tenant demand.”
While the annual growth rate is disappointing should we not be focusing on the fact that it is still growth rather than a decline?
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