Remortgaging activity outperformed all other sectors of the housing market in August, according to new research from Connells Survey & Valuation.
The number of valuations for remortgaging increased by 25% in August compared with July. As a result, the amount of remortgage valuations grew by 102% over the last 12 months.
Total valuation activity was slower in August. The number of valuations across all sectors, including remortgaging, rose by 7% monthly. Activity increased by 48% compared with August 2014, mostly driven by remortgaging.
Corporate Services Director of Connells Survey & Valuation, John Bagshaw, says: “Concern and media attention about an interest rate rise in the near future is the key driver of this surge.
Remortgaging Activity Surged in August
“Due to the very low Bank of England base rate, there are currently some very appealing remortgaging deals on offer from lenders. But homeowners have been influenced by a powerful perception that these deals will not last.
“Underneath the short-term surge, remortgaging is also driven by a longer term shift. People are increasingly looking to upgrade their home rather than trade, and so, for a slightly different purpose, are also keen to take advantage of cheaper mortgage deals.
“Meanwhile, the wider picture looks encouragingly stable. First time buyers and homeowners are far more optimistic about the housing market now than they were at this point in 2014, and this is evident from the strong, steady growth we’ve been seeing throughout 2015.”
The amount of valuations for existing owner-occupiers looking to move house has increased by 3% since July. As a result, activity on behalf of home movers rose by 30% from August 2014.
First time buyer activity was similar. The number of valuations conducted in August for those looking to buy their first home rose by 1% monthly and 31% year-on-year.
Bagshaw continues: “Home mover and first time buyer activity has been sizeable and speedy growth over the last six months, so a period of more stable growth is a sign of consolidation.
“It shows that these sectors command long-term momentum and demonstrates a more stable optimism from households about the future.
“For those moving up the ladder, low mortgage rates are combining with property price growth as a basis for their next purchase. Meanwhile, first time buyers don’t have the benefit of this natural deposit, but are showing remarkable fortitude in the face of price rises – buoyed by a jobs market that is increasingly showing real wage growth.”
The only sector to see a fall in August activity was buy-to-let, in which valuations dropped by 5% on July. Despite this, the total number of valuations carried out for buy-to-let investors increased by 29% compared to last year.
He concludes: “Buy-to-let has retained its winning popularity with investors. The slight slowdown the sector experienced this month is likely due to some investors taking a step back to calculate the cost of the Chancellor scrapping certain tax exemptions for buy-to-let landlords in the summer Budget.
“However, the fundamentals of the rental market remain very strong, driven by tenant demand. Even buy-to-let – once a rollercoaster sector in terms of growth – is showing signs of settling into a positive pattern of strong and steady growth, a pattern replicated across many other sectors of the mortgage market.”1