Remortgaging activity in August was higher than all other areas of the housing market, according to a new investigation.
Research from Connells Survey and Valuation shows that remortgaging activity rose by 25% during the last month, in comparison to July. What’s more, the number of remortgage valuations is up by 102% compared to August 2014.
Total valuation activity was actually more muted in the last month, with the number of valuations across all sectors rising by 7% from July.
‘Concern and media attention about an interest rate rise in the near future is the key driver of this surge,’ said John Bagshaw, corporate services director of Connells Survey and Valuation. ‘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,’ Bagshaw continued. ‘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.’
Bagshaw believes that, ‘the wider picture looks encouraging stable,’ and that, first-time buyers and home-owners are far more optimistic about the housing market now than they were at this point in 2014.’ He feels that this is evident, ‘from the strong, steady growth we’ve been seeing throughout 2015.’
The number of valuations for already existing owner-occupiers who are searching for a new home has risen by 3% since July. Home mover activity is up by 30% in comparison to August 2014. Similarly, the number of first-time buyer valuations in August rose by 1% month-on-month and by 30% year-on-year.
‘Home mover and first-time buyer activity has been sizeable and speedy growth over the last six month, so a period of more stable growth is a sign of consolidation,’ observes Bagshaw. ‘It shows that these sectors command long-term momentum and demonstrates a more stable optimism from households about the future.’
Remortgaging activity up in August
‘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 part of the market to see a fall in activity during August was valuations for buy-to-let purposes, which fell by 5% month-on-month. However, the total number of valuations carried out for buy-to-let investors increased by 29% year-on-year.
Mr Bagshaw believes that, ‘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 mort