January 2018 Sees Increase in Remortgage Applications

The beginning of 2018 has brought about a nine-year high of remortgage applications, according to UK Finance’s latest update on mortgage trends.

As well as this increase, we are also seeing a higher number of first-time buyers and home moves, compared to last year at this time.

In January alone, there were 49,800 new homeowner remortgages. This is most likely a reaction to recent speculation of interest rate rises, with homeowners at the end of their fixed term and looking to lock into another that’s similar or better. Looking at monthly figures, UK Finance has revealed that this is the highest monthly number of remortgages since November 2008, which resulted in a figure of 51,300. Overall, it was 19.1% higher then January 2017. When looking at the monetary figures, the £8.9bn that came from remortgaging in January 2018 was 20.3% more year-on-year.

Jackie Bennett, Director of Mortgages at UK Finance, has said: “While an increase in remortgaging is expected in the New Year as people put their household finances in order, this strong growth is above the seasonal fluctuations we tend to see at this time of year.”

First-time buyer mortgages have also risen this January, compared to last year, seeing a 7% increase. Again, financially there has been a higher yield, with the £4bn of new lending providing an 11.1% increase year-on-year. UK Finance’s update has also revealed that the average age of first-time buyers is 30, with a gross household income of £41,000.

Shaun Church, Director at Mortgage broker Private Finance, has commented: “The first-time buyer market is continuing to flourish. Government initiatives such as Help to Buy and Stamp Duty cuts are clearly starting to bear fruit, and with Theresa May’s pledge last week to galvanise housebuilders into building more homes, it would appear that the prospects of first-time buyers are finally and firmly on the up.”

January 2018 Sees Increase in Mortgage Applications

Looking at the mortgages taken out by home movers, January saw 25,000 completed. Again this was more than in the same month last year, seeing a 6.4% increase. Financially, there has been a 10.2% increase, with £5.4bn of new lending. The age of those moving from one home to another is at an average of 39 years, with a gross household income of £55,000.Although there is a temptation to lock into a mortgage or remortgage before the rates rise again, there are always other factors to consider. We feel it’s worth thinking about other fees that can accompany these deals. You may find extras such as arrangement fees and early repayment charges, which do not apply to every mortgage, so working out the overall cost of going with a specific lender can save you some money.

Ishaan Malhi, CEO and founder of online mortgage broker Trussle, has shared their view: “Borrowers must look beyond the interest rate… and instead focus on the deal’s true cost, which includes fees and incentives. The lowest-rate deals on the market aren’t always as competitive as they may first seem. Talking to a broker is one way to ensure you’re choosing the right deal.”

Overall, the increase year-on-year of these figures looks promising. Despite rising house prices in some regions, and the increase of interest rates, January has shown a strong start to the year for those buying properties. If it is to be believed that these figures reflect panic caused by rising interest rates, then this trend could continue for 2018. With each increase, some might feel eager to lock into a fixed term mortgage in order to avoid future rises. First-time buyers might therefore feel under pressure to find themselves a property as soon as possible.

Simon Heawood, CEO of Bricklane.com has said: “We would like to see more support for Generation Rent to save enough to build up a deposit and get on the first rung of the property ladder, so that this encouraging trend upwards is made sustainable, The government and industry must look at innovative ways to helping first-time buyers save up for their first home deposit.”

As long as support such as Help-to-Buy ISAs, and the removal of Stamp Duty on houses under £300,000 for first-time buyers continues, then the opportunity is there. We look forward to seeing how this support develops in the future.