Remortgaging activity in London reached a nine year high in the second quarter of this year with some 16.9% more completed than in the same period of 2017, new figures shows.
There were 15,200 new home owner remortgages in the capital amounting to £4.84 billion of lending, a rise of 23.2% year on year, according to the latest regional mortgage trends report from UK Finance which represents the majority of lenders in the UK.
There were 6,800 new home mover mortgages completed in London in the second quarter but this was down considerably, by 8.1% year on year and first time buyer mortgages also fell, down 3.7% to 10,300.
Jackie Bennett, director of mortgages at UK Finance, said that the rise in remortgages was boosted by home owners locking into competitive deals amid anticipation of the recent base rate rise.
‘House purchase activity has slowed slightly, with affordability remaining a challenge for many would-be borrowers. This underlines the need for clarity over the future of the Help to Buy scheme after 2021,’ she added.
Shaun Church, director at Private Finance, pointed out that remortgage activity is propping up the London market house purchasing activity is flat. ‘After decades of boom, the lack of home-buyer activity and month on month decline of house prices London marks unchartered waters for the capital’s property market,’ he said.
‘Even first time buyer activity, which has performed encouragingly throughout 2018, has now declined. This suggests that despite easing house price growth, stamp duty exemptions and Help to Buy, affordability remains out of reach for many who rent. This may translate to greater activity in the commuter belt as would-be buyers seek more affordable properties within reaching distance of the capital,’ he explained.
‘Lenders are still displaying a strong appetite to lend, resulting in competitive mortgage rates and deals. With house prices easing and rates still favourable, now is an opportune moment for first time buyers to make their first step onto the housing ladder, although they may wish to look outside of the capital for more affordable deals,’ he added.
The figures from UK Finance also shows that remortgaging in Scotland continues to grow as house purchase activity also softens. There were 8,100 new Scottish home owner remortgages completed in the second quarter, up 9.5% year on year.
As in London the number of home mover mortgages fell, down by 2.1% compared with the second quarter of 2017 and first time buyer mortgages fell too, down by 3.1%.
But Douglas Cochrane, chair of UK Finance’s Scotland mortgage committee, pointed out that the number of first time buyers has bounced back from the previous quarter, but remains down compared to the same period last year.
‘This reflects continued affordability pressures facing many prospective buyers. While the current funding commitment to Help to Buy in Scotland is welcome, clarity over the scheme’s future after 2021 is now needed,’ he added.
Remortgaging in Wales also remains strong with a rise of 17.1% year on year and other lending followed the same pattern as Scotland and London. In Wales the number of home mover loans fell by 2.6% and first time buyer mortgages were down by 2.4%.