The housing market may be coming under pressure from a variety of sources, but this hasn't curbed the appetite of those seeking to improve their mortgage deal. In fact, remortgaging activity saw a significant increase during June, helping to strengthen the UK mortgage market as a whole.
According to the latest figures from Connells Survey & Valuation, there was a 30% monthly rise in the number of property valuations undertaken in June, which was largely led by remortgaging, with valuations for this purpose soaring by 61% over the month. This sharp increase easily offsets the drop of 30% witnessed in March and April, and builds on the gradual 4% rise in activity seen in May. It also puts remortgaging activity levels 10% higher than those seen in June 2013.
In addition, remortgaging made up 28% of all valuations in the month, which is not just higher than the temporary low of 22% seen in April, but also significantly above the average proportion of 26% recorded in the previous 12 months. The figures indicate that remortgaging has not only recovered from its temporary dip – arguably as a result of tighter regulation following the Mortgage Market Review – but that it's recovering strongly, with consumers keen to capitalise on the low mortgage rates while they are still available.
Other sectors of the market, however, appear to have stabilised somewhat, with overall valuation activity being exactly the same as a year ago, while first-time buyer activity has similarly returned to June 2013 levels after a 17% month-on-month increase.
John Bagshaw, corporate services director of Connells Survey & Valuation, cites two reasons for this dramatic month-on-month growth of remortgaging, as well as the subsequent cooling of other sectors: "Firstly, remortgaging was severely affected by the short-term transition to the new MMR regime, and the temporary backlogs this created. But secondly, pre-MMR there was a real focus on home movers and particularly first-time buyers.
"The latest noises from the regulator and the Bank of England seem to have put a cooler on riskier lending, especially at high income multiples. Equally, the expectation that interest rates may increase this year may have also encouraged borrowers themselves to be more cautious when approaching new mortgage commitments."
So, while current homeowners – particularly those who have built up equity – are keen to see what deals are out there, those who have yet to purchase or who still seek high LTV mortgages are becoming more reluctant to do so. Home-movers also seem to be on the backburner, as although the number of home-mover valuations has increased by 21% month-on-month, activity in this sector is actually 11% lower than in June last year.
"Home-mover activity has been muted due to strong property prices and the serious constraints that remain on many in the 'stretched middle'. Many homeowners are staying put as they continue to recover from the recession and are happy just to sit on an asset increasing in value," explained John Bagshaw.
Whatever your situation, it may be a good time to reconsider your mortgage deal. Mortgage rates are steadily rising in anticipation of an increase to base rate, and the unfortunate fact is that the run of record low rates has come to an end. Now's the time to take a look at what's out there so you can fix to a competitive deal, thereby keeping your payments low for as long as possible. If you're coming to the end of your term but choose to hold off, you may be disappointed in a few months' time…
Check out our best buy tables to find the top remortgage deals
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