Remortgaging activity remained high in June whilst the remainder of the housing market slowed in anticipation of this month's base rate rise, according to UK Finance.
The trade association’s mortgage trends update, released today (14 August), showed 37,400 new homeowner remortgages were completed in June, an increase of 8.4 per cent on the same month last year, at a value of £6.8bn.
However, the update reported first-time buyer, homemover and buy-to-let home purchase mortgages were all down on levels from the same month a year earlier.
UK Finance recorded 34,900 new first-time buyer mortgages completed in June, 3.6 per cent fewer than in June 2017, and 33,700 new homemover mortgages, down 7.9 per cent on the year before, while buy-to-let mortgages dropped 19.4 per cent to 5,400 last month on the previous year.
Jackie Bennett, director of mortgages at UK Finance, said remortgaging continued to dominate in June as existing two and three year products came to an end and borrowers opted for new deals.
She said: "Despite a boost in recent months, speculation of a base rate rise saw the market remain relatively subdued with year-on-year declines in activity among both first-time buyers and homemovers as customers adopted a ‘wait and see’ approach."
On 2 August the base rate rose to its highest level since the financial crisis, with the Bank of England increasing it to 0.75 per cent.
In response a number of lenders have put their mortgage rates up on their variable rate products.
Ms Bennett said affordability remained a challenge for would-be borrowers as house price inflation remained above earnings growth, despite moderating in recent months.
Vikki Jefferies, proposition director at PRIMIS Mortgage Network and Personal Touch Financial Services, said the key theme of remortgage demand will only become more apparent in the wake of the Bank of England’s rate rise.
Ms Jefferies said: "These figures are not only testament to the hard work that brokers have done to educate their customers about the benefits of remortgaging, but also show that borrowers are eager to lock in favourable rates before any further rate rises."
Ms Jefferies said she would welcome a rise in the number of first-time buyers next month as innovation in the mortgage market continues to heat up, making it easier for these borrowers to access the funds they need.
Mark Harris, chief executive of mortgage broker SPF Private Clients, also expects remortgaging will continue to be popular as those who haven not got around to doing so finally take the plunge.
He said: "With most lenders pricing in the base rate rise before it actually happened, the good news for borrowers is that fixes in particular are still very competitive - now is a good time to fix to protect borrowers from any future rate rises."
Mr Harris said although buy-to-let continues to be a challenge with the harsher tax and regulatory environment putting off novice investors, there are still seasoned landlords committed to the sector for whom it is business as usual.