Remortgaging in London hits nine-year high

Remortgaging in London hits nine-year high

Remortgaging in London reached a nine-year high in the second quarter of this year but house purchase activity in the capital slowed, according to the latest UK Finance figures.

The trade association released a mortgage trends update today (22 August), detailing London’s performance in the second quarter of 2018.

The report found homeowner remortgages in the capital increased by 16.9 per cent on the same quarter in 2017, reaching 15,200 cases and valuing at £4.84bn.

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However, homemover and first-time buyer mortgages dropped on last year’s figures, with 6,800 homemover plans completed, down 8.1 per cent on the same point last year, and 10,300 first-time buyer mortgages, down 3.7 per cent.

Homemover mortgages completed in the capital in the second quarter of this year totalled £2.77bn in value, while first-time buyer mortgages totalled £3.04bn.

The average age of a first-time buyer in London during this time was 32, with a gross household income of £68,000 - the average loan size for this group was £274,749.

Jackie Bennett, director of mortgages at UK Finance, said​ remortgaging in London had reached its highest level in nine years, as homeowners locked into competitive deals amid anticipation of the recent base rate rise.

She added: "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."

Jeremy Leaf, north London estate agent and former RICS residential chairman, said although the figures reflected sales agreed at the beginning of the year, the regional survey was still an important indicator of market strength in the capital. 

He said: "The signs are not great as buyers struggle to recover from an affordability crisis and overpricing - clearly, we need to see more transactions and that will only happen if first-time buyers in particular and home movers generally feel more confident about the future, and we see more realism among sellers."

Matt Andrews, managing director at Mortgages at Masthaven, said it is unsurprising that remortgaging continued to spike - a trend set to continue throughout 2018 as Brexit and further base rate rises threaten borrowers' uncertainty.

He said: "Brokers are already working hard to re-engage with their back books and should continue to utilise this period to lock clients into favourable rates.

"Whilst London is notoriously known for its lack of affordability, house prices are continuing to improve which should attract more first-time buyers - this is likely to be attributed to lenders, particularly specialist lenders, making a conscious effort to provide better access to the necessary funds this group of borrowers need."

Mr Andrews said ideally the average age and gross household income of first-time buyers would be lower but for now the aim was to make purchasing in the capital a reality for as many borrowers as possible.