Property 

Existing homeowners bolster mortgage market

Existing homeowners bolster mortgage market

Mortgage activity has remained steady across the country as competitive mortgage rates drove existing homeowners to take out new loans, according to new data.

The latest Mortgage Monitor from e.surv found 65,801 residential mortgages were approved during May 2019 — 1.2 per cent up on the same month last year.

According to the report, this growth comes despite activity tailing off in areas such as first-time buyers and mortgages with small deposits dropping 0.7 per cent.

However, the 0.7 per cent drop recorded in May was still well ahead of the 26 per cent decline measured in March, when the country was approaching the first Brexit deadline.

Last month housing experts warned the housing market would face a disaster if the number of first-time buyers entering continued to drop.

Meanwhile existing homeowners have maintained to drive the market forward as mortgage lenders continued to offer competitive deals, the report stated.

The number of people opting to remortgage is expected to reach a peak later this year as those who secured two-year fixed policies at their historic low in 2017 will look to avoid comparatively high standard variable rates of almost 5 per cent.

Richard Sexton, director at e.surv, said: "The doom and gloom in the property market seems a mile away from the positive stories coming out of the mortgage market.

"While few people are moving when they don’t have to, first-time buyers are still desperate to get onto the ladder.

"As for existing homeowners, they are being tempted into the market by near record low interest rates. Those looking to switch could save hundreds of pounds a month by moving to a cheaper deal from a rival lender."

Mid-market borrowers saw the greatest increase in activity in May — from a 47.2 per cent market share to 47.8 per cent — while the number of small deposit borrowers reduced and large deposits remained steady.

This was down to the strength of the remortgage market, according to Mr Sexton, as mid-market borrowers were benefiting the most from switching deals.

Yorkshire held on to its small deposit hotspot title as the region offering the most favourable market conditions for small deposit borrowers, with 34.9 per cent of all loans going to this part of the market.

At the other end of the scale, London was once again the most difficult market for these borrowers as less than a fifth (17.5 per cent) of all mortgages went to those with a small deposit.

Mr Sexton said that few people were likely to move to the other end of the country in search of a cheap house but noted that those in or close to Yorkshire, the north west and the Midlands stood a better chance of getting on the ladder.

Robert Sinclair, chief executive of the Association for Mortgage Intermediaries, said: "As this survey says, activity remains solid and business volumes remain resilient.

"Whilst the first-time buyer and home mover numbers declined slightly, this can be ascribed to consumers sitting on the sidelines as continuing political, economic and Brexit uncertainty dents consumer confidence.