Borrowing by home movers increases 20% by value in the last year
Homeowners showed resilience with borrowings from home movers rising to £8.4 billion up 20% compared to August last year.
The latest research from UK Finance shows an increase in activity in August with the amount borrowed by home movers increasing from £7.0 billion in 2016 to £8.4 billion this year.More home movers have been making house purchases with a rise from 34,100 last year to 38,500 in August 2017, an increase of 17.0%.
June Deasy UK Finance’s head of mortgages policy said, activity picked up in August and recent resilience ensured that borrowing by home movers was at its highest since March 2016.
In contrast the number of buy-to-let investors is lower for the month at -4.4% while the value of borrowings is -4.4% down over this period.
Higher demand from first time buyers
Over the month demand from first time buyers was up 13.5% with numbers rising from 32,900 in July to 38,500 in August.In terms of the value of borrowing this has increased from £4.9 billion last month to £5.7 billion this month and the average mortgage is £140,035.
The average first time buyer income is £41,254 and the multiple over borrowings has increased from 3.60 to 3.63 although the loan to value (LTV) has remained the same at 85% of the purchase value.
For home movers average income has increased over the year by 1.1% and is now at £56,087 with the multiple over borrowings increasing from 3.27 in August 2016 to 3.40 today.
Home movers have higher levels of equity than first time buyers with an LTV of 72.0% and average mortgage of £182,750.
Rate rise threat sees more remortgages
Homeowners are concerned with the risk of higher interest rates and remortgage buyers are securing deals while the cost of borrowing is low.June Deasy UK Finance said over the last 12 months, the number of people remortgaging has been higher than in any period since late 2009.
With mortgage rates close to historic lows and the likelihood of a rise in official rates moving closer, the popularity of remortgaging looks set to continue, says Ms Deasy.
The number of remortgage buyers was up 4.9% over the last year from 35,000 in August 2016 to 36,700 this year.
By value the total borrowed is 8.5% higher from £5.9 billion last year to £6.4 billion in August 2017 although this is slightly lower than the figure for last month.
For older homeowners there is also significantly higher activity with equity release mortgage buyers accessing wealth in their property while the cost of borrowing is competitive.
What are your next steps?
Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything such as repay an interest only mortgage or even gift to a family member or friend.
Learn more by using the mortgage monthly cost calculators, property value tracker chart and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
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