Posts with tag: remortgaging activity

Remortgaging Activity Surged in August

Published On: September 8, 2015 at 11:43 am

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Remortgaging activity outperformed all other sectors of the housing market in August, according to new research from Connells Survey & Valuation.

The number of valuations for remortgaging increased by 25% in August compared with July. As a result, the amount of remortgage valuations grew by 102% over the last 12 months.

Total valuation activity was slower in August. The number of valuations across all sectors, including remortgaging, rose by 7% monthly. Activity increased by 48% compared with August 2014, mostly driven by remortgaging.

Corporate Services Director of Connells Survey & Valuation, John Bagshaw, says: “Concern and media attention about an interest rate rise in the near future is the key driver of this surge.

Remortgaging Activity Surged in August

Remortgaging Activity Surged in August

“Due to the very low Bank of England base rate, there are currently some very appealing remortgaging deals on offer from lenders. But homeowners have been influenced by a powerful perception that these deals will not last.

“Underneath the short-term surge, remortgaging is also driven by a longer term shift. People are increasingly looking to upgrade their home rather than trade, and so, for a slightly different purpose, are also keen to take advantage of cheaper mortgage deals.

“Meanwhile, the wider picture looks encouragingly stable. First time buyers and homeowners are far more optimistic about the housing market now than they were at this point in 2014, and this is evident from the strong, steady growth we’ve been seeing throughout 2015.”

The amount of valuations for existing owner-occupiers looking to move house has increased by 3% since July. As a result, activity on behalf of home movers rose by 30% from August 2014.

First time buyer activity was similar. The number of valuations conducted in August for those looking to buy their first home rose by 1% monthly and 31% year-on-year.

Bagshaw continues: “Home mover and first time buyer activity has been sizeable and speedy growth over the last six months, so a period of more stable growth is a sign of consolidation.

“It shows that these sectors command long-term momentum and demonstrates a more stable optimism from households about the future.

“For those moving up the ladder, low mortgage rates are combining with property price growth as a basis for their next purchase. Meanwhile, first time buyers don’t have the benefit of this natural deposit, but are showing remarkable fortitude in the face of price rises – buoyed by a jobs market that is increasingly showing real wage growth.”

The only sector to see a fall in August activity was buy-to-let, in which valuations dropped by 5% on July. Despite this, the total number of valuations carried out for buy-to-let investors increased by 29% compared to last year.

He concludes: “Buy-to-let has retained its winning popularity with investors. The slight slowdown the sector experienced this month is likely due to some investors taking a step back to calculate the cost of the Chancellor scrapping certain tax exemptions for buy-to-let landlords in the summer Budget.

“However, the fundamentals of the rental market remain very strong, driven by tenant demand. Even buy-to-let – once a rollercoaster sector in terms of growth – is showing signs of settling into a positive pattern of strong and steady growth, a pattern replicated across many other sectors of the mortgage market.”1

1 http://www.propertyreporter.co.uk/property/remortgaging-activity-soars-in-august.html

Interest Rate Rise in Autumn 2016, City Predicts

Published On: August 28, 2015 at 3:42 pm

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Bank of England

The first rise in UK interest rates will be put on hold until autumn 2016, predict City experts.

The financial chaos in China is making it seem more likely that rates will stay at their record lows for longer than previously expected.

These predictions arrive as homeowners rush to remortgage in anticipation of a rate increase.

This week, the British Bankers’ Association (BBA) claimed that the number of people fixing their loans at low rates is at the highest level for four years.

Interest Rate Rise in Autumn 2016, City Predicts

Interest Rate Rise in Autumn 2016, City Predicts

This follows the Bank of England (BoE) boss, Mark Carney’s indication that the Bank could raise interest rates early next year.

As the FTSE-100 is down 15% from its April high and China is cutting interest rates to support its slowing economy, City traders have lost confidence regarding rate growth in Britain.

Market traders were prepared for a rise from the current rate of 0.5% next May, but in the last few days, this has been set back to late September or even early October 2016.

Chief UK Economist at investment bank Citi, Michael Saunders, says his main prediction is that the Bank will increase rates early next year, but adds: “It would not be a big step to expect that bank rate at end-2016 will still be 0.5%.”1

UK Economist at Capital Economics, Paul Hollingsworth, also says: “Recent equity market volatility and the further fall in commodity prices is probably the final nail in the coffin for those entertaining the possibility of a rise in bank rate this year.

“But we think markets have gone too far in expecting the MPC to hold off until October next year.

“China’s recent economic data suggest that growth remains sluggish, but not weak enough to justify feats of a hard landing. In addition, the UK’s trade links are still fairly small, with only around 5% of goods exports going to China.”1

The BBA’s data reveals that mortgage approvals in July were 15% higher than last year and house purchases increased by 11%.

Chief Economist at the BBA, Richard Woolhouse, explains the situation: “Everything that has happened in China this week puts the likelihood of that rise back two to three months. But even if rates do go up in the near future, I don’t think mortgage rates will go up as much and, in any case, this won’t impact much on people’s decision to buy a house.”

He believes that people would still do “whatever they can” to get onto the property ladder.

He expects rates to rise slowly and gradually over the next five years, when he says they could reach 3%.

Woolhouse adds: “Even if rates go up faster than expected, I don’t think that would affect the housing market. The fact is that price rises are being driven by a shortage of housing and demand outstripping supply.”1

1 http://www.theguardian.com/money/2015/aug/26/chinas-economic-crisis-will-not-impact-uk-housing-market-say-experts