There has been a record number of remortgage valuations carried out in the UK, rising to 37% of the market in August, the highest proportion in over 1
There has been a record number of remortgage valuations carried out in the UK, rising to 37% of the market in August, the highest proportion in over 10 years, the latest data shows.
The proportion of remortgage valuations, including buy to let, has risen 3% year on year, driven by high levels of competition from lenders who are reducing their rates to attract potential borrowers, according to the research from Connells Survey & Valuation.
The firm’s report suggest that consumers are opting to lock in these lower rates, securing long term, fixed-rate remortgages ahead of a potential interest rate rise which could come as early a later this year.
‘Remortgaging is quickly becoming the dominant activity in the lending market. The record high in August was driven by consumers seeking out better value borrowing. Having benefited from a decade of low interest rates, consumers are sensing the risk that this era is nearing an end,’ said John Bagshaw, corporate services director of Connells Survey & Valuation,
‘Many older mortgage deals are expiring this autumn which will mean moving onto more expensive standard variable rates. As a result, home owners on these deals are opting to refinance, taking advantage of the intense competition in the mortgage market right now,’ he explained.
‘Despite a slight slowdown in transactions this August, official figures suggest house price growth has held up. This rise in property prices means home owners could now get a better loan to value ratio when remortgaging than when they first borrowed, potentially allowing them to lower monthly repayments. With so much economic uncertainty and hints of a base rate rise, many are choosing to lock into a lower rate to see them through the next few years,’ he added.
A closer look at the figures show that there has been a fall in the proportion of valuations from people selling their property to buy another, down to 21% of the market in August compared to 25% in the same month last year.
Bagshaw believes that with house prices still rising, even if it’s at a slower rate, many home owners have drifted up a stamp duty band since they first bought their home. This means those at the higher end of the market are facing larger bills if they’re looking to move or downsize.
‘As the average stamp duty bill now stands at around £6,000 it’s far less affordable to move than it used to be because salary growth hasn’t kept up with property prices. Of course, addressing the chronic shortage of homes by boosting house building would fix most of the issues in the property market,’ he said.