The prospect of a rate rise helped to boost remortgaging activity in September, when compared to a year ago, with homeowners sought to fix their monthly mortgage costs.
New figures by UK Finance show a mixed picture on lending figures, with lending in many other areas declining.
The value of remortgages in September was £6.4bn – the same amount as in August but 16 per cent higher than a year ago. This equated to 35,900 loans, a 3 per cent drop from August, but 13 per cent higher than a year ago.
Lending to first-time-buyers showed one of the biggest contractions. FTBs borrowed £5.1bn in September, down 11 per cent on the previous month. However, this was 4 per cent higher than first-time buying a year ago.
This equated to 31,100 loans, down 10 per cent month-on-month and representing a 1 per cent fall on the number of FTB mortgages arranged in the same period last year.
Similar trends were seen with lending to home movers. This group borrowed £6.9bn in September, down 18 per cent on August’s figure. However, on a year-on-year basis lending to home movers increased by 6 per cent.
This equates to 32,200 loans, down 17 per cent since August, but 3 per cent higher than September 2016.
In the BTL market gross lending totalled £2.9bn, down 9 per cent from August, but 4 per cent higher than figures from September the year before. Again, the number of loans was down from August, but up (4 per cent) year on year.
All these figures are on a non-seasonally adjusted basis.
However, this fall in lending during September has not dented quarterly lending figures. UK Finance said that mortgage lending rose in the third quarter of 2017, compared to lending in quarter two, and on a year by year basis.
This rise was seen in across all lending types, including loans to FTBs, home movers, those remortgaging and in the buy-to-let market.
UK Finance’s head of mortgage policy June Deasy says: “Although lending slackened in September it remained higher than a year ago. Remortgage was particularly strong, with borrowers seeking to lock intro historically low interest rates in advance of the widely anticipated rise in Bank base rate at the beginning of November.
“Over the last year the number of loans for remortgaging has been higher than in any period since 2009. Low borrowing rates mean that mortgage repayments as a proportion of income remain at or close to their historic low point. While this ratio may edge upwards in the coming months, monthly mortgage repayments will remain affordable for the vast majority of borrowers.”
But Prolific Mortgage Finance managing director Lea Karasavvas says that these figures show that difficulties may lie ahead in the buy-to-let market.
He says: “Both homeowners and landlords took early hints from Mark Carney, so September represents the tail end of the rush to remortgage on low rates while they lasted.
“However, owner-occupiers and landlords are not on the same page. Homeowners have been grabbing low rates while they can while the response from landlords has been far more muted.
“This demonstrates a sustained shift as many turn their backs on the market. Landlords are waving the white flag after a severe tax bashing from the Treasury over the last two years.
“This is a statement of intent. Being a landlord is not a hobby, it’s an investment that must pay or it’s simply not worth it.
“The number of remortgages by homeowners has risen faster than for landlords in the last year and, more recently, is falling slower.
“Many landlords are effectively signalling that the good times are over and they don’t intend to stick around long enough to justify committing to a new deal.”
Enterprise Finance managing director Harry Landy added: “With recent widespread economic and political uncertainty it was expected that buy-to-let and remortgage activity would feel the effects.
“We are yet to see how the industry will adapt to the PRA-enforced changes in underwriting of buy-to-let mortgage applications, and how this will affect lending activity. As the impact of new regulation becomes clear it is as important as ever for brokers to be aware of all the different financing options available to them, including alternative, specialist buy-to-let lenders who can operate on a more flexible basis.
“Improving education and awareness in this area will be crucial if people are to be able to capitalise on the market opportunities.