Remortgage activity increased significantly in October, ahead of the much-anticipated rise in interest rates, according to research from the Mortgage Advice Bureau.
Their National Mortgage Index shows that the average remortgage loan increased by 1.1 per cent in October, to £214,132 – when compared to the previous month.
This research also showed that the purchase prices for first-time buyers continued to rise strongly. The average price was £214,132 – a rise of 2.6 per cent on the previous month.
The outlook was more mixed on house prices nationwide, with some regions – including Yorks and Humber, the North West and the West Midlands – posting strong house price gains, month-on-month and year on year. Elsewhere though house prices in London and the South East continued to slip.
The MAB data shows that the average purchase loan was £171,114 in October, an increase of just 0.4 per cent on September’s figures. The typical LTV remained the unchanged – both month-on-month and year-on-year – at 69 per cent loan to value.
The average age of a mortgage applicant was 36 years, with the average age of those remortgage being 42 years. The average age of first time buyers remaining at 31.
Mortgage Advice Bureau head of lending Brian Murphy says: “Amid a backdrop of better than expected GDP results, together with inflation returning, market sentiment in October was very much that an interest rate rise was signposted.” Against these expectations it was not surprising that remortgage activity had increased.
Asking prices however did seem to come off the boil slightly in October, according to the monthly Rightmove House Price Index, although the overall indication was that this outcome was more than likely due to over-ambitious pricing when properties are first marketed, due to the ongoing stock shortage in many areas.
Murphy adds: “It remains to be seen whether Chancellor Hammond’s decision to cut Stampt Duty for first time buyers will have the desired effect on the first rung of the housing market.
“However, given the current prevailing economioc and political headwinds, it’s perhaps reasonable to suggest that the market will plateau for the remaining two months of 2017 reutrning a ‘market performed as anticiapted’ overall result by the end of the year.”
Mortgage Advice Bureau data is based upon mortgage applications therefore this provides a reliable bellwether in terms of consumer activity.