This October 2018 we saw a dramatic rise in the amount of UK properties being re-mortgaged. Experts state that the remortgaging rates reached the highest point in over a decade during the month of October.
Remortgaging can be carried out for a number of reasons. For example, perhaps you want to free up some of the capital in your home to consolidate debts or pay school or college fees. However, the fact that the remortgaging rates have reached a decade-long high should ring some alarm bells, or at the very least raise some questions.
During October 2018, it is reported that 50,500 homeowners opted to remortgage their properties during that month alone. This is almost a <25% increase in last years figures (from October 2017). UK Finance has reported that a massive £9.2bn has been released in this recent explosion in remortgaging.
Again, the Brexit theory comes up as a factor that is affecting people’s choices to remortgage their homes at this time. Another reason that has been postulated is that in a vow to reach their targets, the UK banks have been offering attractive deals to UK homeowners.
Why are so many people choosing to re-mortgage their homes?
One of the key points to mention here is that the UK mortgage lenders go hard to meet their targets during the last quarter of the year. October is the first month in the last quarter of the year and has always been a time to grab a bargain in the mortgage market… a point to be noted for UK homeowners or first-time buyers!
Another factor to take into consideration is that in 2016 there was a huge push for people to get on 2-year fixed-rate deals. These fixed-rate deals ended in the last quarter of this year (or close to this time) when homeowners would be looking to get a good new deal on their mortgage. Homeowners have also been informed that 2019 will see an increase in interest rates – urging them to grab a good fixed rate deal, while they still can.
How will this increase in re-mortgages affect people?
The increase in lending transactions is a good thing for UK property owners. The increase in competition means that you can get some really good deals at the moment. There are many new lenders coming into the market and older lenders who are still keen for the business. So this added drive creates some great deals for consumers who want to mortgage or re-mortgage their properties.
The focus is on re-mortgaging for the lenders. The reason for this is due to the dramatic decrease in people buying and selling homes. Therefore to drum up more business lenders are forced to focus on re-mortgages. Hence the sharp increase that we saw in October 2018.
Are landlords also re-mortgaging their properties?
Yes, the fact is that re-mortgaging has jumped across the board. The number of landlords re-mortgaging their homes has risen by 5% when compared to the same time last year. The fact that landlords are also taking advantage of the mortgage lenders deals is suspected to be linked to the new legislation that has been brought into effect in the latter half of this year.
Landlords are now obliged to adhere to a lot of extra legislation, paperwork, and taxes that will all take their toll on their bottom line. Landlords and investors are most likely taking advantage of the current re-mortgaging offers to maximize their overall ROI.
On the Flip Side
Buy-to-let mortgages have seen a massive 20% drop over the past year. In October house purchases fell by a further 9% when compared to 2017. In general, there have been a lot fewer transactions across the board. Many experts tie this with the fact that the looming Brexit changes are making buyers nervous (until the outcome becomes more clear).
First-time buyers increase
The amount of first-time buyers is increasing at a steady rate, mainly due to the Help to Buy schemes and stamp duty exemption. When compared to October 2017, first-time buyers who mortgaged their first property increased by 12%.
This October saw re-mortgaging rates explode to a decade-long high. This could be due, in part to Brexit uncertainties or people simply taking advantage of the deals on offer. Landlord purchases are declining, due to the new legislation. However, landlord re-mortgaging increased in October by 5%. The picture is of a rigid Britain who wants to sit tight and maximize their investment rather than mobilize.
There is still a short window where you could take advantage of the re-mortgaging deals. Firstly take a second to find out the current market value of your property to see how you can win.