Competition among lenders and economic uncertainty prompted homeowners to switch loans.
Remortgage levels soared to their highest level for nearly a decade in October driven by intense competition among lenders.
Around 50,500 homeowners switched mortgage during the month, a 23% jump on the same period of 2017, with a total of £9.2bn advanced, according to UK Finance.
The rush to remortgage was driven by a combination of economic uncertainty due to Brexit and a raft of competitive deals on offer as banks looked to meet their annual lending targets.
Jonathan Harris, director of mortgage broker Anderson Harris, said: “Remortgaging is at a decade-high as borrowers, fuelled by continuing uncertainty around Brexit and the economy, take advantage of cheap rates.”
Why is this happening?
The final quarter is traditionally a busy time for the mortgage market with competition ramping up as lenders look to hit their targets.
This year is thought to be particularly busy as a large number of homeowners are coming off two-year fixed rate deals taken out in 2016.
At the same time, the expectation that interest rates will rise again next year, as well as the high cost of standard variable rate mortgages compared with new fixed rate loans are motivating homeowners to lock into a new deal sooner rather than later.
Above: Three-bedroom semi-detached house for sale in Bracklesham Bay near Chichester, West Sussex
Who does it affect?
The fact that the remortgage market is so buoyant is great news for homeowners.
With new lenders entering the area, and existing ones keen to expand their market share, competition is expected to remain intense for some time to come.
But with property transactions continuing to be subdued, the battle for new lending is focused on people who are remortgaging.
What’s the background?
There was also a jump in the number of landlords remortgaging, with this rising by 5% year-on-year.
The increase is likely to have been driven by investors trying to maximise the returns they can make from their portfolios following a raft of tax changes.
But lending to landlords buying a property continued to decline, with buy-to-let mortgage advances for house purchase falling by 9% in number and 20% in value during the past 12 months.
Lending to home movers was also subdued, edging ahead by only 4% compared with a year earlier, as potential buyers are thought to be sitting on their hands until the outcome of Brexit becomes clearer.
By contrast, first-time buyers continued to take advantage of the lack of competition from landlords, as well as a number of government initiatives, such as the Help to Buy schemes and stamp duty exemption.
Lending to those taking their first step on the property ladder was 12% higher during the month than in October 2017, with a total of £5.5bn advanced.
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Top 3 takeaways
- Remortgage levels soared to their highest level for nearly a decade in October
- A total of 50,500 homeowners switched mortgage during the month, a 23% jump compared with October 2017
- The rush to remortgage was driven by a combination of economic uncertainty and a raft of competitive deals on offer as banks looked to meet their annual lending targets