On Monday 24th July, figures were released showing that the most active sector of the mortgage market for June was the remortgaging sector. According to research that was carried out by Connells Survey & Valuation around a third of the property valuations that were carried out throughout the month of June were from owner occupiers or landlords who were carrying out remortgaging.
From the research that has been carried out by Connells, this rate of remortgaging valuations has increased, and is 7% above the five year average for June. As a breakdown of these figures, standard remortgaging valuations cover 23% of the market activity, and 10% is covered by buy-to-let remortgaging loans. Combines, these categories represent more of the market than the first-time buyers, buy to let or standard moving house mortgages.
This increase is thought to have been caused by the low interest rates that are on offer at the moment. With predictions that the Bank of England will be increasing the interest rates in August, it appears that people have been making the most of the base rate which has been at almost zero since the crash in 2009. Another reason that remortgaging levels could be high is the lack of choice on the housing market at the minute and the increase of housing prices. These two factors combined mean that homeowners are looking to remortgage and make repayments cheaper, while staying put for longer as well as freeing up funds that could ease financial situations or allow for home improvements so that moving is not necessary.
For the buy-to-let market, there ha been a reduction in the level of tax relief that is received by landlords, meaning that they have had their profits cut. For landlords, remortgaging allows them to pay less over a longer period of time in order to free up funds and replace the ones that they have lost through the tax regulation changes.
With the tax changes and the looming increase of base rate and interest rates, acting sooner rather than later with remortgaging is wise, and means that there has been a surge in the success of this area of the industry.
