Remortgages and first time buyers still propping up the housing market

John Phillips, operations director at Just Mortgages and Spicerhaart, comments on the latest UK Finance Trends in lending report which reveals that the number of new first-time buyer mortgages completed in 2018 was 1.9% more than in 2017 and the highest number of first-time buyer mortgages since 2006.

Home mover mortgages were down – both month on month – by 1.3% – and year on year – a drop of 1.9%, but remortgages were up significantly – 9.3% more were completed in December 12018 than December 2017 and 2018 overall say 10.8% more than 2017.

John Phillips said: “These latest results do not surprise me. We have been seeing the same trend for many months now – first time buyers are holding up the purchase market, as incentives Help to Buy and the freeze on stamp duty, plus new mortgages like Lloyds ‘lend a hand’ 100% mortgage offering coming onto the market are making it easier for them to make that first move onto the housing ladder. I think equity release will also remain strong, both as an alternative to downsizing, and as a way for the ‘bank of mum and dad’ to free up cash to help their kids get into the housing ladder.

“We are also seeing remortgaging remains strong. This is something we have seen at Just Mortgages too, as people take advantage of the low rates we are still enjoying, and if they remain low, there is no reason why this won’t continue. I also think we are increasingly seeing people choosing to remortgage to free up cash to do work to their current homes – extensions, new kitchens and bathrooms etc. – rather than move, either because the stamp duty and other costs make it too expensive, or because they are unwilling to take the risk in an uncertain market.

“I think we will see this trend continue into 2019. Remortgaging equity release and first time buyer purchases will remain strong while purchase will remain flat. But post March 29 I think there will be a change in sentiment. No matter what the outcome, uncertainly will be taken out of the equation, and as a result, I think the purchase market will start to pick up. But overall, we will probably not see the effects of that until much later on in the year.”