Connells Survey & Valuation has released updated figures for June that show the health of the remortgaging sector. In June Connells found that one in three property valuations that took place were for the purpose of remortgaging. This figure is 7% above the five year average level for June.
Normally, remortgaging makes up around 23% of market activity, with another 10% of loans being accredited to buy-to-let remortgaging accounts. Combining these two figures means that both of these different forms of remortgaging accounts for a larger part of the market than first time buyers, buy to lets, and those selling their house and wanting to move.
With the demand for housing at the minute, the limited choice and raised price, it would appear that more and more people are choosing to stay put and remortgage, making alterations to homes as opposed to selling and moving to somewhere that better suits the homeowner’s requirements.
Also the costs for landlords and rental properties are meaning that the profits for buy-to-lets are being cut. This means that landlords are looking to remortgage in order to reduce the amount of money that they have to pay each month. The lower rates that are on offer at the moment are also making property owners act sooner rather than later, in order to make the most of the possible base rate increase expected at some point later this year.
Because of the lack of incentive to move, and the low interest rates that are on offer, the remortgage sector has managed to become the leading component of the mortgage market. The rate of remortgaging has increased to more than double since the banks crash in 2009 as people make the most of the low base rate, which has been close to zero for nearly ten years. However it is expected that interest rates will be increased by the Bank of England in August, so people are making the most of the opportunity to cut down on their monthly repayments, in order to free up additional income. There has also been a reduction on the tax-relief that is given to landlords, meaning that the landlords have to pay more tax, cutting their profit and making them worse off. Remortgaging also offers the ability to free up some extra income.