Date Published 29 August 2018
Re mortgaging activity in London surged to a nine-year high in the second quarter of this year, as buyer activity and house prices continued to fall.
With homeowners rushing to re mortgage before this month's interest rate increase, the £4.8billion worth of re mortgaging in the second quarter was 23.2 per cent higher than a year ago, UK Finance's latest figures show.
'After decades of boom, the lack of home-buyer activity and month-on-month decline of house prices in London marks uncharted waters for the capital's property market', Shaun Church, director of Private Finance said.
There were 15,200 new homeowner remortgages in London completed in the second quarter, the data reveals. By comparison, there were 6,800 new mortgages completed in London between April and June, marking an 8.1 per cent decline since the same point a year ago.
Homeowners had been battling to secure decent remortgaging rates ahead of the Bank of England's decision to increase interest rates from 0.5 to 0.75 per cent on 2 August.
While many banks and building societies have been quick to announce mortgage rate hikes in light of the Bank's increase, they have been less hasty when it comes to upping rates for consumers with saving accounts dishing out dismal rates.
Commenting on the state of London's housing market, Jackie Bennett, director of mortgages at UK Finance, said: 'Remortgaging in London reached its highest level in nine years in the second quarter of this year, as homeowners locked into competitive deals amid anticipation of the recent base rate rise.
'House purchase activity has slowed slightly, with affordability remaining a challenge for many would-be borrowers." Mr Church of Private Finance said: 'Even first-time-buyer activity, which has performed encouragingly throughout 2018, has now declined.
'This suggests that despite easing house price growth, stamp duty exemptions and Help to Buy, affordability remains out of reach for London's Generation Rent.
'This may translate to greater activity in the commuter belt as would-be buyers seek more affordable properties within reaching distance of the capital.'
Across the UK, the number of first-time buyers making successful home purchases fell 3.6 per cent from the previous year to 34,900. By value, there was £5.8billion of new lending to first-time buyers in the month, down 1.7 per cent down year-on-year.
In its last set of data published earlier this month, the Office for National Statistics said the average cost of a home in London stands at £477,000, which is the highest of any region in the UK.
But, what these figures didn't reveal was how the top of the market in London has been struggling, with prices plummeting well below 10 per cent in notoriously expensive areas like Kensington and Chelsea.
Source: 'Thisismoney.co.uk' (29/08/18)