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Home owners ‘improving rather than moving’, figures suggest

Mortgage lending to home movers was down annually in May amid signs that households are improving by borrowing extra cash, rather than moving.

Some 29,430 home mover mortgages were completed in May – 1.2% fewer than in the same month a year earlier, UK Finance said.

Meanwhile, the number of re-mortgages where households borrowed extra cash jumped by a fifth year-on-year.

There were 21,370 new re-mortgages with additional borrowing in May, 19.8% more than in the same month in 2018.

For these re-mortgages, the average additional amount borrowed in May was £52,000.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said UK Finance’s figures confirm “a trend we are seeing – that people are keen to stay put and improve or extend, rather than go to the considerable cost of moving to another property.

“Some borrowers are also releasing extra cash to help children or grandchildren onto the housing ladder or to cover other costs such as school fees, with older borrowers in particular taking advantage of the sizeable equity they have built up in their homes over time.”

Some 19,650 “pound for pound” re-mortgages with no additional borrowing were recorded – 19.7% more than in May 2018 – as home owners came to the end of their existing deals.

UK Finance also said 30,720 new first-time buyer mortgages were completed in May – 0.5% more than in the same month in 2018.

In the buy-to-let sector, there were 5,500 new home purchase mortgages completed in May – the same as a year earlier.

Buy-to-let re-mortgaging increased by 2% annually, with 15,000 re-mortgages in May.

By Vicky Shaw

Source: Yahoo Finance UK

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Half of younger home owners put off moving up housing ladder by interest rate rise

More than half of home owners, 56% of those aged 25 to 34, say they have been deterred from climbing further up the housing ladder in the UK due to the recent rise in interest rates.

The rise from 0.25% to 0.5%, the first increase by the Bank of England for a decade, was the first rate increase for 37% of owners but for those aged 25 to 34 it was the first rise for 78%, according to the research from hybrid estate agent eMoov.

Despite being the first increase in over a decade, 46% of those asked remained undeterred from buying another property, with 17% put off from a property sale and 13% putting the idea of a purchase on hold for the time being.

However, those in the first time buyer age bracket seemed more deterred from another purchase with 56% put off from climbing the ladder, 40% indefinitely, 16% for the time being.

The increase had more of an effect in London where 60% of owner were put off from another purchase by the recent increase in rates, 50% completely with a further 10% deterred from the time being.

The highest number of home owners seeing an interest rate rise for the first time was in London where 63% have been affected while the North East was the highest region outside of the capital at 55%.

But despite so many seeing interest rates rise for the first time since becoming home owners when asked what impact it had on their monthly mortgage payments some 64% hardly noticed, while 33% saw a manageable increase. Just 3% believed it had a serious impact on their monthly affordability.

Those aged 45 to 50 were worst hit with 5% seeing a serious impact on their monthly payments, although this increased to 11% for those in both the South West and North East. It was least notable in Wales, where 83% of those surveyed answered that they had hardly noticed an increase.

When asked how much interest rates would have to increase by to stop them from climbing the ladder some 49% of owners said they would have to see an increase of 2% or more before they were deterred while 15% said it would be 1.5%, 18% said a rise of 1% and 12% by just 0.5%.

According to Russell Quirk, chief executive officer of eMoov, the research shows that there is some trepidation among younger owners about interest rates. ‘The majority have weathered the financial implications and the marginal hike has made it easy enough to do so,’ he said.

Source: Property Wire