"These latest figures show that the housing market is struggling, especially amongst homemovers where activity is down 7.9%"
According to UK Finance, speculation over a rise in interest rates caused a drop in homemover activity with 33,700 new homemover mortgages completed in the month - an annual fall of 7.9%.
The data revealed that remortgaging continued to dominate the market, rising 8.4% by volume and 13.3% by value on an annual basis and BTL mortgages dropped by as much as 19.4% in June. BTL remortgaging remained steady compared to last year.
Jackie Bennett, director of mortgages at UK Finance, said: “Remortgaging continued to dominate in June with figures up 13% on the same period last year as existing two and three year products came to an end and borrowers opted for new deals.
Despite a boost in recent months, speculation of a base rate rise saw the market remain relatively subdued with year-on-year declines in activity among both first-time buyers and homemovers as customers adopted a ‘wait and see’ approach. House price inflation has moderated in recent months yet it still remains above earnings growth, and so affordability is still a challenge for would-be borrowers.
And although the full impact has yet to be felt, tax and regulatory changes continue to bear down on borrowing activity in the buy-to-let purchase market.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: "Remortgaging numbers were strong in June, both on residential and buy-to-let mortgages, as borrowers rightly worried about an impending rate rise. Now that rates have gone up this month, we expect to see remortgaging continue to be popular as those who haven’t got around to doing so finally take the plunge.
With most lenders pricing in the base rate rise before it actually happened, the good news for borrowers is that fixes in particular are still very competitive. Now is a good time to fix - whether it’s for two, five or even 10 years - protecting borrowers from any future rate rises.
Buy-to-let continues to be a challenge with the harsher tax and regulatory environment putting off novice investors. But there are still seasoned landlords committed to the sector for whom it is business as usual."
Jeremy Leaf, north London estate agent and a former RICS residential chairman, had this to say: "Although a little historic, as the figures reflect buying decisions made several months previously, the trends are important as they show a direction of travel. The journey is not particularly exciting at the moment as buyers and sellers are sitting on their hands reluctant to commit unless exciting opportunities present themselves or moves are needs-driven. Nevertheless, no major correction is anticipated and realistic pricing is helping to keep the market ticking over, though lack of urgency remains a concern.
Unfortunately, first-time buyers are not completely replacing the dwindling number of buy-to-let investors as the latter face tax and regulatory changes. The rise in remortgaging is more of a defensive move to counter the imminent threat of higher interest rates, which proved accurate."
Mike Scott, chief property analyst at Yopa, said: "June's data confirms the trend of housing market activity in 2018 being down by a few percent on 2017. The number of mortgages for house purchase in June was down by 5.8 per cent on the same month last year. The number of first-time-buyer mortgages saw a bigger drop, down by 7.9 per cent, while the number for home movers was barely changed, down by just 1.7 per cent.
The buy-to-let market continues to shrink, with the number of buy-to-let mortgages for house purchase down by 19.4 per cent on the year. This reflects the changes in stamp duty and mortgage interest tax relief that have increased the costs of buying and letting a property. However, the remortgaging market is doing well, with numbers up by 8.4 per cent.
Since market activity has reduced for both buyers and sellers, we expect that there will be little impact on house prices, and 2018 will end with slightly fewer house sales than 2017, but with prices slightly higher."
John Phillips, group operations director at Just Mortgages and Spicerhaart, says: "These latest figures show that the housing market is struggling, especially amongst homemovers where activity is down 7.9%. I think the main reason for this is not that people don’t want to move, but they are reluctant to because stamp duty is so high that they are not prepared to shell out thousands of pounds just to move. So they are staying put.
The trouble is, while remortgaging is up, which is good, but is more to do with rate rises than anything else, the UK economy needs people to move house because it has a positive knock on effect on so many other sectors. So if the Government wants to fix this, it needs to make a bold statement.
The stamp duty cut has worked for first time buyers but we need similar incentives for the rest of the market. I would like to see an 18 month suspension of stamp duty across the board. This gives the market seven months or so before the Brexit deadline in March and a year afterwards to let things settle.”
