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More UK Home Owners Borrow Extra On Mortgage To Improve Not Move

LONDON (Alliance News) - The number of UK home owners borrowing extra amounts on their mortgage ...

Alliance News 16 May, 2019 | 11:05AM
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LONDON (Alliance News) - The number of UK home owners borrowing extra amounts on their mortgage has surged by just over 9% year-on-year, figures from a trade association showed Thursday.

Home owners are borrowing just over GBP55,000 on average in addition to what they owe as they take advantage of continued low mortgage rates, and experts said the trend reflects people choosing to improve their existing home rather than move.

The figures from UK Finance also showed the number of first-time buyers has decreased year-on-year for the first time in six months.

There was a 9.1% year-on-year increase in borrowers taking out re-mortgage deals which included some additional borrowing in March, UK Finance said.

There were 16,810 new re-mortgages with additional borrowing in March. For these re-mortgages, the average additional amount taken out in March was GBP55,700.

In total, there were 4.1% more residential re-mortgages in March than in the same month a year earlier.

UK Finance said: "This is the 12th consecutive month of year-on-year growth in re-mortgaging, as a number of fixed-rate deals come to an end and borrowers continue to lock into attractive rates."

Commenting on UK Finance's figures, Andrew Montlake, director of mortgage broker, Coreco, said: "The 9.1% rise in additional borrowing re-mortgages compared to a year ago reflects the fact that a lot of people are choosing to add value to their existing homes rather than move."

While re-mortgaging is on the increase, the number of deals being taken out by home buyers has fallen year-on-year.

Some 28,800 new first-time buyer mortgages were completed in March 2019, 2.4% fewer than in the same month in 2018, UK Finance said.

This is the first year-on-year decrease in first-time buyers since September 2018.

The number of mortgages handed out to existing home owners moving house was also down year-on-year.

There were 25,280 home mover mortgages completed in March, a 6% year-on-year decrease.

Meanwhile, the number of mortgages being handed out to buy-to-let landlords purchasing properties also decreased year-on-year.

UK Finance said: "While buy-to-let house purchase activity continues to contract due to tax and regulatory changes, buy-to-let remortgaging has increased year-on year for the second month in a row."

There were 5,000 new buy-to-let home purchase mortgages completed in March 2019, 9.1% fewer than in the same month in 2018.

Re-mortgaging in the buy-to-let sector increased by 3.9% year-on-year, with 14,400 loans handed out in March.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "The decrease in number of first-time buyers after continuous growth over the past six months is a concern, and let's hope it is just a blip in the numbers.

"First-time buyers are so important for the overall health of the housing market, ensuring transactions further up the chain can happen.

"Re-mortgaging goes from strength to strength as borrowers come to the end of fixed-rate deals and quickly hop over onto another competitive rate."

By Vicky Shaw, Press Association Personal Finance Correspondent

source: Press Association

Copyright 2019 Alliance News Limited. All Rights Reserved.

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