Surprise base rate boost for summer UK mortgage market
After an unusually busy couple of months for lenders, with a particular rise seen in small deposit mortgage uptake, many are predicting a surge in remortgages this autumn.
The mortgage market enjoyed a buoyant summer of activity according to latest reports, despite the base rate increase on 2 August. The most recent Mortgage Monitor from chartered surveyors e.surv found a total of 66,543 mortgages were approved during August.
Borrowers forced into action
Traditionally a quiet month for the housing market, this August bucked the trend. Many borrowers were kicked into action by the base rate rise and raced to secure a low-rate deal before lenders reviewed their product range and increased their rates.
The number of mortgages approved for those with small deposits, including first-time buyers, increased between July and August. More than a fifth (22.8%) of all loans went to this section of the market, a 1.7% increase on the previous month. Mid-market borrowers also increased by 0.6%, with 44.7% of all approvals.
Statistics released by the Bank of England reflect e.surv findings with increased mortgage lending activity in Q2 and new commitments at their highest since Q1 2008. The total gross advance increased from £62.4bn to £66.7bn, a 6.9% growth in this quarter, and new commitments rose by a significant 19.8% to £73.2bn.
Lenders anticipating a busy autumn
Although remortgaging fell by 2% accounting for 30.8% of new lending in Q2, mortgage providers are expecting a busy September and October. Borrowers that failed to take action following the August rate rise will be starting to see the impact on their monthly repayments. Lenders are anticipating that they will be keen to take advantage of competitive deals while they are still available.
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