The mortgage market showed "welcome signs of life" in August, indicating prolonged low interest rates are helping borrowers despite the worsening economic environment.
Remortgaging rose by more than a third in both volume and number in August compared to the same month in 2010, according to figures published by the Council of Mortgage Lenders (CML). The number of remortgage loans increased by 9% from July to August 2011, and by 33% from August 2010 to August 2011, while the value of loans went up by 5% and 31% respectively
Lending to movers as well as first-time buyers was also at its highest for more than a year, even though lending criteria remained unchanged with the average loan-to-value standing at 80%.
The number of house purchase loans rose by 7% in August compared to July, and by 2% compared to August 2010, while the value increased by 10% and 3% respectively. The proportion of income used by homeowners to pay interest fell slightly by 0.2% to 9.4% in August from July, and by just 0.1% from August 2010.
First-time buyer loans increased by 5% in number and 4% in volume from July, and 5% and 9% compare to August 2010. The proportion of a first-time buyer's income spent on interest payments fell marginally by 0.1% to 13% from July to August, but the drop from August 2010 was a more substantial 0.5%.
Paul Smee, director general of the CML, said: "Even though it is impossible to ignore the knocks to confidence emanating from the euro zone, August lending showed welcome signs of life.
"With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low-rate environment is a benefit to those with mortgages, even against the backdrop of the gloom in the wider economy."
Chris Broome of Broome Financial Planning said: "These latest mortgage figures are encouraging given the overall state of the economy. On the one hand, you have an economic climate that reduces the incentive for people to buy, but on the other, the combination of highly competitive mortgage rates and low house prices is proving irresistible.
"In many respects, prospective buyers and homeowners have become hardened to the current climate. People have to get on with their lives and more of them are doing just that.
"The sharp rise in remortgages since last summer reflects just how much more attractive the mortgage products out there have become. Although interest rates are expected to stay on hold for some time yet, people feel they cannot turn down some of the rates currently on offer."
Meanwhile, the latest figures from the government's communities and local government department show UK house prices increased by 0.6% in August, reducing the annual rate of decline from 1.5% in July to 1.3%. Based on the data for mortgages completed in August, the average price of a UK home stands at £208,476.
The department said its figures, when seasonally adjusted, showed house prices were down by 5.5% from their recent peak in April 2008, but remained 9.9% above the recent trough of April 2009.
Howard Archer, chief UK economist at IHS Global Insight, said: "The 0.6% rise in house prices in August reported by the communities department is an upward surprise, but bear in mind that it provides lagging evidence on house prices as the office calculates its index at the time when mortgages are completed.
"Other evidence largely suggests that house prices firmed modestly earlier in the summer. However, latest data from the Halifax and Nationwide points overall to softening house prices over September and August combined, and we see no reason to change our view that house prices are headed downwards over the coming months."
Comments
11 October 2011 12:21PM
I could buy now too
However I'll get on with reducing my remaining debt first, then think about getting on with my life.
11 October 2011 12:32PM
Total number of 1st time buyer loans in August 2011 = 19,000.
That is distinctly underwhelming. Not a sign of an active healthy market, that's for sure.
11 October 2011 12:40PM
Why is a surge in re-mortgaging a cause for celebration?
That's people desperate for money a step closer to losing their homes.
11 October 2011 12:48PM
I think The Smiths said repackage reissue repackage.
I would say re-munter re-mortgage, re-munter.. may be more apt.
11 October 2011 12:49PM
12kazuko12, no you use your credit card first, you only remortgage when you have maxed them out, can't get any more 0% balance transfers and no other card.
Only then do you really need to remortgage, the money for that 5th foreign holiday this year or new 4x4 has to come from somewhere.
Stop worrying, the Government BTL programme will start soon, 100k plots up for grabs in one of the largest land grabs seen since 1066.
That will get things moving, think of all that speculation over an undersized rectangle of land, add in underovermiddlegazuderumping and you have the perfect housing speculation storm.
I smell many, many billionaires by Christmas with only £250 down.
11 October 2011 12:49PM
I ve just had an offer accepted, I am a 1st time buyer, took me years to get the depoist together, and to be honest I am just glad that from now on in I will be paying my own mortgage and not just paying rent and so therefore paying of someone elses
11 October 2011 12:52PM
What? How on earth do you come to that genius conclusion? It's sensible people moving to a lower rate. There are some incredible rates around at the moment.
11 October 2011 12:54PM
Why is a surge in re-mortgaging a cause for celebration?
You're assuming equity withdrawal. Many are probably remortgaging without increasing their mortgage and are doing so to get a lower rate. Hooray!
11 October 2011 1:36PM
Even though it makes me physically retch, I have to say I agree with Ambon. I can't see that people remortgaging at a time of low rates is anything other than rationality. Not sure it is a cause for celebration, bit no bad thing.
If, of course people want to overpay on their mortgage at this time and they can afford to do so, then good for them too.
The real problem in the article is that £209k average price - way too high and steps must be taken to bring that down severely.
The interesting test is however yet to come - the reduction in university student numbers.
11 October 2011 2:03PM
Surely, a lot of the fantastic tracker mortgages some people have been enjoying are simply coming to an end - this was predicted a while back, as many of them are for 3/4/5 year terms. So these people have probably found themselves a better deal, and are remortgaging to take advantage?
Why do some people so readily and enthusiastically jump to the conclusion that everyone else financially incompetent and will only spend money of 4x4, multiple holidays and designer nic-nacs? Some people do so this, of course, but not everyone.
11 October 2011 2:05PM
@jameshenry81
"...I am just glad that from now on in I will be paying my own mortgage and not just paying rent ..."
So now you are paying a mortgage and exposing yourself to further price falls, instead of letting your landlord take that equity hit. On top of that you now own all the maintenance expenses.
Unless you are a cash buyer, worried about inflation and the security of your stash in the bank - and happy to stay put for at least five years - a first time buyer would be crazy to jump in to the market right now. Of course your offer was accepted! For the vendor Christmas has just come early.
11 October 2011 2:19PM
I agree a bit with massivegolfsale.
The reason I didn't buy is a) I emigrated instead - best move ever b) before I emigrated I was put off by high prices.
Here's a graph of the Japanese property market until the end of 2008.
http://www.marketoracle.co.uk/images/2008/japan-house-prices--nov08.gif
It goes up to 2.5 times the starting value, then deflates, painfully slowly, for 15 years.
Here's a graph of the UK property market.
http://www.housepricecrash.co.uk/graphs-average-house-price.php
Over the same time it's gone up to 3 times the starting value give or take and is showing signs of dipping. The BoJ spent years at effectively zero percent interest rates, and I bet the UK will too
I'd argue that pre-tsunami the UK and Japanese economies were in a similar situation. Both have a highly educated and highly developed work force, primarily service or high tech industry based economies etc etc etc..
On the one hand it's nice to be able to paint the place your own colour, but on the other hand it does leave you exposed to negative equity. Still, if your earnings increase faster than your house devalues, it doesn't matter (if it devalues at all). I wasn't up for that. I'm traditionally rather conservative on such financial matters.
11 October 2011 2:26PM
Fwoggie
11 October 2011 12:32PM
Total number of 1st time buyer loans in August 2011 = 19,000.
That is distinctly underwhelming. Not a sign of an active healthy market, that's for sure.
Taking my idea a bit further, assuming a population of 68 million in the UK, that means 2.7 first time buyer loans taken out per 10,000 people. Applying that ratio across a London population of 8 million, that would suggest 22 first time buyer loans approved in the whole of London last month, or half a street's worth.
It's a bit more than that of course cos that's where the lions share of the jobs are (something that no government of any colour since seems bothered to address since Thatcher closed the mines), but a theoretical 22 loans for a single month for the city of London is canbe only described as pathetically insignificant. In other words, everyone's staying put.
11 October 2011 2:38PM
Fwoggie
Your sums are out by two decimal places.
11 October 2011 2:41PM
Re-mortgaging stats tell you nothing because most of this is done by people who are not moving house, often have low LTVs and are just doing financial housekeeping. While some of these people will be saving money by getting a better deal, it is likely an equal number will be coming off an old and very cheap deal and paying more. Non-moving remortgagers are of little relevance to the housing market (market = trading activity) and it is the state of house mover activity that bears on the active market. Loans to movers were only up 1% year on year.
Take a look at the RICS survey also out today: that gives a far more realistic view of the housing market with prices falling and agents expecting further falls. I bet I know which of these two reports will get more press coverage.
11 October 2011 2:53PM
Forgive me father for I have Gazundered. Just got 2.5k knocked off hte house I am buying (purchasing for 200k) in Brighton BUTTTTTTTTT even if local rents were to fall by 40 - 50% my mortgage would still be less than the going rate so crashy crashy or dippy dippy you cant argue with those numbers.
11 October 2011 3:07PM
Damnit. But the concept still applies.
11 October 2011 3:25PM
All speculation again :-)
Remortgaging doesn't mean desperate people. Many people remortgage to get a better deal.
The only fact I see in all the data is that the appetite for buying your own home in the UK hasn't diminished.
19,000 FTB in a month seems a lot to me. Definitely a lot higher than the past 3 years.
11 October 2011 3:26PM
How much is the house in the picture with the Yellow door?
Thats got to be worth £100K minimum..... dependent on location.... if its in SWL i am prepared to go to £120K, final offer.
11 October 2011 3:31PM
It's on legs so it can be wherever you want it to be!
By the way, I have noticed something a bit dodgy with Zoopla. On a house whose value I have been tracking, it recently has suddenly had about 15% knocked off the value. But Zoopla have also adjusted the graph of the previous 12 months downwards as well, rewriting history....
11 October 2011 3:54PM
On a more serious note the previous Guardian House Price article was;
"House sellers fear weakening economy, RICS reveals"....i think that pretty much sums up the measure of lovely jubbly remortgaging activity going on, given the current squeeze on most incomes you would have to be a complete cabbage not to remortgage at the end of a deal (if i was camped on a cliff id throw as many tent pegs as i could in the ground)
Theres a few people on here who've said they have recently bought/completed, good on you, i think its a bit wrong to have a pop at anyone in this position (as long as you have got, what you consider. to be a good deal,. If the numbers add up for you and you have factored in probable drops/IR hikes and have accepted the distinct possibility of both and its impact on your life then fair play.
Also why do these artcicles start with bullish soundbite from a VI sentiment x5, then a x1 bearish comment.... get Howard Archer in first.
Ooooh, Firming AND softening of the market.....shudder......sensual.
End game 2012, watch this space.
11 October 2011 3:59PM
Sorrry...silly me.....typo..... I meant End Game 2032!!
The 'game', as previously decreed by our betters to be a 20 year game of course.
11 October 2011 4:32PM
What a truly bizarre statement.
Who in their right mind would not want to save money by moving to a cheaper deal? By all accounts there are some fantastic rates out there to be had.
The HPC mindset gets more desperate by the day.
11 October 2011 4:36PM
well, I guess remortgaging is a good move. Depends on your circs' though . If you remortgage and are still just scraping by, then it could be just delaying the inevitable eventually. I don't think house prices are going up for a long time GJones. It may not be an abrupt crash but it's sure a protracted decline
11 October 2011 4:38PM
There are lots of desperate people about these days and not all are HPC head bangers either. I think one upmanship of "desperation" between home owners and none is somewhat passe now
11 October 2011 4:45PM
I knew as soon as I saw your post that you would be setting yourself up for denigration by the bitter and envious HPC.
Don't worry though, enjoy your own home, choose whatever colour scheme you want, plant your garden how you want, have as many pets as you want, forget all those inspection visits, forget paying into your landlords pension, sleep easy knowing that you wont be given 2 months notice to leave, become engaged in your own community etc etc etc.
And you seem to be in good company. 19,000 others also took the plunge to buy their first home - that must stick in the crop of HPC.
11 October 2011 5:13PM
Congratulations; if you've bought smart (paid a good price and can easily afford your mortgage) then you'll be fine. Unfortunately posts like your attract certain responses from the crash monkeys. All the best.
11 October 2011 5:13PM
To be honest, better to be a rent slave than a debt slave.
With rent you are the landlord's asset, paying their mortgage. With a mortgage, you become the bank's asset, repaying them interest as well as your mortgage.
11 October 2011 5:16PM
Mortgages are soooo last decade.
This decade you'll be able to buy a house outright with just your deposit!
That must stick in the crop of HPR.
11 October 2011 6:04PM
We don't know how much equity release is going on. Until we do we cannot interpret the figures.
From what I see all the new deals / remortgages are at higher rates than what I'm paying and involve large upfront fees.
11 October 2011 6:32PM
As i commented positively that it was a good thing that JamesHenry81 had bought a house (given the assumption on my part that the number stacked up) am i now kicked out of the HPC brigade?? (which i seem to be branded as part of)
GJones, your first point of the beauty of owning your own home was 'the ability to paint it any colour you like', nice, ive taken that on board..... point 2 doesnt get much better....haha...'you can plant whatever you want in the garden'...priceless, you havent sold home ownership to me there i'm afraid (throwing £80-100k at an 'at best' static assest') 2/10 must ramp harder.
Hampton, agree with your comment. Good luck to anyone purchasing now, and i do mean that.
11 October 2011 6:37PM
...Oh I forgot to mention, I’m a colour blind, spendthrift hermit that’s allergic to chlorophyll, pet hair….. and landlords. Grrr.
11 October 2011 6:43PM
The other important thing to point out is that a remortgage has no baring on the overall housing market -- these houses are simply being refinanced, not going back onto to market.
Even if remortgages are up 10000%, it makes no difference to house prices that I can see apart from those who -- by getting a cheaper rate, albeit temporarily -- are saving themselves from mortgage arrears and therefore not being forced to sell up and put the house on the so-called free market.
11 October 2011 6:49PM
Why on earth would you think I was talking to you?
11 October 2011 6:55PM
Why on earth wouldnt i think you were talking to me?
.... if you have some better reasons for 'taking the plunge', please share.
11 October 2011 7:00PM
From the article:
So 13 per cent -- even if it sounds too low to be realistic -- of FTB's income is being paid to the banks in interest. For the priviledge of borrowing a shed load of money and to right to choose your plants, pets and wallpaper.
11 October 2011 7:09PM
@Sharkfinn, i pondered that number.... theres no way that 13% figure is realistic mate, (whatever its based on...undefined in article ) and if it is it shows that the only FTB's getting on the market are hugely cash rich and what complete dire straights UK housing (homes/housing) is in.
A worse scenario for you.... the pet cat comes flying in after being booted by one of your unsavoury neighbours, it knocks your prize winning hydranger over and claws its way up the £100 a roll designer wallpaper (slap forhead and say "...doh")
...hometime.
11 October 2011 7:32PM
"that 13% figure is ...."
... the lowest since records begain. Houses never more affordable = screaming buy signal.
How sad that the HPCrazies felt the need to jump on some poor guy who had the guts to buy his own home.
11 October 2011 7:34PM
If you don't value security, independence and freedom of choice then keep living the renters dream, paying your landlords pension, constantly moaning about home owners and rogue landlords, and continually winging that life's not fair.
11 October 2011 7:37PM
If it has never been more affordable (sic) why would it take "guts"?
Think about it?
11 October 2011 7:42PM
These numbers are meaningless.
Literally meaningless.
Houses aren't selling very fast.
Prices are stagnant.
People are re-mortgaging.
Banks are agreeing to repackaged existing deals.
Various people see long term stagnation or risks on the downside.
That just about covers every report from possibly the next 2 months to the next years.
Major financial shock aside.
11 October 2011 7:43PM
why would it take "guts"?
Because all the HPGhouls are running around shouting "the sky is falling in, the sky is falling in". I can see why some people are reluctant to jump in. And why the HPCrazies are so quick to jump on anyone who upsets their narrow, insecure, self centred and selfish view of the world.
11 October 2011 8:12PM
"...The proportion of a first-time buyer's income spent on interest payments fell marginally by 0.1% to 13% from July to August..."
Hmmm
I suspect "income" before Tax, NI is taken.
or
Young first-timers have more dosh than we think.
11 October 2011 8:16PM
couldn't agree more Ambon
In a previous blog I asked if anyone out there in Guardianland had bought a house for less than it was purchased for before 2007. Not a single person had. There are no bargains out there. Only places like Northern Ireland or Merthyr where prices rose on the back of greater handouts from Tony and Gordon with no economic backbone to support these increases are seeing crashes. Everywhere else is just slower sales than the boom.
11 October 2011 8:32PM
Yes, I've asked who is buying too . I sold in late 2006. I know one person that did it soon after. I think poster walshywalsh is about to update our list, though! But s/he has the right idea - decent size, decent area.
A point I've made before is now being more widely made. That being hooked to the housing market is limiting lives. Somehow, people really need to get on with it, buying, selling, whatever. I last bought in early 2007 (not UK). But I could easily have not, given the uncertainly that had just started to brew. I'd now be half way through one of those "lost decades" (particularly given that there's not been many great alternative homes for my cash).
The point is: we keep reading about the "lost decade" as a vague idea. But it is actually hear. The UK is 4-5 years of one now. I know so many people that'd love to buy or move but can't. And more that are limited by having capital in second places that nobody wants to buy or rent.
I don't know what the answer is other than "grit your teeth and get on with it". Mine was the usual: smaller place / rock solid area / location - location - location.
But remortgaging certainly does not indicate a stimulated market. I live in a hyperactive, rising (very possibly bubble) market and I for one can certainly tell the difference.
11 October 2011 8:34PM
And, as where the "value" is, my 30 something yuppie type mates are currently gravitating to Sheffield for varied quality of life and central Manc for urban.
11 October 2011 8:45PM
I think I may have done this. I bought in 2008 (nov) for £115,000 and the seller had bought in 2005 for £130,000. It needed some work and I'm not in a massive growth area, but it was a good decision (mortgage 2% above base rate for life - overpayments are permitted).
11 October 2011 8:57PM
Ambon
You talking to yourself again, mate?
Meanwhile, it's not just "HPCrazies" (sic) who can see where things are heading...
House prices to halve - the FTSE to fall by even more
House prices: 'We're set for a crash so slow that many will not even see it' Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2047375/David-Kauders-house-price-prediction-Were-set-crash-slow-it.html#ixzz1aVMk8IVR
Stay well away from buying a house right now, beware the house-price ponzi schemers. How do you like those apples?
11 October 2011 9:02PM
Whatever999,
Why do you keep asking that question? Every single data set there is shows us that average house prices are below what they were in 07 (and falling again following a dead duck bounce). Why are you limiting your point of reference to the few Guardian readers who have user accounts and happen to be sad enough to read these comments?
11 October 2011 9:08PM
You keep studying money articles in the Daily Mail, or read the tea leaves.
Meanwhile the rest of use will remain in the real world......