The analysis shows that there were 92,558 remortgage sales through Q4’21 – their highest quarter since Q1 2020 (114,503) as the sector returns to pre-pandemic levels of activity.
In contrast, the surge in first-time buyer and property mover loans now appears to have subsided. These mortgages had shot up during the pandemic as people took advantage of the stamp duty holiday, increasing household deposits and changing lifestyles to get on the property ladder or move on.
Sales of mortgages for first-time buyers (112,005) and house mover mortgages (133,890) both reached a five-year peak in Q2 2021 but slumped in Q4 to 89,542 and 75,726 respectively.
It marks a continuation of the trend from ‘move’ to ‘improve’ as households prepare for a gloomier economic situation as the cost-of-living crisis bites and the Bank of England began to increase interest rates in Q4.
This is leading people to lock in fixed-term deals before further rate hikes and capitalise on the equity in their property to finance renovations rather than moving home.
Andrew Fisher, Chief Commercial Officer at Freedom Finance, pointed to a higher-rate environment and slowing property market as drivers for further remortgage growth in 2022, while debt consolidation could also drive activity in the remortgage and second charge markets.
He said: “Since late-2020 mortgage sales for first-time buyers and home-movers rocketed due to pent-up demand from the first lockdown combined with stamp duty cuts, the ability for many households to save more money and a change in working habits driving a race for space.
“This latest data however indicates that the housing market began to return to pre-pandemic trends in the final quarter of 2021 with remortgage sales outnumbering all other types of home loan.
“The gloomy economic environment and the consecutive rate rises from the Bank of England are only likely to drive further demand in the remortgage market as borrowers look to lock into fixed-rate loans either from variable-rate mortgages or as their existing deals come to a close.
“The second charge mortgage market is also seeing rapid growth this year, with the value of new business reaching £127 million in April 2022, marking a 54% increase from April 2021.
“It indicates that as the cost of borrowing rises, squeezing household budgets even further, debt consolidation is rising up the agenda. Second charge mortgages and remortgaging could therefore be an increasingly favourable method of clearing or reducing existing debts for homeowners looking to capitalise on the house price boom from the pandemic and get through the cost-of-living crisis.
“As ever, it is crucial that customers compare products from different lenders to ensure they are getting the best deal they are eligible for and that is the most appropriate deal for their personal circumstances.”
