UK Finance has released its latest Household Finance update for August 2018. The findings showed that credit card spending was 7.6 per cent higher than a year earlier, with outstanding levels on card borrowing growing by 5.8 per cent over the year. Gross mortgage lending for the total market in August was £24.1bn, some 1.2 per cent lower than a year earlier.
The number of mortgage approvals by the main high street banks in August rose by 0.7 per cent compared to the same month a year earlier. Within this, remortgaging approvals were 9.2 per cent higher than for the same period a year earlier. There was a fall in house purchase and other secured borrowing of 4.3 per cent and 2.1 per cent respectively. Outstanding overdraft borrowing was 7.2 per cent lower compared to the same time last year.
Commenting on the data, Peter Tyler, Director at UK Finance, said “Remortgaging continued to dominate in August, as homeowners took advantage of a competitive market to lock into attractive deals. Growth in card spending remained fairly strong, reflecting the boost to retail sales from the warm weather as well as the growing use of credit cards as a preferred means of payment. However, the overall economic outlook remains mixed as household incomes continue to be squeezed by rising inflation.”
Richard Pike, Phoebus Software Sales and Marketing Director, said “Following the interest rate rise it is of little surprise that the remortgaging figures have increased in the last quarter, whether in anticipation of the first rise or of what is to come. With just over a month to go until the MPC meet to make its next interest rate decision, speculation is once again rife and predictions changing almost daily whilst Brexit negotiations seem to be faltering. Add to that the upcoming Budget, and what that may mean to the average man on street, and once again the thought of remortgaging is the main option when supply remains low and confidence is weak.”
“Unless you are a first-time buyer, there seems to be little help for anyone further up the ladder, so perhaps the Chancellor will take heed of industry calls to look at stamp duty to help free up the market. Or will the health of exchequers purse be the overriding influence, no matter the effect on the health of the housing market.”
John Phillips, Group Operations Director at Just Mortgages and Spicerhaart, said “These latest figures show that remortgaging has continued to dominate the housing market, with approvals up 9.2 per cent on last year, while house purchase has fallen 4.3%. With the rate rise in September and warnings from Mark Carney that it might not be the last rise this year, it is perhaps no surprise that people are remortgaging now before any further rises start to impact their repayments. And while the whole country is probably sick to the back teeth of talking about Brexit, it is clearly affecting the mortgage market. There are fears that borrowing may become more expensive post-March, so this could also be a factor in the rise in remortgaging. Plus, it could also be part of the reason why house purchase has fallen. I say this because we know people want to move, but many are reluctant to because they don’t know what will happen in terms of the Brexit negotiations.”
“I think stamp duty is still playing its part too; first-time buyers have really benefited from the freeze in stamp duty, but the rest of the market is still faced with huge bills if they want to move – even older people looking to downsize have a huge tax bill to contend with. I’ve said it before and I’ll say it again, with so much uncertainty in the market, people need incentives, and there is an easy option; suspension of all stamp duty. This will give the property sector the boost it needs in the run-up to Brexit.”