Remortgaging: making sense of the data

Today's mortgage trends update showed there was a ten per cent drop in overall remortgaging activity in June 2019, compared to the previous year. This has been driven largely by a fall in pound-for-pound remortgages, contrasting with a year-on-year rise in remortgages with additional borrowing. However, when we look beyond the latest monthly figures, we see a different pattern emerging.

A look at the longer trend data

Remortgaging activity can be volatile and there are often significant variations from month to month (see chart below). For example, last month saw a 20 per cent rise year-on-year in overall remortgaging, with growth in both the number of pound-to-pound mortgages and those with additional borrowing. Overall, the trend for remortgaging in recent years has been an upward one.

Source: UK Finance


Remortgaging is also cyclical and dependent on the maturing of fixed-term deals, meaning it is impacted by borrower behaviour from two and five years ago. Due to low interest rates and a competitive market, we?ve seen more and more borrowers shift towards taking out a five-year fixed rate mortgage, both when buying a house or when remortgaging to a new deal. In June 2018, the number of five-year fixed rate mortgages overtook the number of two-year deals for the first time. This trend has continued into 2019, with five-year fixes remaining the most popular product options for new mortgages.

This, coupled with some borrowers locking into attractive rates early, may have contributed to the slight drop in the number of homeowner mortgage deals coming to an end, with 400,000 ending in Q2 2019 compared to 440,000 in Q2 2018.

Source: UK Finance


We?ve also seen product transfers become more popular, with 1.2 million borrowers last year opting to switch product internally with their existing provider. This is in addition to 460,000 remortgages. This suggests that many of those who would traditionally have taken out a pound-for-pound remortgage are instead now switching products internally. UK Finance's latest product transfer data for Q2 2019 is due to be published on 23 August and will give an indication of whether further growth in product transfers could also be driving the recent fall in pound-for-pound remortgaging.

Overall, when we see a substantial change in figures, it's important to examine the broader reasons why these changes might have occurred - and not to take a single month's data at face value. We will be continuing to carefully monitor the performance of the mortgage market in the months ahead, looking at how ongoing trends and customer preferences are shaping this highly competitive and diverse sector.

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