While evidence suggests uncertainty surrounding the EU Referendum hasn’t deterred home buyers, with asking prices and house sales at record highs, home owners appear more cautious with 56% of those remortgaging lowering their rates ahead of June 23rd.
Online property portal, Rightmove, has reported that asking prices in England and Wales rose by 0.8% in May, with the average asking price now recorded as being £310,471. This has been compared to the 0.1% fall in house prices in May 2015, during the run up to the general election.
The only area in England and Wales to see a monthly decline in asking prices was Greater London, where prices fell by 0.2%.
House sales also continue apace. Rightmove reports that the average time to sell a house is now 57 days. This is the lowest time recorded since 2010.
The severe lack of supply in housing has been held accountable for this: there are now 5.3% fewer new-to-market properties available than there were a year ago. And the recent rush on buy to let and second homes by investors looking to avoid the new stamp duty surcharge has not helped the housing shortage.
Miles Shipside, director of Rightmove, said:
“In many parts of the country, the over-riding factor of supply outstripping demand has so far overcome buyers’ usual reluctance to make major financial decisions at times of political uncertainty.
“Most seem to be getting on with the certainties they can control, namely if you find a suitable property snap it up. Indeed, the figures for average time to sell indicate that properties are being snapped up more quickly than ever.”
These latest figures are published following a forecast from the Royal Institution of Chartered Surveyors last week that house prices are due to fall in the short-term because of uncertainty surrounding the EU referendum.
LMS meanwhile has reported that 56% of remortgagors lowered their mortgage rates in May, taking advantage of the competitive rates currently available.
In fact, LMS’s research reveals that 32% of borrowers reduced their monthly outgoings by up to £500.
The number of remortgagors looking to increase their loan size rose by 2% from 24% to 26%. Similarly, the number of home owners increasing their mortgage by more than £10,000 was up by 3% to 19%, from a low of 16% in April.
LMS’s research also found that the number of remortgagors who think that interest rates will rise is now at 14%, up from 12% in April. It has been reported that this may be due to uncertainty surrounding a potential Brexit outcome.
Otherwise, 19% of borrowers remortgaged to finance home improvements, 3% borrowed to help their children on to the property ladder and 7% remortgaged to pay off other debt.
Andy Knee, Chief Executive of LMS, said:
“Increased competition between lenders, record low rates and rising housing equity have come together to provide homeowners with a setting that is ripe for remortgaging. The number remortgaging hit a seven-year high in April and with over half of those lowering their mortgage rate and a quarter increasing the size of their loan in May, it is clear that many savvy borrowers are taking advantage of the current climate and we expect activity to maintain its momentum.
“For others, as the EU referendum looms ever closer with the outcome increasingly difficult to predict, homeowners are looking for stability in their monthly costs and prioritising long-term security over initial savings. We’re also seeing evidence in the market that many remortgagors are opting for a fixed rate to guarantee a set rate for a set period. Locking in is very competitive right now with huge savings to be made in the long-run even if it means in the short term they pay a little more. With an uncertain economic climate, knowing what your mortgage payment will be for five years is a very seductive offering for many remortgagors.”
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