Mortgage: Stamp duty changes force shifts in priorities as remortgaging figures plummet

Martin Lewis compares paying mortgage over investing in savings

Mortgage holders often have the option of remortgaging, which involves a person taking out a new mortgage on a property they own. This is usually done to replace existing deals or borrow money against a home and if done correctly, it can save families thousands.

However, given recent state intervention, the option has become less popular with homeowners in recent months.

In analysing new data, Trussle revealed more homeowners are moving to a new home (56 percent) than remortgaging on their current home (44 percent), compared to this time last year, where the majority of homeowners were prioritising remortgaging (63 percent) over moving to a new house purchase (37 percent)

This turn of events did not seem likely at the beginning of the year, as applications for remortgaging was up 196 percent month-on-month in January, with an additional jump of 54 percent seen in March, just as the UK entered lockdown.

Despite this, priorities were completely reversed as the stamp duty rules were upended in the summer, with new mortgage applications from next time buyers surging by over 73 percent in June as stamp duty excitement grew.

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This demand has only grown and as such, Trussle detailed they were keen to remind people slipping onto an expensive SVR could increase their monthly outgoings.

Previous research from Trussle found people could save an average of £4,500 a year by remortgaging, which is equivalent to 15 percent of the UK’s average salary.

Continued low interest rates mean many fixed rate mortgages are competitive, especially for those who have equity in their properties.

Miles Robinson, the Head of Mortgages at Trussle, commented on this: “After an uncertain year, it’s encouraging to see house prices rising and the property market moving, with a sustained interest for house moves.

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“While many homeowners contemplate buying a new home, it’s important to keep on top of your current mortgage and consider remortgage when the time is right.

“Every year, thousands of homeowners unknowingly move onto a high standard variable rate (SVR) when their mortgage deal ends and their monthly payments can increase considerably.

“Homeowners can save £344 on average per month by remortgaging, which is a significant sum.

“In these unprecedented times, we’d encourage those who are concerned about their finances to keep an eye on their mortgage.

“It’s worth using a remortgage calculator to see if switching to a better deal could save money.”

Few industries or financial products have been as impacted by coronavirus as the mortgage market has and this can be illustrated by today’s Mortgage Lenders and Administrators Statistics released by the Bank of England.

Conor Murphy, the CEO of Smartr365 and Capricorn Financial Consultancy, examined the data and broke down what the figures mean for multiple facets of the mortgage market: “Today’s statistics show the full impact of the coronavirus pandemic through Q3. The value of mortgage advances fell by 14.7 percent year on year, which is a significant amount. Despite this drop, the overall outstanding value rose by 2.9 percent, as the vast number of borrowers on payment holidays continue to accrue interest on their loans despite missing payments.

“The payment holiday scheme presents an opportunity for brokers to show their expertise to support borrowers through this difficult time and beyond. Brokers are host to a wealth of information on the mortgage products available for borrowers in all financial situations, and offer invaluable support and advice to those in challenging situations at present.

“Although an undoubtedly challenging Q3, the outlook for Q4 looks promising. We have already seen great improvements as more borrowers return to full payments and more 90 percent LTV products have been reintroduced to the market.

“Q4 owes much of its success to tech, as it is through tech that the impact of the second lockdown on the mortgage market was limited with little disruption to the continuation of business. We have seen a significant shift in the uptake of tech from brokers, lenders and lawyers, as its use has become vital to ensure secure access to documents, digital verification of ID and meetings to continue.

“While these unusual times will continue in the new year, it is great to see the market beginning to return to full capacity through a unanimous acceptance of tech. As the home moving market continues to boom, driven by the stamp duty holiday and continued demand, it is great to see brokers providing a secure and efficient service through the uptake of tech; a change that is likely to remain even once the world returns to normality.”

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