Very encouraging figures released by financial advice platform Twenty7tec this week show that the amount of people searching for a mortgage has increased significantly in the last month despite reservations due to looming economic downturn.
Against all odds and many financial advisor’s predictions, the amount of clients actively searching for a new mortgage has increased by 21.5% in August 2022 compared to the same time last year. To many, this was not expected as people are tightening their purse strings as the grip of the rising cost of living is felt by the average person. Energy bills are going up, food is becoming more expensive, and lots of mortgage lenders are increasing their interest rates on a weekly basis. But, it seems that the appetite for new mortgages and perhaps more importantly remortgages is still there. Good news for the property market.
As a mortgage brokerage, we are actively encouraging all of our client base to speak with us and go through a full mortgage health check to make sure that they are all on the best deal to cope with rising costs. Its a simple process and just involves one of our advisors taking a look at your current product, interest rate, and fixed deal and then making a recommendation about how to prepare for the next few years. The aim being to make sure that your monthly mortgage payment doesn’t increase by too much and become unmanageable.
Already we have seen quite a large amount of our clients returning to us to have a look at their current mortgage deal and we have helped lots of clients re-structure and remortgage to get in to a better financial position. This, is what we believe is driving the amount of new mortgage searches more than anything. There are of course other factors to consider for the increase, for example we were still reeling from the several lockdowns imposed by the COVID-19 pandemic. In August 2021, despite lockdown measure being eased quite significantly compared to 2020, people were still cautious of how things were going to play out. People did not know if we were going to go in to another lockdown, if they were going to lose their jobs, if they were going to stay put or look to move. Everything was still very much in the air in August 2021.
Thankfully, the COVID-19 alert in the UK was reduced to 2 last week which means that despite the virus still being present, the risk of getting seriously ill has decreased significantly and all lockdown measures have now been lifted. The easing of lockdown measures in the country has definitely given people more confidence and the property purchase and sale market initially bounced back quicker than any of us expected. But alas, a culmination of COVID spending and the war in the Ukraine has pushed our economy dangerously close to the edge and we are now facing a recession. The Bank of England’s base rate is currently at 1.75% and inflation is at 10.1% with both expected to increase significantly over the next 12 months. Despite all this doom and gloom, there is still a market for mortgages and now more than ever, people need the valuable advice of a mortgage advisor. And we are here to help.
In the newly released date by Twenty7tec, they also announced the following positive news:
- August was also the second busiest month ever for ESIS documents with the 4th of the month being the highest-ever day for total ESIS documents produced.
- August 4th was also the busiest day ever for remortgage searches. For eight of the 31 days last month, searches for remortgages outstripped searches for purchase mortgages.
- The 10 busiest days ever for green buy-to-let mortgages were also all in August, but it saw the lowest proportion of first-time buyers in the market in 2022.
Some not so positive data does however show that in August 2022, there was a 11.52% drop in mortgage products available, down to the lowest product availability since 23 July 2021. Meaning that mortgage lenders are removing and reducing the number of products they offer as a direct result of the economic crisis.
James Tucker, founder and CEO of Twenty7Tec, has commented on these new figures:
“The front end of August was among the busiest of months we’ve ever seen. The latter half was definitely affected by the summer holidays and by the bank holiday weekend. Away from the headline figures, however, it’s a very nuanced market. Remortgages and buy-to-let activity were high, but first-time buyer, purchase and £1m+ property searches were all down. The major story of the month has to be product availability, including a 26% drop in products with max LTV of 60% – a key component of the buy-to-let market and a move that surely drove some of the extra search activity.
Normally, we’d be expecting a back-to-school vibe this week, with the 14 weeks from the beginning of September to the run-up to Christmas being the busiest of the year. But if I have learned anything from the past couple of years, it’s that it’s easier to comment on what has come than what is to come. Either way, we’ll be here to support you in advising your customers on getting the best possible deal in a rapidly changing market.”
Lets hope that these figures continue to increase moving forward. If you or someone you know is thinking of getting a new mortgage or just wants to discuss their current deal with a professional, please feel free to give our team a call today to see how we can help.