Remortgaging lending up by 16.5% as recovery in NI housing market continues

REMORTGAGES are the fastest-growing form of home loan in Northern Ireland, with lending up 16.5% over the last year, according to new figures.

The report from industry body UK Finance also shows growth in mortgage lending in Northern Ireland is outpacing the UK as a whole.

But Ulster Bank chief economist Richard Ramsey warned the mortgage market was unlikely to be insulated from negative economic trends in the near future.

UK Finance said there had been 2,750 remortgage loans made to Northern Ireland home owners in the second quarter, up 16.5% on the same quarter in 2018.

Levels, however, are still well below the peak of the housing market in 2007, with Mr Ramsey adding that growth was from a low base.

But he said the 16.5% yearon-year increase was in keeping with growth in house prices over recent years.

People were opting to remortgage to raise money after building up more value in their homes since the market began its gradual recovery around 2012/13.

Mr Ramsey said: “Six years of house price growth, with a cumulative rise of 40%, has boosted residential property equity. In turn, this has facilitated remortgage growth for home improvements and extensions.

“The first half of 2019 has seen the remortgage market overtake the first-time buyer sector.

“Despite this growth, the level of remortgage activity remains just over one third of what it was in 2007.”

There was a 4.1% growth in loans to first-time buyer, reaching 2,810 during the second quarter of the year.

Patrick Mullan, head of mortgages at Danske Bank, said the UK Finance report showed the health of the housing market and that people were keen to move regardless of worries about the economy.

But he said the rise in remortgage resulted from “competitiveness between lenders providing customers with choice, better awareness of deals and a tranche of people reaching the point in the cycle where they have the option of re-fixing their mortgage”.

Mr Mullan added: “We have seen the clear trend of people fixing their mortgage for longer continue, with a significant number of people moving from twoyear fixed rate to five-year deals. Number of remortgage loans made to Northern Ireland home owners in the second quarter of the year There is now a culture of preference for fixed-rate mortgages and the certainty they bring, which historically was not the case in Northern Ireland.

“Looking forward, we expect continued healthy growth.

“We are in a prolonged low interest rate environment, new home construction activity is continuing apace, there’s a ready supply of finance and house prices in Northern Ireland are still the most affordable in the United Kingdom.”

There was growth of 4.7 % in the numbers of home- mover loans, reaching 1,780.

Mr Ramsey said the house price crash and ensuing negative equity for many homes had resulted in a slowdown in house-movers. “While the level of home mover activity has doubled from its post-downturn trough, the level of activity remains subdued,” he said.

“During the first six months of 2019, the home mover market has posted growth of 2.8%.

“Nevertheless, this still compares favourably with the UK, where growth was marginal at 0.5% year-on-year.”

Mr Ramsey said that while the mortgage market was in expansion mode, different parts were expanding at different speeds.

“Given the challenging economic outlook, the market will not be insulated from wider economic developments and could hit a speed bump sooner rather than later,” he said.