Property prices have climbed 12 per cent in the last year, according to the latest figures from the Office of National Statistics (ONS).
And as expected, homeowners have benefited from improved housing equity as a result. Analysis from the Mortgage Advice Bureau shows homeowners who remortgaged in October had £140,611 of equity on average, compared with £111,783 in October 2013: a rise of 26 per cent or almost £30,000 in a year.
At the same time, remortgage applications rose 17 per cent since September and 34 per cent year-on-year, suggesting equity gains are prompting more homeowners to seek a better mortgage deal.
However, a gradual cooling of house price growth (the ONS data shows a monthly increase of just 0.5 per cent) has reassured many people that they can still afford to buy – purchase applications rose 11 per cent since September and 17 per cent since a year ago.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments:
“House price growth has often been billed as a cause for concern over the last year, but for many of the UK’s homeowners – including more than 11 million mortgage holders – the recovery has delivered a long awaited boost to their housing equity. Recovering property values are giving many the leverage they need to negotiate a better mortgage deal with lower monthly repayments, so it’s unsurprising that remortgage applications are rising as a result.
“The fact that annual house price comparisons still remain in double figures might seem detrimental to first-time buyers, but there has been a visible cooling in the rate of house price growth in recent months. This has helped to maintain consumer demand, with purchase applications up by almost a fifth compared to this time last year.”
