With more Lockdown restrictions being brought in for most of the Northern parts of England, mortgage refinancing activity fell just 4% in the second quarter of 2020.
The ease of product transfers over Remortgages also pushed more borrowers down this route, as product transfer volumes grew 2% in Q2 and accounted for 77% of all refinances, up from 72% in the previous quarter. However, Remortgages, where extra borrowing is required, has suffered the greatest decline of 22% year-on-year, likely due to the need for face-to-face interaction with mortgage advisors, such as Stephen Kerrigan, Mortgage Advisor from Sheffield.
Under normal conditions, borrowers with higher balances would have looked to the wider market for a Remortgage while those with lower balances were more likely to choose the quicker option of a transfer. However, a 5% increase in the average loan size for a product transfer to £145,000 compared to a 1% rise in external remortgage loan size suggested those who usually would have remortgaged decided to switch with their existing lender.
House purchases lending dropped 48% in Q2 as the nation went into Lockdown, and home movers were affected massively due to being more reliant on a housing chain because of logistical challenges as well as they need to buy and sell.
In April, home mover numbers dropped by 61% year-on-year compared to 53% for First-Time Buyers and 54% for buy-to-let borrowers. This picked up slightly after the sector reopened in May, but the 3% growth in activity in June still remained below that seen in the same month last year.
Despite this, a rebound is expected in Q3 if Zoopla’s estimation that 370,000 transactions were put on hold due to the lockdown resume. UK Finance said these would not immediately continue if buyers were deterred by the economic situation or needed more time to get their finances back on track.