Cooling market clear as remortgagers and buy-to-let investors bring biggest boost to lending

The latest market analysis by specialist property lending experts, Octane Capital, has shown that while home movers remained the most prominent category within residential mortgage lending space over the last year, it’s remortgage and buy-to-let investors that have seen the largest uptick in activity in a cooling market .

Octane Capital analysed the latest Bank of England data, released last week, which shows that total advances in residential loans to individuals climbed by 2.1% in 2022, hitting £322.5bn and adding further positive growth to the 26.8% annual jump seen the previous year.

At just shy of £99.7bn, home movers continue to be the most influential force in the residential mortgage market, accounting for the largest proportion of loans seen in 2022, although it’s clear that the landscape has started to change following a string of interest rate hikes and higher borrowing costs.

With the market cooling, so too has the appetite for moving house, with total loans to home movers falling by -16% annually in 2022.

Whilst in contrast, the total value of loans issued to those remortgaging has spiked. In the last year there has been a 31.3% jump in the value of loans issued to remortgagers, hitting a total of £87bn, the second highest of all sub sectors.

This demonstrates the higher propensity of homeowners opting to sit tight in what has become an increasingly difficult market over the last year.

Interestingly, despite the government’s failing to incentivise UK landlords, the total value of loans issued to buy-to-let investors climbed by 12% over the last year, one of only two sub sectors to see positive movement two years in a row.

CEO of Octane Capital, Jonathan Samuels, commented:

“On the face of it, the residential mortgage sector is yet to show any signs that the current cooling market is anything other than a gradual return to normality following the pandemic market boom.

However, what we certainly are seeing is a shift in the landscape and while home movers still account for the vast majority of residential market activity, growing uncertainty around the wider health of the market has caused this number to decline, with many choosing to stay put and remortgage instead.

Instead it is the buy-to-let space that has, perhaps surprisingly, shown the strongest and most consistent growth in recent years. It’s clear that with the number of loans issued to home movers on the decline, brokers should be turning their attention to this segment of the market to capitalise on increasing demand.”