The number of home owners borrowing extra amounts on their mortgage has surged by just over 9% year-on-year, figures from a trade association show.
Home owners are borrowing just over £55,000 on average in addition to what they owe as they take advantage of continued low mortgage rates – and experts said the trend reflects people choosing to improve their existing home rather than move.
The figures from UK Finance also showed the number of first-time buyers has decreased year-on-year for the first time in six months.
There was a 9.1% year-on-year increase in borrowers taking out re-mortgage deals which included some additional borrowing in March, UK Finance said.
There were 16,810 new re-mortgages with additional borrowing in March. For these re-mortgages, the average additional amount taken out in March was £55,700.
In total, there were 4.1% more residential re-mortgages in March than in the same month a year earlier.
UK Finance said: “This is the 12th consecutive month of year-on-year growth in re-mortgaging, as a number of fixed-rate deals come to an end and borrowers continue to lock into attractive rates.”
Commenting on UK Finance’s figures, Andrew Montlake, director of mortgage broker, Coreco, said: “The 9.1% rise in additional borrowing re-mortgages compared to a year ago reflects the fact that a lot of people are choosing to add value to their existing homes rather than move.”
While re-mortgaging is on the increase, the number of deals being taken out by home buyers has fallen year-on-year.
Some 28,800 new first-time buyer mortgages were completed in March 2019, 2.4% fewer than in the same month in 2018, UK Finance said.
This is the first year-on-year decrease in first-time buyers since September 2018.
The number of mortgages handed out to existing home owners moving house was also down year-on-year.
There were 25,280 home mover mortgages completed in March, a 6% year-on-year decrease.
Meanwhile, the number of mortgages being handed out to buy-to-let landlords purchasing properties also decreased year-on-year.
UK Finance said: “While buy-to-let house purchase activity continues to contract due to tax and regulatory changes, buy-to-let remortgaging has increased year-on year for the second month in a row.”
There were 5,000 new buy-to-let home purchase mortgages completed in March 2019, 9.1% fewer than in the same month in 2018.
Re-mortgaging in the buy-to-let sector increased by 3.9% year-on-year, with 14,400 loans handed out in March.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The decrease in number of first-time buyers after continuous growth over the past six months is a concern, and let’s hope it is just a blip in the numbers.
“First-time buyers are so important for the overall health of the housing market, ensuring transactions further up the chain can happen.
“Re-mortgaging goes from strength to strength as borrowers come to the end of fixed-rate deals and quickly hop over onto another competitive rate.”