latest trends in property August 2019
Growing numbers of homeowners appear to be opting to extend or improve their current property instead of trading up the housing ladder.
Around 16,880 people increased the outstanding size of their loan in June when they remortgaged, borrowing an additional £56,100 each on average, according to figures from UK Finance.
While the group does not track what homeowners are using the money for, commentators speculated that it was being used for substantial home improvements.
Adrian Anderson, director of mortgage broker Anderson Harris, says: “Many borrowers are taking on extra borrowing when they come to remortgage.
“This is a clear sign that homeowners are staying put and improving or extending, rather than paying the hefty cost of moving home.”
The number of people who took on additional borrowing outstripped the 15,320 homeowners who switched loans without increasing the size of their mortgage.
The total was also 8% higher than it had been in June 2018, suggesting it represents a growing trend.
Why is this happening?
A number of factors are likely to be driving the decision among homeowners to extend rather than move.
As house prices have risen, the associated costs of moving – many of which are charged as a percentage of a property’s value, have also increased.
In its most recent survey, Lloyds Bank estimate the average person now spends more than £12,000 on taxes, surveyors’ and estate agents’ fees and moving costs when they buy a new home.
At the same time, growth in property values has increased the gap between the cost of a starter home and a family property, leading to many people finding their second step up the property ladder harder than their first.
Meanwhile, the current shortage of homes for sale, means those looking to buy a new property have only a limited choice.
As a result, it appears that many people have decided they are better off staying put and finding a way to extend their current home.
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