The Slow Re-Emergence of Remortgage Deals in the UK
The lack of remortgage deals has been a problem for British consumers over the last few years. However, homeowners were boosted by recent good news from the Council of Mortgage Lenders (CML). The lenders organisation’s latest report shows that there has been a significant increase in lending in the UK.
The organization released figures that show a 20% increase from February to March, and although the lending figures are down from a year previously, it is encouraging to see that the mortgage market appears to be recovering after a long wait.
Those who have been looking to remortgage their homes to obtain a better interest rate have been stuck for some time, and so these new figures are extremely good news for those people, as lenders are now approving their highest number of remortgage applications in three years. It looks as though those people are now able to get the cheaper deals that they have been wanting.
Over the last ten years remortgaging has been commonplace in the UK. Many homeowners used a remortgage to consolidate unsecured debts such as personal loans and credit cards. Consumers used low rate remortgages to repay high interest unsecured borrowing.
The financial crisis within the UK also saw banks, building societies and other lenders becoming more brutal in their attempts to recover debts from homeowners. You may recall that we saw record numbers of repossessions over the past few years, and this was all linked in with the high levels of debt that UK homeowners had against their properties. When property prices dropped, many had negative equity so could not sell their properties.
Cuts in government spending on benefits and public services in order that it can reduce its own debts have had a knock-on effect on many households. Many people have been forced to use loans and credit cards to meet their commitments and increasing numbers of people are now seeking to consolidate these debts with a remortgage.
The CML believe that the housing and mortgage market has improved since March 2010 even considering that household finances are still under pressure from rising inflation and tax increases. Most lenders believe that lending restrictions will continue to be loosened in the second quarter of 2011 and that mortgage finance will gradually become more readily available.
The spokesperson did also say however, that it looks as though the mortgage and remortgage markets look stable and set to continue to increase. Of course, this will not continue unless consumers are far more sensible with credit than in previous years.
The higher remortgage activity also suggests that lenders now believe that borrowers with security, such as a property, are now at lower risk levels than other borrowers. Many people who were unable to cope with their finances are now out of the market place having lost their properties, and many more have faced bankruptcy.
It would seem then, that there is light at the end of the tunnel, and the UK is coming out of the current economic climate, all be it at a slow place. However for the markets to remain stable, it is vital that the recovery is slow to avoid another disaster.
Timothy Frodsham writes for JustRemortgages.com one of the UK’s top sites for the latest remortgage rates and best remortgage deals.