Re-Mortgaging takes a hit
While the credit crunch affected the prospects for first time buyers and those looking to upgrade their properties and new crisis has struck the mortgage market leaving it weaker than ever.
With house prices falling and consumer spending at its lowest for years the number of people re-mortgaging their homes has dropped sharply. The CML has released figures which show this drop to have been 23% year on year for the month of May.
This represents a sharp U-turn from the booming re-mortgaging market of just a year ago when £500 million was handed out in loans every day.The data from the CML also showed that the number of loans taken out by home buyers has fallen by 45 per cent over the last 12 months, with just 7,900 home loans written.However, it is the drop in re-mortgaging levels that has surprised mortgage experts, who said it proved home owners were increasingly choosing to take out a fresh deal when their fixed rate mortgage comes to an end.Instead, many are choosing to move onto the bank or building society’s standard variable rate (SVR) – even though traditionally this is the most expensive rate.Some standard variable rates are now cheaper than fixed mortgage deals. And they are fee-free so lots of people are just sitting and waiting for rates to fall.For example, the
Halifax’s standard variable rate is seven per cent but the average three-year fixed-rate loan is 7.25 per cent.While it is possible to get a cheaper home loan, the best deals have high fees, unlike the SVRs. In a further sign that falling house prices are making it increasingly difficult for consumers to raise money, Firstplus, the
UK’s largest supplier of homeowner loans, has said it would stop selling new loans because of a collapse in demand.
