subject: The Varying Fortunes Of Remortgages And Mortgages.. [print this page] The UK economy has rarely been so seriously bad.
The UK has only previously been in such financial crisis when at war.
It was to be hoped that the Budget this week might contain some little gems that would help the recovery but unfortunately this was not to be.
In fact certain aspects of the Budget such as the raising of National Insurance Contibutions that employers will have to pay for their workers will only cause some companies already struggling to survive to even lose their fight for survival.
It will even lead to further redundancies at a period when redundancies have reached epidemic proportions
In the midst of all this eonomic depression there was a glimmer of hope this week with the announcement by The Council Of Mortgage Lenders that mortgage applications had risen in October to the highest level since December 2007.Mortgage applications rose to 55,000.
There are still citizens who feel that they are financially in a good place at the moment.
When buying a property a mortgage is required and this up turn in mortgage applications shows that some people have the confidence to move house.
Most of these will be moving to a bigger more expensive property as if they were down sizing frequently there is no need for a mortgage as the profit on their current property should make them mortgage free.
Mortgages appear to be moving in the right direction with the figures for October being 33,000 more that those in January.
However the news from the remortgage front is not the same as for mortgages.
Remortgages are the product that is only available to those who already have a mortgage, and it involves changing the current mortgage from the existing lender to another to either obtain a better rate of interest or to raise additional funds for any number of reasons.
The majority of homeowners in the past remortgaged at the end of their current deal which could last from two to five years after which there was no early repayment penalty.
People wanting a remortgaqe are being turned down as they may not have the required equity in their property.
Underwriting criteria for remortgages is not nearly so lax as it one was.
The Council Of Mortgage Lenders has been keeping records for more than seven years now, and the number of remortgages granted in August this year being only 30,000 made it the lowest month in all these years.
It is difficult to understand why remortgages have been so badly affected by the recession as rates are at their lowest rates ever for those with good equity in their property.
There are homeowners who have equity and for those with an equity margin of 70% and 60% rates of 1.99% and 1.98% respectively are available on a tracker product.
As such it makes little sense that remortgages have fallen so badly while mortgages are on the up.
by: Liz Moir
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