Remortgage: interesting Bank of England figures
When house prices are falling, finding a remortgage can be difficult. Today, most experts seem to agree that we’re about halfway through a house price slump that’s expected to start turning around once prices have fallen 25-30% from their peak values – and house price trends are a major factor when it comes to remortgage deals.
Lenders don’t want to offer a remortgage that’s worth more than the property might be worth in a year or so, so most of them are only offering remortgage deals to homeowners who owe less (in secured debt) than 60-80% of their home’s value.
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Is a remortgage still an option?
Having said that, the latest Quarterly Bulletin from the Bank of England states that ‘previous rises in house prices had left most homeowners with a substantial buffer of housing equity’. In 2008, according to the Bulletin, almost 60% of mortgagors had secured debt worth 50% or less of the value of their home – and a further 25% or so owed 50-75% of the value. In other words, it seems around three quarters of mortgagors might meet at least one of the banks’ most important criteria for a remortgage, although this doesn’t mean they’d definitely be approved for a remortgage.
What’s more, it doesn’t mean that a remortgage is the right way forward for them, whether they’re looking to change their mortgage provider, consolidate their debts or borrow money.
Tags: remortgage, remortgaging, bank of england, BoE, house prices