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Are Remortgages And Mortgages Seeing Renewed Hope?

By Liz Moir

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Published: 27Dec2009
Word count: 608
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Over the past two odd years since the advent of the credit crunch mortgage and remortgage applications have slumped.

Mortgages are almost a fact of life for most, as of course a mortgage is the first requirement when you think about buying a property, that is unless you have enough money in the bank to pay for the property outright. As very few are in this fortunate position it means that during the course of a lifetime most people will have at least one mortgage. The average person moves house on average every four years or so and therefore most will have several mortgages during their life.

This all means that mortgages were an extremely very much in demand financial product, as a homeowner would be applying for a mortgage every few years.

However the recession changed much of that, as suddenly even some who thought that they had a job for life, found themselves on the scrap heap of redundancy. Others saw their family incomes reduced by no longer working overtime due to the decrease in their firm's productivity, while other members of the work force were asked by their bosses to accept a cut in wages to enable the firm to survive the credit crunch.

This severely depleted the confidence of the public in general and many no longer considered taking out a mortgage, whether to buy their first property and become a homeowner for the first time, having lived up until then with their parents. Therefore even young adults who would have loved to flee the family home and set up their own first home lacked the confidence to do so.

Those who wanted to move house to, for example, buy a bigger home or to relocate to be nearer their work place or elderly parents choose to stay put.

As such the demand for mortgages fell. This was coupled by the fact that even for those in a healthy financial situation and in recession proof professions, such as young doctors and teachers, found it difficult to get on the property ladder, as mortgage lenders tightened up their underwriting criteria and their equity so that first time buyers required to have a minimum 25% deposit.

Remortgages suffered the same fate. Remortgages had always proved to be a popular product allowing homeowners to move from their existing building society to another to obtain a better rate of interest. Changing from one mortgage lender to another without applying for any additional funds is known as a like for like remortgage.

Remortgaging to obtain additional funds was a very common practice, as it enabled homeowners to raise capital for any number of purposes including car, caravan and boat purchase, to go on an extra special holiday or even to pay for that dream wedding.

Homowners often took out a remortgage for debt consolidation whereby all outstanding debts on personal loans, credit cards etc. were rolled into one, saving a considerable sum of money each month and making the household finances much easier to manage.

The recession saw the call for remortgages fall dramatically in the same way as mortgages, and several mortgage lenders withdrew from the market.

Only today it was announced that Kensington, who had withdrawn from the market, are now coming back although in a more restricted fashion than previously when they advanced remortgages and mortgages to people with poor credit ratings, and accepted self cert. self employed applicants.

Now only status remortgages and mortgages will be available from Kensington and their once extensive intermediary sector is, for the meantime at least, restricted to only three. Let us hope that this heralds an improvement in mortgage lending.

Champion Finance has been established since 1985, and are the longest established finance broker in Scotland. Champion Finance are experts in the field of secured loans, mortgages and remortgages.

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