Recovering house prices will unlock mortgage prisoners
Remortgage lending will increase to £80bn in 2016, according to the latest forecast by the Mortgage Advice Bureau.
The remortgage market has slowed significantly in the past few years with many homeowners benefiting from the historically low base rate of 0.5 per cent. Others though have been far less fortunate; plummeting house prices have left 27 per cent of homeowners imprisoned on their current rate.
However with house prices steadily increasing, homeowners will start to see the cloud of negative equity lift and new mortgage opportunities present themselves.
The threat of an increasing base rate will also play a part in the remortgage revival as homeowners are woken up from their mortgage lethargy.
Lynne McCaffrey, Head of Property, comments:
“Forget a tale of two cities, for the past few years it’s been the tale to two homeowners – those able to lap up the historically low base rates – to the extent where many are oblivious to their current rate - and those locked into theirs with no means of escape.
“However, if this forecast is to be believed, we could see homeowners returning to the remortgage market sooner rather than later. After all, nothing prompts a reaction better than an increase to our outgoings!”
Content correct at time of publication