Remortgage blog: Market stuck in a spin cycle

Published: 01/07/2014

Monthly gross remortgage lending dropped 17 per cent despite rumours of an imminent rate rise. Are homeowners burying their heads in the sand or is MMR to blame? Lynne McCaffrey thinks it’s time for remortgagers to rinse and repeat the mortgage process:

“So remortgage activity is dropping faster than England’s World Cup ranking and Luis Suarez sponsorship deals combined! Gross remortgage lending is down from £4bn to £3.3bn. The number of remortgage loans is down to 21,396 – a 19 per cent drop month-on-month and a staggering 27 per cent year-on-year. Loan amounts are down for the first time since October 2013 and the overall market share drops 4 per cent month-on-month and 6 per cent year-on-year.

“Many will lay the blame solely at MMR’s door; we know remortgagers in particular are frustrated by the lengthier process now involved in securing a new mortgage. In essence they are being made to prove their ability to pay a mortgage they have already been repaying!

“But are things really this black and white or are homeowners themselves partly culpable for this sizeable dip in remortgage activity?

“I’ve often applied the ethos if it ain’t broke don’t fix it and I’m hazarding a guess that many homeowners who are plodding along on their lender’s standard variable rate are of the same attitude. This is all well and good when things are in full working order but if there is a smidge of evidence that things could be on the blink then it might be time to bring in the professionals. It’s a bit like a washing machine that, after washing your clothes, won’t release the door to allow you to hang them out!

“There are very definite warning signs that the wheels could soon come off. Near enough every day we are reading how rates are set to rise, by the end of the year, to 5 per cent by the end of the decade. Remortgagers may therefore wish to find a way to unlock that door sooner rather than later.

“Some appear to be heeding the warning bells; lenders are starting to report an increase in enquiries particularly following Mark Carney’s comments a week or so ago. It’s a just a shame this coincides with lenders trying to find their MMR feet. I’m afraid remortgagers may have to go through a couple of rinses before coming out with a shiny, new mortgage in the short time. I believe it to be worth the effort though, like getting into bed with fresh clean sheets… lovely!”

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