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Rise In Remortgaging Brought About By Record Low Base Interest Rate

The Bank of England’s record low base interest rate has propelled a rise in remortgages.

The mortgage processor Legal Marketing Services has released data showing a rise in remortgage transactions. The number of remortgages taking place is the highest since July 2009 and the year-on-year gross amount remortgaged has risen 40% since August 2015.

The Base Rate

On the 4th of August this year, the Bank of England announced a cut to its base interest rate from 0.5% to 0.25%.

The Effect

Remortgages in August saw an increase of 45% annually and 8% since July. Homeowners used the cheaper environment for borrowing to refinance their loans.

Andy Knee, chief executive of L.M.S explains that this cut has had the effect of boosting mortgages but that fears remain over the wider economic future.

Loan Amounts Getting Smaller

Although more numerous, remortgages reduced their loan to value ratio, a key measure of a bank’s confidence from 58% to 54%. In August, the average amount loaned to each customer fell 6% to £162,263.

Mr Knee states that “homeowners appear to be in a more cautious mood than last month: borrowing less in the wake of a couple of turbulent months, both politically and economically”.

The Outlook

This year, customers have been remortgaging more frequently. The average length of customers previous mortgages has decreased by 8 months. Those who had waited for better conditions to remortgage saw the benefit in the interest rates available to them but Mr Knee argues that current conditions favour taking action.

Mr Knee believes that “with today’s favourable conditions it is no surprise to see eight months shaved off the average time that people wait to remortgage and there is plenty of incentive for more people to consider acting before the year is out.”

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Hundreds Of Thousands Trapped In Negative Equity Due To Where They Live

Homeowners in the north of England remain stuck with homes worth less than the value of their mortgage while London property prices surge ahead.

According to the latest analysis by online estate agent House Simple, British homeowners are slowly escaping the mass negative equity that followed the 2008 economic crash. As Alex Gosling, House Simple’s chief executive puts it, “there is light at the end of the tunnel with prices now climbing across the country, and that should help bring many more homeowners out of negative equity”.

North/South Divide

There is however a vast disparity in how quickly different regions are returning to their pre-crash heights. If you have owned a property in London between 2007 and February 2016, you will have enjoyed a rise in the average value of a property of 56%. Owners in the north of England have not been as lucky, with the area home to 17 out of the 20 towns and cities worst affected by the crash that are now facing the longest roads to recovery. The north west of England contributes 40% of the 20 areas with the highest rates of negative equity.

In total, 75 towns and cities were analysed, reporting the percentage change in the value of the average house from 2007 to February 2016. Of these, 53% where found to have current prices still lower than in 2007.

Blackpool and Middlesbrough performed the worst overall with current house prices nearly 30% below their 2007 mark. Alex Gosling admitted “it’s going to take some time” for these areas to “come close” to their previous worth.

Top 20 Performing Towns and Cities In The Housing Market

Town/City Region Average Prices in 2007 (£) Average Price in February 2016 (£) % Difference between 2007 and February 2016 Prices
1 London London 339,511 530,368 56.20
2 Winchester South East 310,089 447,046 44.20
3 Stevenage East Anglia 207,765 289,265 39.20
4 Warwick West Midlands 200,546 278,396 38.80
5 Bedford East Anglia 190,938 256,282 34.20
6 Brighton South East 223,378 298,653 33.70
7 Bath South West 314,896 412,211 30.90
8 Slough South East 181,994 236,023 29.70
9 Reading South East 208,364 270,002 29.60
10 Sale North West 202,452 252,203 24.60
11 Oxford South East 242,896 300,717 23.80
12 Bristol South West 181,588 223,688 23.20
13 Canterbury South East 217,992 266,621 22.30
14 Eastbourne South East 208,170 254,585 22.30
15 Stockport North West 169,813 206,368 21.50
16 Worcester West Midlands 177,492 208,620 17.50
17 Milton Keynes South East 171,861 201,081 17.00
18 Cambridge East Anglia 191,331 223,837 17.00
19 Colchester East Anglia 200,740 234,680 16.90
20 Luton East Anglia 145,595 169,184 16.20

Sale and Stockport are the only towns outside the south of England to make it into the top 20, seeing 25% and 22% rises respectively.

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.