Is a Revival of Mortgages and Remortgages on the Cards

Unless a person considering buying a property has a substantial sum of money saved to pay cash for the property which is unlikely taking out a mortgage is essential for most people. Very few have this kind of money in the bank and therefore most people do in fact require a mortgage to fund the purchase of a property. 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 them 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.

A very common use for a remortgage is to use it as a debt consolidation loan which combines all financial outgoings into the one lower monthly payment saving a considerable sum of money each month and making the household finances much easier to manage.

During the course of the recession remortgages followed the same path as mortgages and caused a number of mortgage lenders to stop lending and close shop.

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. Hopefully there is a renewal of hope in mortgages and remortgages.