Remortgaging? Don't bank on it.
House market keeps stalling
Published: 24 May, 2010
LONDON: Hopes of a springtime recovery in the housing market are fading as new data shows bleak prospects for homeowners.
New figures show mortgage approvals for house purchases in April were at their lowest level for a year with lenders warning that their own difficulties accessing cash were making it hard to offer mortgages to homebuyers.
Data from the Bank of England shows that about 14% of all households with a mortgage, equal to about 1.5m households, have less than 10% equity in their property. That is too little to allow them to reduce their outgoings by refinancing on more attractive terms, even if these were available.
This is more than twice the roughly 600 000 households that the Council of Mortgage Lenders estimates are in negative equity owing more to their bank than their homes are worth.
The council said its members, who make about 94% of all the mortgage loans in Britain, are facing higher costs as they compete for retail deposits to replace maturing wholesale loans. This is likely to mean that rates on mortgages may have to rise even if the bank rate remains on hold.
The latest data, from the Bank's monthly Trends in Lending Report showed that remortgage activity in April totalled £2.8bn, the lowest it has been since the beginning of the crisis and that net lending, after repayments, was below £1.0bn for the first time in that period.