November 12th, 2014
The number of remortgage loans continued to fall last month, according to official figures released today by the Council of Mortgage Lenders.
The findings reveal a total of 28,300 remortgage loans were advanced in September, more than 10% down on the same period during 2013.
Loans for house purchase, however, continue to grow, with a total of 58,600 being advanced in September, up from 51,800 in the same month last year.
“The remortgage market is one that has been hit spectacularly by the Mortgage Market Review” said Andy McBride, Business Development Director at niche broker Contractor Mortgages Made Easy.
“The same affordability tests are applied regardless of the reason for the mortgage (purchase or remortgage); and therefore there were a number of clients coming to us this year complaining of what they perceive as unfair treatment by their current lender, mostly due to MMR.”
With remortgage applications now subject to the same level of scrutiny as buying a property for the first time – regardless of the level of security involved for the lender – the impact of some of the more trivial details of MMR have been more severely felt in the remortgage market than elsewhere.
“Previously, if you’d been with a bank for a number of years and simply wanted a better rate on your mortgage, it was little more than a tick box exercise for that lender to change products, since very little was changing” adds McBride.
“Now, full affordability tests are being performed, which has led in some cases to customers being declined a renewal of a mortgage that they had maintained flawlessly for a number of years.”
There was also a warning from the Bank of England’s Monetary Policy Committee today that inflation could fall below 1%, as the growth in average pay for UK workers overtook inflation for the first time since 2009.
Wages excluding bonus payments rose by 1.3% year-on-year in September, beating the Consumer Prices Index rate of inflation for the first time in five years.
This, according to Bank of England governor Mark Carney, could mean that inflation will not reach the targeted 2% figure for three years yet.
The Bank's inflation forecast, conditioned on an October rate rise, suggested that inflation would climb to 2% by the end of 2017, indicating that a rate increase ahead of next year’s general election is unlikely.
“It is appropriate that, while a tightening in monetary policy remains in prospect, markets now expect somewhat easier monetary conditions over the forecast period than was the case three months ago” said Carney.
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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