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Remortgage lending to reach £80 billion by 2016
A new report has revealed that the remortgage market is set to reach a staggering £80 billion by 2016, following results showing it is up 45 per cent from last year.
According to the Mortgage Advice Bureau, there will be a surge of remortgaging as “improving economic conditions” are tempting borrowers to switch mortgage deals.
The report identifies three dormant borrower groups since the financial crash, such as ‘silent prisoners’, ‘sitting pretty borrowers’ and ‘stay putters’:
• There are three million ‘silent prisoners’ who have been stuck with their current mortgage and unable to move home or shop around for a better deal.
• Sitting pretty borrowers’ are currently paying rates that are better than what is readily available in today’s market.
• 4.4 million ‘Stay putters’ (39 per cent) who could already benefit financially from remortgaging, but have not bothered to do so.
The report stated that !although two million ‘savvy switchers’ have remortgaged over the past five years, another 4.4 million ‘stay putters’ have not switched lender – even though they could already benefit financially.”
It stated that releasing cash, rate capping and rate cutting are the three main reasons for borrowers to remortgage.
Commenting on the surge, Brian Murphy, Head of Lending at Mortgage Advice Bureau, said: “After languishing behind the purchase market in terms of recovery, the stage is set for the remortgage market to experience a significant pickup in activity. Although lending criteria have tightened under the Mortgage Market Review, the available options have greatly improved since the recession and will continue to do so.
“Recovering house prices mean many homeowners will finally be in a position to re-enter the market for the first time in years with the equity needed to access new loans. Many more borrowers will want to position themselves on the most favourable deals before losing the advantages they have enjoyed in an era of exceptionally low interest rates.
“After years in the doldrums, the market looks poised for a resurgence of interest from consumers who will very soon find a host of reasons to reassess their existing mortgage.”
The report’s analysis confirmed that there was a 21 per cent rise in remortgaging in July, after reaching £55 billion for the year in 2013. Mortgage Advice Bureau forecasts that this will rise to £58 billion in 2014 and £80 billion by 2016.
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