The number of Brits thinking about remortgaging their property is on the rise. As the cost of living takes its toll and millions are living on a financial knife-edge, reports of a rise in remortgaging may come as no surprise.
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Within these tough economic times, those who have housing can’t afford to keep up with living costs and the number of those who can’t afford housing is steadily growing.
The cost of running a home is now at a record high, according to Halifax bank. A rise in utility bills and a drop in income levels have severely impacted the nation’s personal finances.
As a result, a number of people are considering remortgaging their homes. According to research by a price comparison website, searches for remortgaging advice has increased by a massive 37% in March alone.
This marks a 4% increase compared to February, when 33% of people were looking to remortgage.
Small businesses consider their options
It’s not just the cost of basic essentials that are the reason behind a rise in the trend of remortgaging. A growing number of small business bosses are remortgaging their property to keep paying staff.
The situation has become so desperate that small business owners are going to extraordinary lengths in order to avoid redundancies.
Commenting on the research, Janet Connor, Managing Director of MORE TH>N, said:
“Business owners care about the bottom line and rightly so. It’s sad that so many small business owners have had to remortgage their homes and take hefty pay cuts, but at the same time it shows real compassion on their part that they’re prepared to sacrifice personal gains for the sake of their staff.”
Despite the demand for remortgaging, it could become harder for Brits to get one.
Around 11.2 million households are currently trapped on interest-only mortgages, making it increasingly hard for them to pay off the actual loan and remortgage.
Under new Financial Services Authority (FSA) regulations, which come into force next year, remortgaging could be harder for those who are on high loan-to-value mortgages and interest-only mortgages. Borrowers are also under pressure from the FSA to introduce tighter lending restrictions as the FSA clamp down on ‘irresponsible lending’.
Property sales drop to 2008 levels
The number of property sales has fallen to its lowest level for almost four years.
New reports from Lloyds TSB found that the number of property hotspots where towns were expected to see a rise in sales have halved in 2011. The significant dip in property sales could largely be down to the harsh financial conditions which many Brits currently face.
Just 40% of the 200 towns which are tracked as property hotspots in England and Wales recorded a rise in home sales last year. This marks the descent of sales to their lowest level since the height of the financial crisis in 2008.
Overall, there were 630,389 property sales in England and Wales last year, which is 43% less than in 2010.
The North-South divide continues to increase as towns in the north experienced a rise in the number of home sales, whereas London saw the lowest proportion of hotspots, falling 6% in the last year. Worryingly, eight out of 10 towns with the largest fall in home sales where located in the south of England.
“The overall level of housing market activity across England and Wales has weakened over the past year, reflecting the concerns over the outlook for the UK economy,” stated Suren Thiru, Lloyds TSB Housing Economist.
“Additionally, consumers are experiencing difficulties in raising the necessary deposit, which is preventing many potential home buyers from entering the market,” he continued.
The number of property sales could continue to fall as economic recovery remains slow. Figures suggest that the number of property sales across England and Wales have fallen by a staggering 48% since the peak of the housing market in 2011. In the north, this has fallen by over 50%!
Whilst the government has recently introduced schemes to help first time buyers get on the market and banks are starting to become more flexible with deposit requirements, many Brits still face a tough time stumping up the cash.
As job security and the rising cost of everyday essentials takes a swipe at any chance of saving, first time buyers are finding it increasingly hard to get a foot on the property ladder.