The Shaky Recovery Of The Mortgage and Remortgage Market

One of the main repercussions of the global financial crisis has been that lenders have tightened their criteria for mortgages and remortgages. It has become more difficult to secure a home loan, although there have been some recent signs that lenders are rediscovering their appetite for mortgage lending and are offering some good remortgage rates.

One of the main causes of the 'credit crunch' was problems with sub-prime mortgage lending in America. As these problems grew, lenders became increasingly reluctant to agree any home loans and it is only in recent months that banks and building societies have finally begun to loosen their criteria and offer better remortgage deals.

Economists actually predicted that the markets would recover more rapidly than they have done, with most mortgage lending predictions being way off the mark. However, in spite of this, the news that there is any recovery at all after three years of a gloomy outlook is welcome to most, especially those who have been waiting to buy or sell a property.

Estate agents are often quick to point out that there are often seasonal variations in the number of mortgage and remortgage approvals in the UK. For example, the housing market tends to slow down towards the end of the year, starting from September/October onwards.

This will tend to lead to a slump in buyers registering with estate agents and a fall in the overall number of properties sold nationwide. At the height of the financial crisis, these seasonal effects caused big problems to an already struggling market, and although the housing climate has partially recovered since the start of the crisis, estate agents claim it can handle seasonal fluctuations without a crash.

Remortgage markets do appear to be recovering steadily, however it has been noticed that there are far fewer first time buyers who are looking to get on the property ladder. This is believed to be down to the fact that although lending is back on the increase, banks and other lenders are still slightly pessimistic about lending to those who do not have an extremely strong financial background, or a relatively large deposit.

The number of first time buyers however, has historically not been necessarily correlated to lending figures, and so there may be other reasons for the drop in buyers seeking their first home.

The general consensus with economists is that mortgage markets and property prices are generally far too unpredictable to forecast too far into the future, and because of this it is difficult to say how stable or speedy the recovery in the UK will be.

The property related markets are not the only place we're seeing recovery either. Unsecured lending is also back on the increase and is rising steadily, which is a good sign of things to come for the future, when we're likely to see a much healthier economy in the UK.

It has been predicted that prices will begin to fall again in the coming months, which would be bad news for owners planning to sell their homes, although possibly good news for cash buyers.


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Timothy Frodsham writes for JustRemortgages.com one of the UK's top sites for the latest remortgage rates and best remortgage deals.