Home owners have so little equity left in the homes after the credit crisis that they are struggling to remortgage, experts warned.
The latest lending statistics suggested the number of people who remortgaged their homes in June was just 27,000, down 20 per cent on a year earlier.
The number of loans approved for those buying a new home rose 19 per cent in June on the previous month, according to the Council of Mortgage lenders, but experts said it was not unusual for the summer months.
Lenders are cherry-picking borrowers who have the largest deposits amid a backdrop of rising repossessions.
First-time buyers currently pay a typical deposit of more than £35,000, separate research from Nationwide suggested earlier this week. It is a significant increase from the average deposit of £1,300 required 25 years ago.
House prices recovered some lost ground during the past year amid a shortage of supply of suitable properties. However, they remain below the levels seen before the credit crisis began in August 2007.
Paul Samter, an economist at the CML, said: “For the time being, the effects of government spending cuts have yet to make an impact on mortgage demand, and activity continues on its upward trajectory.
“But we still expect house purchase activity to be muted in the coming months. Both consumer demand and lending capacity remain distinctly difficult to call, especially in the light of the government’s austerity measures and their possible impact.”
Concerns about the economic outlook have helped to spur Britons to put more money aside every month, according to National Savings & Investments.
People are now typically saving £85.21, up from £81.94 in the last quarter, it said.
Home owners are particularly vulnerable if interest rates go up as they would be likely to see a sharp increase in their monthly mortgage payments.
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if the 2nd mortgage holder agrees to subordinate it can be done. heres the situation when u refi, the 2nd mortgage automatically becomes the first, therefore ur new mortgage would be in 2nd lein position, which would be at a higher rate than you are figuring on as no one is going to be in 2nd place without a higher rate, therefore, you must approach the current 2nd holder tell them what u r planning and get them to provide in writing the fact that they will subordinate to the new first mortgage. they can say no, depending on how much equity u r planning on taking out. understand if u default the first mortgage holder get paid first, and the second gets whatever is left, if there isnt enough the 2nd holder takes a risk of not getting all his money back. therefore he may allow you to refi the balance, but not take anymore equity out to say consolidate, use for vacation, or just mad cash, however it doesnt hurt to ask, i have done dozens of loans where the 2nd did subordinate, and only a few have refused to cooperate. gl
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