View more on these topics

Borrowers are overstretched and unlikely to get remortgage

Moneynet.co.uk says vast numbers of UK borrowers have borrowed themselves into a position of vulnerability in order to buy property and are not in a position to remortgage.

Nearly 35% of respondents to its recent survey are juggling a mortgage debt more than three times their gross annual salary.

The website says that of these, nearly 30% are unsure whether they would be able to provide proof of their income to a new lender

Both factors seriously weaken their ability to secure affordable loans in the future.

Richard Brown, chief executive of Moneynet.co.uk, says: “Many of these borrowers are likely to find it very difficult to remortgage now that the days of easy borrowing have come to an abrupt end.

“Fewer and fewer lenders will be prepared to offer competitive alternative deals to anyone who is considered at risk of default. These borrowers will have little choice but to accept what their present lender is prepared to offer when their current deal comes to an end.”

The site says there will be vast numbers of people finding themselves in this position in the near future.

Nearly half of those surveyed are on a fixed or discounted deal and 55% of them are likely to experience payment shock this year.

Moneynet.co.uk says nearly 30% of respondents have borrowed more than 80% of their home’s value and nearly 15% more than 90% of the value.

It says that nearly 4% are already a vulnerable position having borrowed more than 100% of what their property is worth.

Especially at risk of finding themselves left without an affordable replacement deal is the 17% who have a history of adverse credit.

But most worrying is the number of people who expect to find themselves in difficulty over the next 12 months.

Brown adds: “These figures shouldn’t be interpreted as scaremongering. Nearly 10% of respondents admitted that they reckon they are at risk of missing mortgage payments in the coming year, with a staggering 22% prepared to consider using other means of credit to meet their mortgage repayments.

“Anyone finding themselves getting into problems with their mortgage payments or other debt are advised to seek help at an early stage. There are a number of organisations that can offer help such as Citizens Advice or The Consumer Credit Counselling Service.

“The worst thing you can do is to bury your head in the sand – seek help and talk to your lender as soon as you feel yourself getting into difficulty.”

Recommended

AMI to clarify client responsibilities

The Association of Mortgage Intermediaries is in the process of launching a paper to help clarify consumers’ responsibility for their finances.Speaking at Network Data’s ann-ual conference, Richard Farr, director of AMI, warned that brokers will have to initiate more robust conversations with clients regarding their financial situations in a bid to en-courage them to live […]

TCF deadlines loom, warns Ifs School of Finance

The Ifs School of Finance is calling on brokers to ensure they are prepared for the Financial Services Authority’s Treating Customers Fairly deadline. Brokers must have appropriate measures in place to test whether they are treating their customers fairly by March 31, reminds the body. And all firms are expected to be able to demonstrate […]

Brokers advised to tap bridging loans demand

Brokers can help bolster the buoyant buy-to-let market with bridging loans, claims Blemain Finance.The firm says that total funds advanced on its bridging cases increased by almost 17% in September 2007 compared with the same period in 2006.Gary Bailey, director of Blemain Finance, says the figures prove the buy-to-let market is flourishing despite difficult market […]

Loanoptions.co.uk launches secured loan guide

Loanoptions.co.uk has added a guide to its website to help brokers get to grips with secured loans. The launch is designed to help brokers who are now looking to broaden the depth of their search for suitable products under the Treating Customers Fairly initiative.Andy Moody, managing director of Loanoptions.co.uk, says: “Analysis of intermediaries coming to […]

Reforming India: just the beginning

By Kunal Desai, Neptune India Fund

As global investors continue to scour emerging markets through the lens of reform potential, India shines bright. Indeed, we think it can sparkle even brighter. We anticipate India’s self-imposed 10-year ‘policy holiday’ to turn into one of the most pro-growth and pro-investment policy calendars seen in Asia in years. The Indian electorate has engineered a historic verdict. We now have the strongest Indian government since 1984, with the pro-market Bharatiya Janata Party (BJP) achieving an absolute majority for the first time in the party’s history.

Newsletter

News and expert analysis straight to your inbox

Sign up