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1 in 6 would struggle if mortgage goes up £50

And all the latest news, rates and need-to-knows from the mortgage world this October from our consumer journalist Christine Toner

How financially stable are you?

A recent report by the Financial Conduct Authority has painted a worrying picture of the mortgage market in terms of how secure homeowners are. In a paper called ‘Understanding the financial lives of UK adults’ the regulator revealed a large number of mortgage borrowers aged between 35 and 44 don’t have any protection in place that would cover their repayments and bills if they were unable to work. It also found one in six (17%) of those with a mortgage or who are paying rent, would struggle if monthly payments rose by less than £50 – a worrying finding given the fact interest rates are almost certainly going to rise in the next few months.

Paula Higgins, chief executive of the Homeowners Alliance, says: “These figures are extremely concerning. It highlights the importance of good quality policies insurance products can provide the peace of mind homeowners need in this unpredictable economy.

Remortgaging boom

With Bank of England governor Mark Carney making it clear that interest rates will be rising in the not too distant future it’s not surprising that the mortgage industry is currently seeing a surge in remortgage activity as homeowners rush to secure the best deal.

According to figures from conveyancing service provider LMS the number of people remortgaging increased by 11% in August to 41,497, up from 36,800 in July, marking the highest level of remortgaging activity since January 2017. Year on year the number jumped by 16% from 34,900 in August 2016.

Nick Chadbourne, chief executive officer at LMS said: “Remortgagors are locking into record low rates to manage the impact of potential rate rises and bolster their financial security,” explained new CEO Nick Chadbourne. “This makes sense given borrowers were warned that time could be running out to fix into low cost deals in August. According to the National Institute of Economic and Social Research, the UK economy will bounce back in 2018 – prompting the Bank of England to raise interest rates to a more normal level before Brexit. It’s no surprise 45% of borrowers we spoke to think interest rates are going to rise soon.”

Mortgage lending up month on month

Uncertainty may be the watchword in the UK at present as Brexit talks reach stalemate and political instability continues but it doesn’t seem to be hampering the housing market.  Indeed, latest figures for from financial trade body UK Finance show first-time buyers borrowed £5.7 billion in August, 16% more than in July and 12% more than in August 2016. The data shows first timers took out 34,400 mortgages, 14% up on the preceding month and 9% more year-on-year.

UK Finance’s Head of Mortgages Policy June Deasy said: “Activity picked up in August, and recent resilience ensured that borrowing by home movers was at its highest since March 2016, when transactions were boosted by an imminent increase in stamp duty. Over the last 12 months, the number of people remortaging has been higher than in any period since late 2009. With mortgage rates close to historic lows and the likelihood of a rise in official rates moving closer, the popularity of remortgaging looks set to continue.”

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