Blog: Rhetoric of unaffordable mortgages is unhelpful to economy
Blog: Rhetoric of unaffordable mortgages is unhelpful to economy
Abstract
Those deals will end and borrowers need to consider the impact. Recent media comments suggesting homeowners may be unlikely to afford a new fixed rate are unhelpful and risks adding to the uncertain economic climate that borrowers are facing. Any borrower can remortgage with their existing lender onto a new deal without any new affordability testing, providing they are not increasing the value of the mortgage. The financial impact of remortgaging is likely to be much more modest than people expect, although I appreciate that any increase in monthly expenditure in the current environment will be unwelcome. It is likely to cost those at the end of a 2-year fixed rate who remortgage to a new similar deal up to £60 more a month. For those on 5-year fixed rates, their remortgage is likely to increase their payments by less than £15 a month. Interestingly, those who fixed on higher LTV deals are likely to be better off, with those ending 5-year fixed rates on 95% LTV expected to be around £100 a month better off.