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When will the remortgage market recover?

While this week we saw a slight increase in net mortgage funding in the UK the remortgage market is still very much dead on its feet. As more and more UK homeowners continue to worry about negative equity and indeed keeping up with their mortgage payments, the once common option of remortgaging and either reducing interest terms or extending the life of their mortgage has disappeared for many.

In light of the UK government asking UK banks to reduce their risk and attempt to improve liquidity in the mortgage market, it seems that the remortgage sector has been hit hardest. If you are in negative equity and struggling to pay your mortgage then it is highly unlikely that you would pass the forthcoming stringent financial strength tests and more and more remortgage applications in the short to medium term may well be rejected.

You could be mistaken for assuming there would be more emphasis on the traditional mortgage market but at the moment the better rates are only available for those who can put down anywhere upwards of 30% as a deposit - something which effectively blocks many people from the market for the immediate future. While competition will return in due course, it is difficult to see when the market might return to normality.

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