With the economy in a controversially debated period of recovery following the catastrophic consequences and the lessons learnt from the recession, it is no surprise that financial regulatory bodies are more conscious than ever of regulations. Tighter restrictions on monetary lending by financial institutions have meant that there has been a tangible increase in the chasm developing between the mortgage and remortgage markets.
The latest statistics released show that there is a burgeoning gap developing in the property lending sector, subsequently causing concern about the restrictions placed upon the market. Donna Green looks at how this could affect mortgage applications in the near future and discusses the implications for the economy in the future.
The body that deals with financial members of the housing market, the Council of Mortgage Lenders, has released figures of the previous twelve months documenting this escalating increase in the statistics separating mortgage and remortgage rates.
These statistics show that there was an overall increase in approved mortgage applications over the past year, with the figure of increase stated as having risen by 29 per cent. In stark contrast, the remortgage valuation has decreased in the same twelve month period by a figure of 63 per cent. Even in consideration of the pronounced increases and decreases experienced within the sector, these figures show that there may be grounds for talk of economic recovery.
The recent sanctions imposed by the Financial Services Authority show the regulatory body’s intention to make it harder for consumers to attain unmanageable levels of debt. The abolition of ‘risky lending’ and the banning of self-certified loans provide the foundation for a more economically conscious change in attitude to the areas of personal finance.
The FSA admitted that at the height of mortgage lending in 2006 to 2007 and prior to the recession, almost half of all mortgages were accepted without any verification of income requested by lenders. Understandably the consequences of this included an increase in those applying for a remortgage and an increased rate of defaults.
It can only be hoped that the lessons served by the economic crises experienced in the post-mortgage boom have been taken on board. The widening gap between mortgages and remortgages can be analysed to indicate a tentative recovery in the market, however how the economy progresses henceforth will shape and mould the property lending sector in ways yet to be seen.
This article was written by Donna Green on behalf of remortgage.com – a website offering information and guides on remortgaging and refinancing your property.
About Donna:Donna Green is a freelance journalist specialising in the areas of property and personal finance markets and economy. Aside from writing and literature, in her free time she is a keen beginner snowboarder and enjoys watching motorsport.
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