July to bring £30bn mortgage crunch

£30 million worth of fixed rate deals are set to expire this month – leaving homeowners with the prospects of a repayment hike.

However, 51 per cent of those needing to remortgage or face their lenders' higher standard variable rate have yet to start looking for a new loan.

But the credit crunch means the bountiful mortgage market of two years ago is now a financial dessert, where remortgage deals are available but with high arrangement fees.

One-sixth of those needing to remortgage in July have secured a deal, but admit the higher repayments will make them struggle to make ends meet, a new poll by moneysupermarket.com reveals.

One in five said they have struggled to find a new deal they can afford or will be eligible for.

Louise Cuming, head of mortgages at moneysupermarket, said: "Many homeowners will be plunged into a borrowing underclass in July when their fixed-rate deal comes to an end.

“Banks are cherry picking customers, leaving many people unable to find affordable deals to service mortgages taken out in better times, when they were plentiful and easy to get hold of.”

She went on to warn homeowners coming to the end of fixed rate not to bury their heads in the sand.
“Anyone whose fixed rate deal is coming to an end should start planning at least three months before the product is due to finish,” Mr Cumings advised.

"You should approach your existing lender to find out what 'retention' product they will offer you. This will give you a useful benchmark to compare against other offers.

"Compare rates across the market to get a rough idea if there are products available to beat those on offer from your existing lender. If you need some extra guidance, a broker should be able to recommend products to suit your circumstances.”
Once you have made your choice, the advice is to move quickly.

“Competitive deals are being pulled with very little notice and many people have been missing the boat by waiting to see if better deals pop up.

“In today's mortgage climate, a bird in the hand is worth two in the bush,” she concluded.