UK homeowners facing remortgage crunch

Higher mortgage repayments and tighter budgets and putting British homeowners under increased pressured, according to new research.

A major survey on the state of the nation’s mortgage market by MoneyNet.co.uk shows over a third of UK borrowers have put themselves at the mercy of their lender and are now repaying mortgages over three-times their annual salary.

Of this figure, nearly 30 per cent are unsure whether they would be able to provide proof of their income to a new lender.

"Many of these borrowers are likely to find it very difficult to remortgage now that the days of easy borrowing have come to an abrupt end," said MoneyNet chief executive, Richard Brown.

"Fewer and fewer lenders will be prepared to offer competitive alternative deals to anyone who is considered at risk of default. These borrowers will have little choice but to accept what their present lender is prepared to offer when their current deal comes to an end."

The UK mortgage market has witnessed a tightening of lending criteria following the global credit crunch which has swept the financial markets for the last seven months.

This is likely to see up to 55 per cent of borrowers secure a competitive deal when remortgaging either this year or next.

One factor of major concern is the 30 per cent of respondents who have borrowed more than 80 per cent of their home’s value and nearly 15 per cent more than 90 per cent of the value.

These borrowers are particularly vulnerable to falling house prices with the spectre of negative equity hanging over them.

"These figures shouldn’t be interpreted as scaremongering," continued Mr Brown.

"Nearly ten per cent of respondents admitted that they reckon they are at risk of missing mortgage payments in the coming year, with a staggering 22 per cent prepared to consider using other means of credit to meet their mortgage repayments."