Not a day goes by but we hear some more discouraging or depressing news on the health of the UK property and mortgage market. The latest nightmare news that hit the streets was that according to Zoopla.co.uk, a property valuation website, Britons have collectively seen nearly £300 billion wiped off the value of their homes since house prices first began to fall. That is a staggering market downturn of more than £1 billion off the collective value every single day.
Nobody likes to hear the words ‘negative equity'. However, if you think about it, your property value is only tangible or of financial worth when moving house, offering the property as security for another debt, or (the big one at the moment) remortgaging your property to get a better mortgage deal.
It is not unimaginable that in six month's time we could see more than half the number of current households having to pay their lender's standard variable rate because they are unable to secure a new remortgage. Remember that the lender has committed the loan to you for around 25 years and as long as you can afford their standard variable rate, bank base rate remains low and you don't have sell. All things remaining equal, you could weather the storm and reach the end of this so-called readjustment with your house still intact.
According to moneyfacts.co.uk research, it is surprising to note that the current average two year fixed mortgage rate is 6.68% and for five years is 6.66%. The current average standard variable rate is 7.08%, with one lender having a rate as low as 5.89%.
So, as long as bank base rate remains low and rates on deals keep on increasing, it might not be all bad news for consumers who are unable to remortgage. The way things are going, we might see standard variable rates in the Moneyfacts.co.uk best buy charts.
Posted
Jun 16 2008, 09:17 AM
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