The cheapest fixed-rate deals are currently available only to those with at least 40pc equity in their home. Those with less than 10pc equity are unlikely to be able to remortgage at all.
According to the CML, nearly half a million mortgages have been granted since the start of 2007 to home owners with less than a 10pc deposit. Given that prices have fallen since then, it is likely that far more home owners will now have less than 10pc equity in their home, so will struggle to remortgage.
It is feared that a perfect storm of rising interest rates, falling house prices and widespread job cuts in the public sector could lead to a rise in repossessions next year, as some families find themselves unable to meet mortgage repayments but unable either to remortgage or to downsize in order to clear their debts.
mortgage brokers, are recommending that home owners should be reassessing their mortgage options. "There is now far more choice and better value in the remortgage market, particularly for those looking to secure a five-year deal,'' he said. "Those waiting could find they have fewer options a few months down the line. Not only could the price of fixed-rate deals rise, but if you have less equity in your home as a result of price falls you may not be able to secure the most competitive rate."
While no one knows for sure when interest rates will rise, the reality is that it will happen at some point so a wise borrower should be prepared. Look at your own circumstances: if rates were to rise, could you afford the mortgage? If not, then you should consider a fixed rate. They are unlikely to get any cheaper; indeed, as a rate rise looks more likely, fixes will become more expensive.
"If you are enjoying a cheap SVR [standard variable rate] you can always reserve a fixed rate to move on to in the future. Some lenders will let you reserve a rate for up to six months before you actually take it out.
"If you have a high LTV [loan to value], so remortgaging is difficult, speak to your lender. Many have special deals available for existing customers." These, she said, may not be as competitively priced as the current "best buys" but will at least provide the peace of mind that monthly mortgage payments will be fixed.
A spokesman for the CML said the FSA's affordability tests were a "notional test" and many people who breached these guidelines would in practice still be able to repay their mortgage.
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