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As the housing market continues to decline, consumers are finding it harder to get a remortgage, even if they are at risk for losing their homes. Currently, due to the risks banks are facing, only those with excellent credit are able to access low rate remortgages. This may create a large problem within a few months when more home loans are scheduled to switch to variable rates.

Richard Morea, at London & Country Mortgages, said: “A lot of people are, understandably, asking themselves if they should be buying at the moment. You can fix your rent for the next six months, save for a higher deposit, sit it out while interest rates go up and watch house prices fall. I can see no reason why a first-time buyer should want to buy in this market. If lenders are forced to charge lower fees, it’s likely that the underlying interest rate will rise.”   

Howard Archer, an economist stated, “Very low housing market activity seems certain to feed through to further depress already markedly weakening house prices. Those people who took out 100% or even 100%-plus mortgages within the last two years are particularly vulnerable to falling into the negative equity trap.” 

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