Credit, Collections & Insolvency News
Over 250,000 homeowners are expected to struggle to refinance their properties over the next five years, according to research conducted by Kensington Mortgages.
The data shows that 15 per cent of borrowers will have reached the end of their repayment date by 2024 and will be unable to find a new deal, which Kensington says is due lenders taking a more stringent stance on risk. The interest-only mortgage problem is predicted to escalate over the next two decades.
In addition, shifting to a conventional repayment mortgage will be difficult for these borrowers, as many will be nearing retirement. By the beginning of 2029, the report predicts that 860,000 interest-only mortgage borrowers will have reached the end of their terms, with half of those borrowers unable to find a new deal.
Moving to a conventional repayment mortgage may be difficult for many of these borrowers, even if the property has soared in value.
Kensington Mortgages Chief executive Mark Arnold said “This is a big problem that is lurking in Britain’s financial system. It is important that people start thinking about this issue now before thousands of homeowners find themselves facing a giant repayment bill.”
“Society has changed a great deal in recent years. Yet the big banks, driven by risk considerations, now lend to fewer and fewer people.
“The people who will be facing these bills will have a very different customer profile at the expiry of their mortgage than they did 25 years earlier when they took out these products – many will have retired. Of those who are still working, many are likely now to be self-employed. Some may have moved from full-time work into the gig economy.”
“They could still be fantastic borrowers, but these are families that will not necessarily be able to tick all the boxes when they come to ask one of the big banks for a new loan.”
