Homeowners remortgaging to help weather economic storm

Date:Monday 15th December 2008
Author: Susanna Kavka

Homeowners are carrying out remortgages in order to help fund themselves through the current economic situation, a new study has found.

Researchers at Durham University studied more than 8000 UK households from 2001 to 2005 in a study funded by the Economic and Social Research Council.

In any given year, two-fifths remortgaged or extended their mortgages, borrowing an average of £5000 to £75000 more.

They therefore made their mortgages higher than in the previous year but had not moved.

According to the university's findings, drawing on mortgage equity is "a much more popular and frequent event than previously thought", with households securing loans against their homes for essentials rather than luxuries.

Durham University housing expert Prof Susan Smith warned that a "crisis of welfare" could result.

Recently, the Independent reported a study by Energy Reports and Surveys (ERS) which showed that repossessions are bringing remortgage valuations down.

Paul Staley, managing director, explained that valuers need to consider recent selling prices of three comparable properties and that this now includes forced sales and repossessions.