Homeowners Remortgaging Due to Coronavirus Financial Pressures
Nearly one in 10 UK homeowners has remortgaged to cope with financial pressures caused by the coronavirus pandemic and lockdown, according to a survey from NatWest.
NatWest, the country’s third-largest mortgage lender, commissioned the survey to examine how the country’s homeowners have responded to the financial pressures of this year.
It found that 8% of homeowners have already remortgaged, 43% to reduce their monthly payments as their income falls and 19% to fund the home improvements that lockdown has made so popular.
More may remortgage in the coming months, after their payment holidays end by 31 October. The Financial Conduct Authority (FCA) has encouraged lenders to give borrowers who are still struggling access to a range of support measures, including remortgaging to a cheaper interest rate or an interest-only deal.
The pandemic has also delayed many homeowners’ moving plans, which may encourage some the remortgage to fund extensions and other renovations to accommodate growing families and to get home must-haves like new kitchens and open floor plans.
The survey found that while two-fifths of homeowners were planning to sell their property before the pandemic, 38% of these prospective sellers have reconsidered those plans in light of the financial upheaval and the uncertain trajectory of house prices.
Nearly half (47%) of homeowners say they’ll postpone the sale of their property until they can make a clearer financial decision. 62% would consider remortgaging a second time to fund improvements to their current property so they can comfortably stay there.
Most (74%) homeowners who have remortgaged said it had a positive impact on their lives. Specifically, remortgaging, often reducing monthly bills, had a positive impact on the mental health of 43%, including 77% of those aged 18 to 30.
However, some homeowners may be locked out of remortgaging.
HSBC says it won’t count income from furloughed employees who have no fixed return to work date or whose return is more than three months away, while TSB won’t accept income from furloughed staff who aren’t having their salaries topped up by their employers.
NatWest also found that, when seeking out advice on remortgaging, customers are most likely to turn to the banks and lenders themselves (28%), followed by an internet search (25%).