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Problems loom on remortgages

Lenders could be stuck with huge amounts of mortgage business that they cannot handle if remortgage rates move above standard variable rates in the near future, according to Hamptons managing director Jonathan Cornell.

Cornell said a lot of lenders which offered extremely competitive fixed deals two years ago will not have the funds to cope if these customers opt to stay on their SVRs after their fixed deals expire.

He said: “You have got Nationwide which has some rates above its SVR. Admittedly, it has quite a low SVR but there will come a time when remortgage rates will be above SVR so why is someone going to remortgage away?

“That will cause horrendous problems for lenders as those who were offering these fantastically juicy new rates are not expecting people to reach SVR. These lenders are expecting brokers to remortgage them away. They do not necessarily have the funds to allow these people to hit their SVRs.”

It is expected that over 1.4 million borrowers will be coming off fixed-rate loans this year.

Alexander Hall chief operating officer Andy Pratt said: “Most of the high-street lend- ers have already got more business coming in this year than they had last year, plus the added restriction of fund- ing problems.”


Swap rates rocket up

Swap rates have increased by around 20 ticks over the course of the day with a broker warning this may see lenders pulling their fixed rates by the end of today.

No gain without pain

The bonds versus collectives debate continues to rage. Understandable focus is on the capital gains tax changes, including the abolition of indexation allowance, the abolition of taper relief and, of course, the introduction of the 18 per cent flat rate.


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