The Bank of England has released figures that show homeowners are repaying their mortgages quicker than ever.
It seems to be a polar opposite of what happened in the run up to the financial crisis when lots of homeowners released much of the equity in their property to fund financial extensions, cars, holidays and other items. Now borrowers seem to be making the most of the record low rates and using their spare funds to repay their mortgage loans faster.
Some economists have said that as the current low rates are on savings as well as mortgages, households have felt motivated to reduce their debt as opposed to leaving it in a savings account that is generating little or no interest.
IHS Insight’s Howard Archer said:
“Extremely low savings interest rates have undeniably made it much more attractive for many people to use any spare funds that they have to reduce their mortgage balances.”
Prior to the credit crunch, spending was boosted when homeowners turned to equity release. There was a point back in 2006 when this type of equity withdrawal actually accounted for almost 5% of the total spending within the economy. Currently, the amount that borrowers are repaying is just over 4% of post-tax income.
Having completed CeMAP training and passed your exams to become a qualified adviser, you will be in a position to help your customers find the most appropriate mortgage solution, whilst complying with the process and procedures of your employers and regulation set by the Financial Conduct Authority (FCA).