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UK consumers stampede to repay mortgage debts.

Posted 13th April 2010.

Recent figures released from the Bank of England show that for seven consecutive quarters homeowners have been paying of their mortgage debt. This is in strict contrast to normal trends where mortgage debt is expected to grow as more people jump on the property ladder and equity is used for business/personal use.

In the final quarter of 2009 some £4bn of equity was injected into homes with approx £35-40bn having been repaid over the past two years.

Experts believe the main reason may be trend is low interest rates. With rates so low in many cases mortgage borrowers are not reducing their monthly payments preferring to reduce the amount owed.

So what does this mean for consumers, savers and borrowers?

According to mortgage and property website, obligo.co.uk, in the current market the majority of the funds available to lenders to lend for mortgage purposes are from retail sources, meaning the cash invested in savings accounts by savers, and the money received from mortgage borrowers as repayments.

As a result, gross lending, or the amount owed by the nation in mortgages, is reducing because mortgage debt is being repaid which leaves lenders with spare cash that needs to be lent on again to generate interest to pay savers and investors. As a result lenders will be under increasing pressure to lend to be sure to get the returns they need to ensure profitability.

With an election looming and a probable change of government it is looking more and more likely that regulatory changes coupled with a need for lenders to lend will ignite the mortgage market making it easier for borrowers to obtain loans.

This can only be looked upon as extremely good news for prospective mortgagors and the economy.

About obligo
Obligo is a new mortgage business based around a revolutionary concept that will provide consumers with tools and information about UK mortgages, whilst retaining a human aspect to case underwriting and application management.

Obligo intends to change the way UK consumers approach mortgages. Obligo is a unique collaboration of information and resources from both the UK mortgage and property markets.

Features that have recently only been available through websites and entities are collectively presented to the consumer in a simple, easy and effective manner.

Real-time house price information, automated property valuations (AVM), consumer guides, market analysis and expert market commentary is available together with industry leading mortgage calculators and application tracking systems.

Obligo Ltd is a privately held company with a highly experienced and proven management team with proven track records in start-up acquisitions and sales in the mortgage and other sectors.

The founders have set a course in the changing world of financial services to deliver transparency and efficiency to the UK mortgage market .
for more information email chris.gardner@obligo.co.uk