By Rachel Williams
Current account mortgages (CAMs) will account for up to a quarter of net mortgage lending over the next three years with an outstanding balance of £50bn by 2005, according to new research from the Future Foundation.
Commissioned by Virgin One, the report, The future of the UK mortgage market: Impact of Generation Flex, looks at the potential impact of CAMs on UK lending as more borrowers look to consolidate their income, savings and borrowings via this method.
Terry Athaide, author of the report, said: “In five years’ time we may look back and see the recent growth in CAMs as the start of a sea-change in the UK mortgage market. The benefits of consolidation have already re-written the rules of lending in Australia and the same changes appear to be underway in the UK.”
The research, which was based on the model of growth in Australia, was backed by recent research into customer awareness of CAMs in the UK. It found that almost 40% of consumers are now aware of the product and nearly 50% would consider one when they next shop for a mortgage. Their appeal was highest in the younger market, with 63% of 18 to 34-year-olds showing interest.
Some 89% of respondents were attracted by the ability to save on interest by repaying the loan early, 87% valued being in greater control of their finances and 79% rated the ability to repay other loans at the same rate as the mortgage.