5% mortgages still falling
November 26, 2008
First time buyers have had it tough for many years. Out of the past eleven years ten of them have seen house prices soaring year on year, and for first time buyers this has resulted in being priced out of the market altogether, with houses costing hundreds of thousand of pounds instead of tens of thousands of pounds. However, over the past year it has been a very different problem that has hit the average first time buyer, and this is the lack of affordable finance to get onto the property ladder.
House prices started falling in the UK about a year ago, and whilst property prices are still high they have been falling month on month, which should have been good news for the average first time buyer. However, just as things were starting to look up for first time buyers the available of mortgages became far more restricted and the cost of borrowing became more expensive. This came about as a result of the global credit crunch, which led banks and lenders to tighten their lending conditions, and served as yet another major blow to firms time buyers.
In the days of easy credit just a year ago the average first time buyer was able to get all sorts of mortgages, such as 100% and even 125% mortgages, where they could borrow more than the value of the property and use the extra money for home improvements, related costs, and other things. However, these days have gone, and some time ago these high loan to value mortgage were wiped off the face of the mortgage market. Worse still, the availability of the traditional 5% mortgage began to wane, leaving first time buyers with no savings and no previous property from which to take equity in a real predicament.
Recent reports have indicated that the situation is not getting any better. In fact, the number of 5% mortgages on the market continues to shrink according to industry officials, so first time buyers with only a modest deposit will really struggle to get the mortgage that they need. In the current financial climate an increasing number of lenders are looking for far higher deposits even from first time buyers, and this means that the average first time buyer is having to find a fortune upfront in order to get a mortgage.
One industry official recently said: “Every week or so another lender drops out of lending at 95%.” Another stated: “For borrowers there is a danger of a much smaller choice of lenders if the situation in the banking market does not improve in the very near future.”
A mortgage broker added: “There is so much risk to lenders that they want to concentrate on lending to people with a lower risk profile.”
Whilst there are still some 95% mortgages available these are fast disappearing, and only those with decent credit will find that they are able to get them, as banks try and cut back on their lending to higher risk consumers. Even those that can get them will most likely pay a far higher rate of interest than someone with a larger deposit.
- Credit crunch does not stop asking prices from rising According to recent reports asking prices on some properties are still increasing despite the fact that property values have been falling for almost a year. Figures have revealed that the mortgage famine and falling property
- Will house prices go back up again? Over recent months the financial headlines have been filled with stories about falling house prices, and many industry officials have been making one gloomy prediction after another in relation to how quickly and by how
- Future of house prices looks bleak Over the past year the housing market in the UK has fallen into a slump, with house prices having fallen month on month, leaving them considerably lower than they were at their peak this time
- House price falls slow in pace Over the past year house prices have been falling month on month in the UK, with average house prices said to have fallen by close to 15% recently compared to the same period last year.
- Much larger deposit required from first time buyers Whilst industry experts are stating that first time buyers can at last look forward to increased affordability due to falling house prices and interest rates, both of which are expected to continue falling over the
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