I’ve been writing and talking about the difficulties the first-time buyer (and some ‘second-steppers’) is facing in this tough mortgage market.
Here’s the piece I wrote for Metro last week (about the 5th one down) and I was also on the Alan Titchmarsh show with Martin Roberts, talking about how people can get on the ladder in this unfriendly market and what sort of mortgages they might go for.
Essentially, its still tough. Most lenders are looking for at least a 20% deposit if you’re to get anything like a decent mortgage rate. As the average house price is just over £160,000 that means you need to put down at least £30,000 deposit (and that’s apart from stamp duty, legal fees etc).
There are some possibilities, particularly the government’s FirstBuy scheme where you only have to put down 5% deposit, but that’s only if you are happy to buy a new-build property.
Having said that, according to Moneyfacts.co.uk recently there has been an increase in activity from lenders launching mortgage deals at higher loan-to-values (LTVs).
There were 36 new mortgage deals in the 85% LTV tiers and above in August 2012, a complete reversal from the drop of 26 products the previous month.
In a breakdown of individual tiers, there were 16 more products in the 85% LTV tier (11 fixed and five variable), 15 in the 90% LTV tier (nine fixed and six variable) and five in the 95% LTV tier, all of which were fixed rate products.
This suggests that some lenders are relaxing their attitudes to higher risk lending, perhaps in reaction to the Government’s recently-launched Funding for Lending scheme, which aims to make £80 billion of cheap funding available to banks and building societies on condition that they lend more to small businesses and consumers in the hope that this will kick-start the economy.
However, it seems that it’s building societies that are leading the way, with 10 of the 15 providers which launched 90% plus LTV products being building societies.
Come on banks – time to do the same!