Mortgage deals keep disappearing

Since the latter part of 2007 the world of mortgages has seen a lot of changes, and the sector has been in turmoil ever since this time.

The global credit crunch has had a profound effect on the mortgage sector and this has mostly been to the detriment of consumers. The range of mortgage deals available on the market has shrunk enormously over the past couple of years, and this has resulted in many consumers being unable to get the mortgage finance that they need to get onto the property ladder, even though house prices have been falling.

Lenders now seem to be favouring people that are able to put down larger deposits such as those with 25 percent to put down as a deposit. For those that only have a small deposit such as 5 or 10 percent the chances of getting an affordable mortgage are becoming increasingly slim.

No longer can borrowers enjoy the benefits of taking out a no-deposit mortgage loan, as 100 and 125 percent mortgages have disappeared from the shelves altogether. In fact, first time buyers are likely to suffer hugely as a result of the fall in the number of deals available on the mortgage market, as they are the one that often have little in the way of savings and no equity to use by way of a deposit.

Over the past year reports claim that the number of mortgage deals available on the market has fallen by around 65 percent, wiping two thirds of mortgage products from the shelves at a time when many first time buyers may have thought that their luck was finally in because of the drop in property prices. In November alone the number of mortgage products available fell by 25 percent.

Industry experts have stated that over half of the mortgage products that are available on the market now require a deposit of 25 percent or more, which is something that most first time buyers cannot manage. At one time paying a 5 percent deposit was perfectly normal but in the current climate there are only fifteen deals on the market that cater for those that have only 5 percent to put down by way of a deposit.

One industry official recently said: “The vast majority of products lost in the last month are as a result of the loss of so many base-rate tracker mortgages. A month ago there were 249 available, today there are just 45. With base rate falling to such low level, many lenders are choosing to severely restrict the number of trackers they offer or not offer them at all.”

She added: “The 0% deposit products are from Northern Bank, who only lend in Northern Ireland and Tipton & Coseley BS, who only lend in the Midlands and you need a guarantor to get their mortgages.”

Another official said: “The Bank of England can cut its base rate but it is not stopping lenders from increasing the deposits they require. The majority of big lenders will not lend above 80% of a property’s value.”

Tags: low level, 100% mortgage, Mortgages, no-deposit mortgage loan, Northern Bank, range, property's value