Another decade for first time buyer mortgages to stabilise

It has been claimed in a recent report that it could take another decade before mortgages for first time buyers stabilise and reach the level that they were at prior to the global financial crisis. Before the credit crunch first time buyers were usually easily able to get a mortgage, and often did not have to even put down any deposit. However, this has all changed and these days those looking to get onto the property ladder feel that they are hanging on to an impossible dream.

Over the past couple of years things have become increasingly more difficult for first time buyers. Restrictions in the mortgage markets resulting from the financial crisis have resulted in more buyers being turned down by lenders when they apply for a mortgage. Those with damaged or poor credit history are also charged high rates of interest or turned down for a mortgage altogether.

Another huge hurdle that has faced first time buyers over the past couple of years is the matter of the deposit that lenders want in order to get a mortgage. In the past first time buyers were able to get a mortgage without even putting down any deposit, and could even borrow over and above the value of the property with a 125 percent mortgage.

However, these days lenders are demanding huge deposits from first time buyers such as 20 percent or more, which is leaving many people out in the cold when it comes to getting onto the property ladder.

One official from the homeless charity Shelter said: “The failure of successive governments to tackle Britain’s housing crisis has left an entire generation of young people with little hope of ever accessing a secure and affordable place to live. The impact both on them and on wider society is already becoming clear, with rising numbers of young people delaying having children, unable to move for job opportunities and spending longer and longer living with their parents because of the crippling cost of housing.”

Tags: Financial crisis of 2007–2009, mortgage, crisis, value, Subprime mortgage crisis, percent mortgage, business, little hope

Green mortgages ‘not affected by the credit crunch’

Green mortgages have not been affected by the credit crunch, due to the “type of person” who takes one out claims one lender.

Norwich and Peterborough Building Society said that, despite concern over interest rates, there has been no change in the numbers of people taking out green mortgages.

“The reason they’re interested in a green mortgage is because of their personal ethics, so we’ve seen no difference at all,” said Alison Rolls, a spokesperson for the business.

She adds that green mortgages are still very much a “niche product” with growth being much slower than would be good for the environment.

Overall more consumers still need to “put the environment more on their shopping list” and think less about interest rates.

According to Mortgages.co.uk, green mortgages aim to reduce negative impact on our environment.

Lenders that offer this package will often make contributions to charities that support the environment or the welfare of the less fortunate.

Tags: crunch, economics, Peterborough Building Society, Alison Rolls, Financial crisis of 2007–2009, credit crunch, Super jumbo mortgage

Self-certification mortgages still available despite credit crunch

Self-certification mortgages are still available despite the credit crunch and consequent tightening of lending criteria, according to industry experts.

Mortgage advisers Alexander Hall said that the credit crunch has had “nowhere near” the same impact on self-certification products as it has on subprime mortgages.

Andy Pratt, spokesperson for Alexander Hall, said: “All those clients who would have got a self-cert mortgage before have been able to get them even with the credit crunch.”

He added that Alexander Hall have had no problems placing clients in self-certification mortgages as there is “still a good enough choice out there”.

The Council of Mortgage Lenders defines self-certification mortgages as “a mortgage where you declare what your income is, but are not required to provide proof.

They are used by the self-employed, or people who have difficulty providing proof of income.

According to the Economic and Social Research Council’s most recent figures, for 2006, of the 29 million people employed in the UK, 13 per cent (3.8 million) were self-employed.

Tags: United Kingdom, self cert mortgage, alexander, good, Andy Pratt, self-certification products, self certification mortgages, Financial crisis of 2007–2009

BOE warns mortgage defaults to increase

Defaults on mortgage payments are expected to increase this year, according to the latest research from the Bank of England.

The Bank’s Credit Conditions survey revealed that borrowers and small-to-medium-enterprises are expected to find it increasingly difficult to source loans after the tightening of lenders’ belts due to the effects of the credit crunch.

The Council of Mortgage Lenders said that the findings increase the likelihood of a further cut in interest rates.

Bob Pannell, head of research at the CML, said: “This survey corroborates other evidence of worsening market sentiment. This may increase the chances of interest rate cuts sooner rather than later if inflation remains subdued.”

He recommended that consumers should re-evaluate their finances to avoid coming financially unstuck.

The number of borrowers who default on their payments is expected to the rise as a number of fixed rate mortgages expire over the next few months.

The Bank cut interest rates to 5.5 per cent last month, the first cut for two years.

Tags: head, belts, Financial crisis of 2007–2009, mortgage payments, loan

Mortgage deals upset by credit crunch

Mortgage applications are being hit by the global credit crunch, new research has warned.

The chaos in global financial markets caused by the US sub-prime lending crisis is now unquestionably affecting ordinary people in the UK.

Brokers are reporting that 17 per cent of decisions in principle by mortgage lenders are not being honoured after the event, due to the rapidly changing conditions.

And nearly a quarter (23 per cent) of all mortgage offers being made have been affected by the credit crunch, brokers have told GE Money Home Lending.

Duncan Berry, Sales Director, GE Money Home Lending, warned: “During these challenging times there will inevitably be changes to ranges with shorter notice periods, but communication is key and lenders should endeavour to give brokers reasonable notice to alterations in product ranges and changes to pipeline dates.”

Nevertheless, brokers themselves were found to be remarkably tolerant of lenders’ behaviour.

59 per cent said that it was acceptable for deals to be withdrawn or changed at short notice.

Tags: Financial crisis of 2007–2009, product ranges, Financial economics, crisis, chaos, Yield spread premium, event, brokers reasonable notice