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

Mortgage squeeze not letting up

The mortgage squeeze in the UK doesn’t show any signs of easing according to officials in a recent report. Officials from the Council of Mortgage Lenders have recently said that the problems in the mortgage market do not seem to be letting up, and tighter credit and lending conditions are still very much in place. The problems in the mortgage sector began last summer with the arrival of the global credit crunch, and since this time the number and availability of mortgages has fallen rapidly. Read more

Tags: Mortgages, mortgage market, mortgage industries, order, financial markets, Subprime mortgage crisis, tighter credit, plan

Watchdog to probe sale and rent back

The UK’s watchdog, the Office of Fair Trading, recently announced that it would be launching an investigation into sale and rent back scheme, which have been gaining popularity over recent months due to the rising levels of people facing repossession due to high mortgage arrears. Whilst the sale and rent back industry has claimed that this is an ideal solution for many struggling homeowners, many campaigners have expressed concern over how fairly sale and rent back customers are treated. Read more

Tags: home insurance, bank, public improved protection, office, change, sale and rent back, Subprime mortgage crisis

Cash lump sum still needed for overseas mortgages

First-time buyers looking to invest in property outside of the UK will still need a cash lump sum to get an overseas mortgage approved, a property advisor has warned.

BuyAssociation said that it was “quite possible” for consumers to get a mortgage approved on a property abroad, a tactic which can help build up equity quickly.

However, Paul Collins, property editor for BuyAssociation, said that these forms of purchase arrangements can often make getting a mortgage more time consuming, particularly in emerging markets.

“And you will find in a lot of these markets that you won’t be able to get 100 per cent mortgages, so again there is still the issue that you will need some form of cash deposit to be able to actually do that, ” he explained.

A recent study published by UK National Savings & Investments found that 84 per cent of 18 to 30-year-olds believe buying property abroad is a more viable option than buying in Britain.

Tags: Mortgages, first time buyers, investments, First-time, cash, overseas mortgages, tactic

Effects of credit squeeze ‘hard to predict’

How long the impact of the global credit squeeze on the mortgage markets will last is not easy to forecast.

According to the Council of Mortgage Lenders (CML), it is not yet clear how long the credit problems will continue to affect the number of mortgage products on the market.

Bernard Clarke, a spokesperson for the CML that there is uncertainty over when the credit market will return to “normality” and if that “normality” will be the same as before credit crunch.

“There are implications within that for lenders operating in wholesale funding markets. The problems persist for now, and in the longer term we expect the wholesale funding market to improve and become more liquid, but perhaps it will not be as liquid as it was before,” he said.

Commenting on whether the credit squeeze will affect the types of products on the market, Mr Clarke added that time will tell how the government will set out to promote people taking on fixed-rate, long-term mortgages.

Tags: term, market, Super jumbo mortgage, cml, Mortgage loan, credit crunch, market.bernard clarke, Subprime mortgage crisis

Student mortgages remain popular

Despite the imminence of a market cool down, students are still looking to invest in property in their university town.

According to recent research by Abbey mortgages found that as many as 66,000 students already at university want to get a mortgage on their own place.

Furthermore, it found, 14 per cent of the student population hope to buy a house in their university town. This represents an impressive total of 154,000 students.

Nici Audhlam Gardiner, head of mortgages at Abbey, commented: “Britain’s student population continues to be a source of income for buy-to-let property investors, many of whom are parents of the students or the students themselves.”

He added that the most important issue to think about is affordability, especially when getting a buy-to-let mortgage.

Many students (44,000) have parents who are thinking of investing in property in a university town. The same amount hopes to invest with friends whilst at university.

With increased concern to find “green” financial products, the Co-operative bank has advised that there are many different options in this field from lenders and borrowers must shop around to find an option that best suits their needs.

Tags: Subprime mortgage crisis, Nici Audhlam Gardiner, amount, Britain's student population, property investors, town

Housing market slowing down

House prices in the UK are increasing in price at the slowest rate they have all year.

The Halifax House Price Index shows that properties increased in value by 0.3 per cent in May, signalling the third consecutive month of the market slowing down.

The average house price sits at a lofty £196,893 and buyer interest fell for the fifth consecutive month.

The housing market is expected to continue to slow down in the coming months, with increasing interest rates and reduced real earnings each playing a part.

Commenting on the 0.3 per cent price increase, Martin Ellis, chief economist at Halifax, cited rising interest rates as the main factor.

“This is the smallest increase so far this year and the third successive easing in the monthly growth rate,” he said.

“The recent slowing in monthly house price inflation, together with further evidence of moderation in housing market activity, suggests that the interest rate rises since last summer are having an impact on the market.”

A slowing down of the housing market is good news for first-time buyers as ever-increasing house prices are making it very difficult for young buyers to get onto the property ladder.

Tags: part, halifax, United Kingdom, Subprime mortgage crisis, successive easing, rising interest rates, Index, value

Green mortgages to become the ‘norm’

Gordon Brown announced during his Budget yesterday that people who take out a mortgage on a carbon-neutral home will no longer have to pay any stamp duty.

This news, announced during what is widely expected to be the Chancellor’s final Budget, was welcomed by many as the kind of financial break that is needed to encourage us all to reduce our carbon footprint.

In light of the announcement, the Co-operative Bank has revealed that it believes eco home loans will soon become the norm in the UK.

The firm is so confident that environmental concerns will have a big impact on the future of mortgage lending that it is planning to update its current green portfolio.

“We plan to extend our green mortgage proposition, which is currently available on all our products, by developing an innovative solution to reward and encourage homeowners to actively reduce their CO2 emissions,” revealed David Anderson, chief executive at the bank.

“We are convinced that green mortgages will be the most common form of home loan in the future and that is why we are working on several features that will make our range even more eco-friendly.”

A number of other lenders have also confirmed that they too will be extending their current portfolio of green loans.

The Co-operative Bank’s claim that eco home loans will be the norm in the future has been supported by a recent survey, carried out by More Than insurance, which revealed that 70 per cent of Brits wants all new build homes to be carbon neutral.

A fifth of all Brits also said that they would be willing to pay more for an environmentally-friendly home.

Tags: More Than insurance, Subprime mortgage crisis, survey, norm, future, green mortgage proposition, chancellor's final budget, gordon brown