It seems there’s just one bad news story after another if you’re a home owner or prospective buyer. The Bank of England has just announced that mortgage approvals hit their lowest level since they started keeping records 15 years ago.
MoneyExpert’s own data reveals people are concerned about their finances – 38% of those questioned in the most recent debt index said that they were worried about their ability to make repayments on financial products such as mortgages.
There might be a lot of bad news around but it’s important to get some perspective and think about what you really need to know about the mortgage and housing market.
Why can’t I get a mortgage?
The number of mortgage products available has decreased significantly over the last year as lenders review the amount of risk they’re prepared to take on.
First time buyers for instance are the most likely to struggle to find a mortgage, particularly if they’re looking to borrow more than 95% of the value of a property. Lenders are currently looking for large deposits as a pre-condition on lending. If you’ve set your heart on getting on the property ladder then the advice is to keep saving until you have a significant deposit to give yourself the best chance of getting a good deal.
Why has my mortgage got more expensive?
With around 116,000 of us coming off fixed rate mortgage deals every month thousands of us may find ourselves in for a shock when we see our new mortgage deal as the chances are it’s likely to be more expensive than our last deal.
The amount of money banks and mortgage lenders have available to lend each other and also to their customers has reduced significantly in recent months meaning that we’re going to have to pay more to borrow it. Over the past three years fixed rate mortgages have been charging around four or five per cent interest now you might expect a fixed rates of five or six per cent if you’re lucky.
Where should I go for my mortgage?
In the past many of the smaller building societies were offering competitive deals but now, generally speaking, it’s the big banks which have come about with the headline grabbing deals.
HSBC’s Rate Matcher mortgage promises to eliminate the problem of finding a rate similar to your old deal while they will promise to match it. Be warned that while this offer will provide big benefits to some there are also significant fees attached some read the fine print carefully.
Lloyds TSB’s Airmiles mortgage is also competitive on its three year fixed rate offering while at the same time providing families who take out the product a significant number of airmiles to reduce the cost of family holidays.
Property might seem like a source of national depression right no but it’s worth remembering that we’ve seen almost ten years where house prices have grown at a rate of ten per cent a year and that current devaluations are so far only making a small dent in this increase. If you’re worried about the cost of re-mortgaging then be sure to read up on what’s on offer before deciding on a lender and if you’re still intent on getting on the property ladder then keeping saving. By the time you have your deposit together property prices may have stabilised.