New lenders in town

NEW LENDERS IN TOWN There may be signs that the worst of the recession is over but even the most optimistic of forecasters would struggle to predict a quick end to the gloom in the housing market.The latest figures from the Council of Mortgage Lenders (CML) reveal that while the number of repossessions has dropped in the last quarter the number falling behind with their mortgage payments continues to rise. According to the CML 270,400 borrowers fell at least three months behind with their mortgage payments in the second quarter of this year.An increase in the number of arrears at the same time as a drop in the number of repossessions seems an odd occurrence, but is partly explained by the Governmentís Home Owners Mortgage Support Scheme as well as other initiatives giving homeowners some protection.With predictions of interest rate increases in the coming months, however, it seems likely that even these Government schemes will struggle with the pressure for repossessions. When it comes to re-mortgaging borrowers are going to have to ensure they find the very best rates available and they may need to look in some unusual takes a look at the new faces in the mortgage market.Looking further afield With the Bank of Englandís base rate at an historic low there are some hefty margins to be made for lenders prepared to offer deals at 5%, 6%, or even 7%. But the British banks are remaining cautious, many would argue with good reason, and are still only lending to those with the very best financial circumstances.Foreign banks, though, have caught a sniff of the money that can be made and are increasingly pushing for a slice of the UK mortgage market. Israelís Bank Leumi (UK) and Swedenís Handelsbanken are two such banks looking to get a foothold in the UK. The former is offering one of the most competitive rates around with its tracker mortgage currently around the 2.5% mark.And even further…Banks even further afield are keen to get in on the action as well. The Bank of China has recently joined forces with four British mortgage brokers to offer deals to the UK market. With the vast deposits amassed from a more savings-conscious Chinesse population the bank can afford to offer competitive rates and still make a tidy profit.For borrowers with a 25% deposit, Bank of China has a lifetime tracker rate of 2.5% over base rate (plus a fee of ??), which comes to 3% a year at present. Buy-let landlords can borrow at 3% over base, or 3.5% a year.A dodgy deal? Following the collapse of the Icelandic banks many people might be sceptical about having dealings with institutions based overseas. The key point to remember, however, is that these banks are lending to you, as opposed to what is effectively the reverse when they take your savings. If theyíre any risk involved itís on their part not yours! That said, we have seen this situation before, with foreign banks entering the UK market only to go running for the departure gate when things turn sour as in the housing crash of the early 1990ís. Again, though, thereís little to stop you taking advantage of their offers now.

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