Halifax Supports First Time Buyers

by Mark Johnston

The UK’s biggest mortgage lender, the Halifax has launched a new two year fixed rate mortgage.  The loan has a 5.79% rate for first time buyers looking to get onto the UK property market.

The Halifax has designed the mortgage especially for first in buyers in mind to help them take their first steps to owning the home of their dreams. First time buyers and those with smaller deposits have found it difficult to get a foothold on the UK property market since banks and building societies tightened their lending criteria. They hope that by offering a fee free mortgage its will save first time buyers up to £2,000 when money is tight.

Most first time buyers have to around £1000 in arrangement fees together with legal costs and valuation fees.

Stephen Noakes, the commercial director at Halifax said “First-time buyers are an important part of the housing market and whilst they are benefitting from the best monthly mortgage affordability in over a decade, buying a first home has always been an expensive process where every penny counts,”

At the end of last year the Halifax announced changes to its mortgage range that will result in large price hikes for first time buyers. The Halifax announced that from January 2011 it will raise its mortgage rates for new borrowers which will probably effect struggling first time buyers the most.

The Halifax was badly hit by the financial crisis and was bought by the Lloyds banking group in a bid to save it. The UK Government has over  40% stake in the business which had to be rescued because of its over exposure of bad debt due to defaulting mortgages.

They have been criticized for also dropping their promise of their variable rate never being over 3% of base rate which will force borrowers into new deals, many of which with will switch to new lenders.

Industry insiders are warning that the changes will be bad news for first time buyers as the bank will be able to charge what it likes for its mortgages. It comes as a shock for many especially when those effected, the tax payer saved them from collapse with a massive bailout.

Experts are now wondering whether this change will lead the way for other banks and building societies to make rate increases. Either way, any interest rate changes of this kind will have a negative effect on struggling home owners who are already finding things difficult due to government cuts and the economic downturn.

Currently borrowers with Halifax are charged 3.5% at the end of their mortgage term when their home loans are converted to Halifax’s standard variable rate. From the start of January 2011 the Halifax will charge all new customers 3.99%, a rise of almost 0.5%. With no maximum cap of the standard variable rate, the bank is will be clear to set the rate as high as it likes.

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