by Mark Johnston
Today George Osborne set out some austerity measures that the new coalition government hopes will set the UK on the road to recovery. Two years ago at the height of the financial crisis we saw mortgage finance all but dry up, a few banks and building societies continued to stay open for business but for many of us the lack of credit in the banking sector and the need for the financial industry to sort out its balance sheets meant massive deposits or no ability to get a mortgage at all.
As the UK tries to pull itself out of recession we are seeing more confidence in lenders as they start to offer mortgages to those with smaller deposits. Recent figures are showing that the average rate on a two year fixed rate mortgage is around 4.5% which is the lowest level since the middle of September 2003.
Mortgagerates.org.uk is continuing to monitor the market and bring you up to date news and offers. We have seen a number of lenders offering cuts in their rates to try and take back their share of the UK mortgage market. With the Bank of England base rate still at a record low of 0.5% lenders are finding it difficult to attract existing mortgage holders off of variable rates as they would pay higher monthly payments on the new deals. This is starting to pave the way for borrowers who have smaller deposits who have previously been priced out of the market, either with very high interest rates or lenders not willing to offer mortgages to customers with less than 75% loan to value (LTV).
To counter this, mortgage lenders are offering many more products than in the past and some which scare potential borrower off by being too complicated. Mortgagerates.org.uk is helping borrowers understand these deals but the numbers are staggering. At the beginning of the year there were 1,600 products available in the UK and this month has seen that top 2,600 with many on the way.
Mortgagerates.org.uk is starting to see a major increase in mortgages for people with deposits of only 15-20%. For those of you in this category there are over 480 available to you dependant on rates and your current situation. This has led to a doubling of people borrowing 80% of their homes value.
This pattern on falling interest rates and a steep increase in the number of products available is making it more attractive for existing mortgage holders to remortgage. Many mortgage brokers are advising caution against moving from lower standard variable rates. Current fixed rate mortgages may seem tempting but the best deals are on shorter term 2 year deals which would mean anyone taking up one of these offers would be looking to remortgage again in 2 years time, when it is predicted that interest rates will be increasing resulting in much higher payments.
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