by Mark Johnston
A new report just published paints a pretty dismal picture of the state of mortgage lending in the UK. The report shows that home lending has fallen to its lowest level in two years. The end of 2010 saw mortgage arrangements drop to 42,500 which when compared to the high of 120,000 in 2007 looks pretty bad.
The total amount of lending dropped considerably too, in 2009 total lending was just over £11 billion whilst a year later that had dropped £3 billion to just £8 billion. Experts have pointed out that this is the lowest mortgage lending has been since the 80’s , the dark days of 1987 to be exact when typical interest rates were a wallet breaking 10%. It seems the tough lending criteria will remain for the foreseeable future as banks remain cautious about the future and do not want to be seen to return to the risky lending they undertook in the past.
The good news is that despite the poor lending figures, the overall number of mortgage products available have increased and in many cases doubled in the last year. More competition and more choice is always a good thing for borrowers.
Michelle Slade a spokesperson for a leading money website said: “Although lenders’ windows may be full of best buy deals, it doesn’t mean they want to lend. The increase in the number of mortgage deals for those with smaller deposits is encouraging, but only a limited number of such mortgages are likely to be approved.”
Chris Eagle the marketing director another leading financial website said: “It still comes down to the size of your deposit but more importantly how much you can afford to repay. So if you are struggling to get a mortgage, compare all the deals available online and see what you can get for the size your deposit and individual circumstances.”
Hinckley and Rugby Building Society is offering a market beating mortgage for those with a 10% mortgage at 4.64%. the mortgage comes with a fee of £1090 and the cost for comparison is 4.9%. Mansfield Building Society are also topping the best buy tables with a 4.89% three year discount mortgage with a loan to value of 90% so borrowers with smaller deposits should certainly check this out.
Those looking for a fixed rate mortgage that requires a small deposit should visit Newcastle Building Society. They are currently offering a two year fixed rate mortgage at 5.15% with a loan to value of 90%. The fee is £894 so APR is 6.2%. If the fee is a little high for young borrowers just starting out then look at HSBC’s 90% loan to value mortgage. The global bank is offering a two year fixed rate mortgage at 5.49% with a fee of just £99 so the cost for comparison is only 4.3%. This is a great example of why borrowers should look at the overall cost of a mortgage instead of just the interest rates.
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