Mortgage Products Double in A Year

by Mark Johnston

Currently there are over 10000 mortgage products available to the UK mortgage market; this is more than double the number for this time last year.  The recent budget published by the UK Government in the last few weeks has dealt a lethal blow to all first time buyers.  When George Osborne said that Britain was open for business it was clear that his budget was going to favor the institution rather than the individual.  The Stamp Duty reforms and by opening up the previously exempt residential property market to the REIT entities, the days of the hopeful first time buyer are numbered.

The REIT or Real Estate Investment Trust is essentially a tax designation which reduces or eliminates corporation’s income taxes for corporate entities investing in real estate. The structure of the REIT was designed to act in a similar way to the mutual fund facility on individual stocks.  The REIT’s are required to dole out 90 per cent their income to their investors; this may very well be taxable.  Just like other corporations, the REIT can be under public or private ownership and can be listed on the stock exchange. 

With the property market now exposed to such a giant, ready and probably willing to vacuum up vast number of properties, whole streets and probably whole rows of terrace houses, what chance will the first time buyer now have?  The changes to the Stamp Duty indicate that there are significant tax breaks for those investing in bulk property investments, what first time buyer / individual has the capital to invest in properties in bulk?  This is good news for the large retail investment companies but not good for the FTB. I would suspect that mortgage providers are also rubbing their hands together as this now presents them with a great opportunity to develop and roll out more inventive and creative products into the mortgage lending market.  Further alienating individuals and presenting additional, unnecessary and complex information to the FTB.

There is no surprise that over 500 new mortgage products were launched during March 2011.  Market experts believe that these latest figures show a 123 per cent increase in mortgage product availability when compared to this time last year.  Most popular was the fixed rate, this saw a jump of about 10 per cent with only a modest 0.5 per cent increase shown in the variable product availability.

Chief executive of Mortgage Brain said that “It’s been a long time coming but we’ve finally broken the 10,000 mark for product availability in the UK intermediary market, which is great news for brokers.  Additionally, the number of products with higher loan-to-value (LTV) ratios is also increasing, which again is good news for brokers and their customers.  Overall product availability is now at its highest level since September 2008, and to look back over the past 12 months and see a 123 per cent increase is a real delight and shows a clear picture of market movement and the progress that continues to be made.”



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