by Mark Johnston
New Mortgage lenders Could Mean Rates Fall to New lows!
Is seems that many current mortgage holders would welcome new lenders entering the mortgage market as they believe that they will focus more on customers needs compared with traditional lenders.
According to new research from housing investment and equity loan provider Castle Trust, 82 per cent of home owners want more to be done to make it easier for new lenders to enter the mortgage market.
Sean Oldfield, chief executive officer of Castle Trust said “The mortgage market needs greater innovation and a wider selection of products than those currently on offer.”
Islay Robinson, chief executive of London mortgage broker Enness Private Client, suggests “new lenders entering the mortgage market will substantially widen the choice”.
While some lenders will focus on niche parts of the mortgage market, others are though likely to appeal to typical home buyers.
Mark Harris, chief executive of SPF Private Clients, a mortgage broker, said “new mortgage entrants can only be good news for borrowers. With more lenders we expect to see improved lending conditions, which will in turn mean better pricing and availability”.
Research has shown that lenders owned by names that are unfamiliar to most home buyers are considering moves in to residential home loans.
New lenders are likely to be attracted to the market by the availability of cheap loans from the Bank of England and the relaxation of regulations.
Experts think they will then be in a better position than existing high street lenders to pass savings on to borrowers.
Ray Boulger, of mortgage broker John Charcol, adds “new entrants would have a clear advantage when it comes to funding their loans cheaply from the bank”.
So it would seem then that competition from new sources could potentially see mortgage rates fall below 1.5 per cent, enough to cut typical repayments by around £600 a year.
According to Ian Gordon, a banking analyst at Investec, a broker “the combination of new lenders, a renewed appetite to lend among the incumbent banks and cheap funding from the bank of England could see rates fall by up to 0.2 percentage point.
Also as Adrian Anderson, a director of Anderson Harris mortgage brokers, said “with more lenders coming on to the market and competing, it is likely that criteria will loosen as lenders do not vie simply to offer the cheapest rate”.
Some industry experts have predicted that 2013 may be an important year for new lenders entering in to the market, particularly with the offer of new liquidity and for those who have a ‘real’ appetite to lend.
Brian Murphy, head of lending at the Mortgage Advice Bureau, says “it is clearly a positive when new lenders arrive in the market place. Apart from more choice and possible better pricing, we may also see some innovation as new lenders may choose to target specific groups of buyers or focus on a sector of the market that is currently underserved”.
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