by Mark Johnston
Amid the deteriorating employment conditions, the failure of wages to keep up with ever rising energy bills and the general high living costs these days, most households have seen their budgets squeezed even harder.
Therefore there are now a high number of people who can not raise enough of a deposit to get a mortgage and the numbers keep on growing.
However the bank of England has suggested that over the year (2012) most lenders are planning to launch more innovative deals on high loan to value (LTV) mortgages. This news is particularly good for the first time buyer with a smaller deposit.
This suggestion comes only days after it was revealed that there was a surprise in the number of mortgage approvals recorded in November 2011. Approvals for house purchases unexpectedly rose to 52,854, with a total value of £7.6 billion, the highest figure since December 2009.
Samuel Tombs, of Capital Economics, stated that the increase in new mortgage approvals, from 52,786 in October to 52,854 ‘defied the widely held expectation of a fall’.
The latest figures from financial information firm, Moneyfacts show that the number of mortgage deals on offer has jumped by more than 20% in the past year.
David Hollingworth, director of the brokers London and Country, said that “there is a lot more competition out there, with more products available at lower prices”.
At present UK banks and building societies offer approximately 3,523 mortgage deals compared with the 3,038 they offered in June 2011.
Data has also shown that the number of mortgages at a minimum 90% loan to value (LTV) has risen from 244 to 261, 95% loan to value (LTV) mortgages have risen from 31 to 37 and 100% mortgages have risen from just 8 to 17, since the summer of 2011.
A mortgage expert at thinkmoney.com suggests “it now seems that lenders are now becoming more comfortable with lending to people with lower deposits again”.
However, on the down side many believe that the euro zone crisis could have a significant impact on UK banks and limit the amount they are able to lend, thus resulting in a temporary further tightening of their lending criteria.
Paul Diggle, an economist, warns “there are few signs that lenders will loosen their lending criteria, as there is a high chance of another recession”.
In light of the looming euro zone crisis, lenders have predicted that the credit scoring criteria used to assess mortgage applications will be tightened even more with in the first 3 months of 2012, therefore meaning approvals will almost certainly drop.
Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), believes “2012 will see a continued lending barrier facing those entering the housing market for the first time, with major lenders sticking to their tight mortgage criteria”.
Basically the lenders will offer an even better range of mortgage deals for struggling first time buyer in one hand in 2012, but then make them even harder to obtain with the other!
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