Mortgages London | Mortgages in London

The Chancellor George Osborne has announced that the FSA will be abolished by 2012, a move which has the potential to make reasonably priced mortgage deals harder to come by in London. By handing over responsibility to the Bank of England it is hoped that the economy will be able to achieve stability, but this means that it is likely there will be stricter lending rules. The news is not good for first time buyers who are already finding it difficult to secure London mortgage deals.

The deals most likely to be affected are high LTV mortgages, specifically aimed at first time buyers with a small deposit, although official statements say that new regulations will see more competitively priced high LTV loans on offer. The aim of the new rules is to ensure that responsible lending is taking place and the goal is to keep lenders on the straight and narrow without punishing borrowers. Addressing the need for wide consumer choice with accessible fair deals appears to be a contradiction in terms with stricter lending based on arbitrary limits.

It is hoped that mortgage deals in London will see less of a cost difference between high and low LTVs, so if a borrower can only raise 10% of the deposit, they will not be penalised through higher interest rates. This is particularly important for Londoners as the cost of a property in the capital is significantly higher than anywhere else in the country, therefore it is much more difficult for borrowers to raise a sizeable deposit.

Rather than there being fewer mortgage products on the market for borrowers to choose from, lenders will instead offer a wider range of mortgage deals aimed at those who need them most with new lending criteria. It is hoped this will address the recent issues of those who actually have a good credit history and the ability to pay off a loan being refused a mortgage, such as first time buyers. By changing the rules, mortgage approvals will become fairer and the Bank of England will be able to find the stability the UK economy really needs.

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