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Posts Tagged ‘London Mortgage Deals’

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.

According to a rather popular price comparison site, this spring is strong for the mortgage market. There are better mortgage deals than ever and more people applying for them too, including first time buyers and those looking to remortgage. The initial boost for the rise in applications from first time buyers came just days after the Chancellor announced a two year stamp duty holiday for first time buyers when purchasing a property under £250,000; a trend that has remained strong, and positively affected other areas of the mortgage market.

The interest from first time buyers in London rose by 17% in March, but the number of people interested in remortgaging increased by a staggering 29%. This has been due to the number of competitive mortgage deals available. However Londoners are being warned that although competition is returning, it is still wise to watch out for deals that offer low interest rates but charge extortionate fees.

The recovery of the mortgage market looks set to continue over the coming months, despite uncertainty about changes in interest rates due to the coming election. Financial experts think that there will be favourable deals well into the summer, and not just for those with a large deposit. At the moment HSBC have a 4.49% fee free tracker first time buyer deal, offering up to 90% LTV, which is ideal for anyone wanting to get a foot on the ladder whilst interest rates are still low.

For those who can access a larger deposit, HSBC have an even better first time buyer deal – the 2 year discounted mortgage. At 1.9%, this mortgage is half a percent less this April than it was in April of 2009, but to secure it, you will need to find at least 40% deposit as the LTV is a maximum of 60%, and bear in mind that it also comes with a £999 fee. If figures such as these continue to be on offer, the housing market looks set to recover further.