The number of homes changing hands fell to a record low in December despite an increase in the number of buyer enquiries having risen for the second month in a row according to the Royal Institution of Chartered Surveyors (RICS). They also said that sales are at their lowest levels since records began in 1978. The only people who are buying properties at present are people with existing cash, equity in their properties and young people who have been helped with a deposit by their families. Mortgage approvals are so low at present and estate agents are believed to have sold on average 10 homes in the last three months. How can estate agents survive!
The problem as we know it!
Banks are still unwilling to lend money to homebuyers and home movers who need a 90% to 95% loan-to-value mortgage and this does not look likely to change soon. At present Banks are getting two different messages from the government. The first is that they should lend to the housing market and small businesses and the second message is that they should increase their capital base. This is impossible for the banks as they cannot really do both.
The Royal Institution of Chartered Surveyors agrees with the recent report that Sir Crosby produced and they believe that we need some government backed mortgages to be provided through the existing banking system. The banks would then be more willing to lend money as the government would end up being a lender of last resort. This approach would certainly free up the first time buyers market and make an enormous difference to the number of mortgage transaction.
More buyers are interested but mortgages are not available
Without immediate help there is a real danger of homebuyers being frozen out of the mortgage market, house prices will fall to new lows, repossessions will increase and negative equity will become common place. This is a bleak assessment and Ian Perry from the Royal Institution of Chartered Surveyors said it can only get worse, mortgage transactions are at a 30 year low at present and he believes that there is interest at present and people would like to buy now.
A small ray of sunshine for homebuyers and homemovers has appeared finally!
Finally there are some interesting mortgage rates for first time buyers and homeowners looking to remortgage that are well under 5% barrier. These new interest rates are for people who have clean credit reports with the credit reference agencies like CreditExpert also known as Experian . In other words they are only for people who have no arrears, have not defaulted on any payments and have no county court judgements. Alliance & Leicester have just released a two year fixed rate at 3.49%, a 2% arrangement fee, plus a valuation fee depending on the property valuation and income required for lending is based on affordability, roughly 4.75 times a single income or 4.5 times a joint income.
Other new interest rates are 5 year fixed rates at 4.79%, 10 year fixed rates at 4.99% and a lender who is willing to lend 15 / 20 /25/ 30 year fixed rate at 5.89%%, a £895 arrangement fee, plus a valuation fee depending on the property valuation, income required for lending is based on 5 times a single income or 3.75 times a joint income and there is a 10 year penalty should you wish to leave. The best 2 year tracker rate is currently 2.99% or 1.49% above the Bank of England’s base rate and the best 5 year Tracker is currently 3.85% or 3.35% above the Bank of England’s base rate.
To answer my original question, “Are homebuyers being frozen out of the mortgage market?” my reply has to be yes in agreement with the Royal Institution of Chartered Surveyors findings. There are millions of homeowners and first time buyers who have arrears, defaults and county court judgements that are unable to move to another mortgage lender for a better interest rate due to their credit report. There are first time buyers who are penalised for not having a big enough deposit to buy their first home and there are homeowners who desperately need 90% to 100% mortgage products. You should always use a reputable Mortgage advisor to help you find the best mortgage available for your personal circumstances. Your thoughts, experiences and comments are welcome. Just CLICK on the GREEN coloured COMMENT bar below and Leave your thoughts or experiences today!