Where Are The Best Interest Rates
Best Interest Rates
To day we are certainly seeing some of the best interest rates ever seen in the history of motgage lending. Back in 1975 there was around 5,000 different interest rates available in the UK mortgage market and just before the credit crunch four year ago there were over 18,000 different interest rates to choose from. Four years on from the credit crunch we now have around 4,054 different interest rates available to borrowers. This means we have less mortgage rates today than we had 36 years ago when the mortgage market was much smaller.
Whilst we have some of the best interest rates around in many decades it has become harder to borrow money for a mortgage. First-time buyers are struggling to find ten to fifteen percent deposits just to by their first home and the average age of a first-time buyer is 35 years.
The best interest rates today are for borrowers that have more than 25% equity in their properties, no adverse credit history and a permanent full-time job. Haven’t times changed from four years ago?
Best Interest Rates Are For borrowers
That Don’t Present A Risk To The Lenders
Today in the UK you can no longer borrow more than 95% of the value of the property. To obtain a 95% mortgage you will need to have the cleanest credit record and the mortgage lender will not lend any more than 4.5 times your annual income. Four years ago it was possible to borrow up to 125% and obtain finance for your mortgage based on up to seven times your annual income. Today this is impossible as the lending criteria has changed and the mortgage lenders only want to lend to borrowers that present them with no risk.
Sub-prime Lenders Never offered Best Interest Rates
Four years ago we had approximately 35 lenders for the sub-prime mortgage market, whereas today there are only two lenders left. Some of the original sub-prime lenders have left the country while others have stopped lending in this market.
What difference a year can make!
If you have any thoughts about the best Interest Rates around then let us know….
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Mark, as a mortgage broker, I totally agree with you, the market providers have shrunk but there are more customers out there than ever before. the ones that are suffering are those who took the really chaep deals two years ago at the high Loan to value products (rather than taking the long term view) and as their property hasn’t risen in value enough and they haven’t paid sufficient capital off they are now stuck on the standard variable rate with mortgage payments increasing dramatically. I’ve had some clients payments go up over £200pm.
I have always been advising people on the long term view. let me give you an an example of what I mean; I had a client that I saw on 31st October 2007 (No this is not a horror story) and I advised them that since interest rates were at their lowest there was only one way they could go. At the time interest rates in the States were on the increase so I knew it wouldn’t be long before they did the same over here. I recommended they fix their interest rate for 10 years at 4.89% which was just as low as the two year deals around at the time. Now with standard variable rates over 7% and most fixed rate deals around the 6.5% mark this client is laughing all the way to the bank. On the other hand I had a client decline my advice of the long term view and wanted the cheapest short term deal in the market as they thought they knew more than I did. Now that their deal has come to an end they can’t move away from their lender as their loan to value is over 90% and are stuck at the variable rate paying over £100pm more now than they did two years ago.
Coupling this with rising fuel and food prices it is hitting the public where it hurts. I’ve seen more BMW’s and Mercs sitting outside ALDI’s, Quicksave and Netto’s than ever before.
Lenders are now Cherry picking which cases they wish to proceed with and give you the run around until they decide whether they are going to accept it. Not exactly treating customers fairly. Lenders have had it good for so long and at the sniff of trouble they shut up shop and stiff everyone else over. We have seen increasing up front fees from lenders, increases in interest rates, decreases in loan to values and generally not a good time for all concerned.
I’ve heard a rumor that lenders are now thinking about ceasing proc fees so the brokers are also going to get even more battered.
Good Job the brokers who are worth their salt can see though all the smoke and see the long term view and advise their clients accordingly but no doubt about it times are tough at the minute. Let’s just hope that rates don’t go back to Maggie Thatcher’s Black Wednesday’s figures or we can all shut up shop and emigrate.