High LTV Mortgages The Mortgage Market Needs Them!!
The housing market in the UK is being stifled in 2011 by the lack of high LTV mortgage approvals, April turned out to have the lowest level for mortgage approvals since records started in the early 1990′s, with house prices expect to fall borrowers are still being affected by tax increases and higher inflation. Mortgage approvals are running at less than half the levels they were in 2006 and have dropped by about 2,000 on the previous month; those looking for their first home are most affected because they struggle to save the larger deposits to secure the best deals.
This is an Irony as there has never been a better time to get a two-year fixed mortgage deal for buyers deposits that can lower their LTV to around 70%, There is a 2.5% interest difference between rates of 75% LTV mortgages to 90%.
With house prices low you would think this would help the property market. but the lack of hight loan to value mortgages being refused borrowers with small deposits are left out in the cold, with only a 10% deposit borrowers will have to pay much large premiums for a two-year fixed deal. It’s clear the mortgage market needs cheaper deals for buyers with small deposits.
For those attempting to borrow 90% LTV for a two year fixed period the figures are only slightly up from February by a measly few percent, but if the mortgage/property market is going to recover we need to raise the higher LTV approvals in order for the housing market to even get close to the figures pre 2007.
The Bank of England has done its bit to help the mortgage market by holding interest rates at a astonishing 0.5% earlier this month, and wisely they don’t expect to authorise any rises until later this year or hopefully till 2012, this should at least give lenders the chance to approve much higher LTV mortgages thus reinvigorating the UK property market.
There is a downside to being offered such an attractive interest rate, when your two year fixed term has ended you could be facing a huge increase in mortgage repayments especially on mortgages over £200,000, and lets face it with interest rates as low as they are rates can only go up, while some countries in the EU offer 30 year fixed mortgages Britain seems unfair by offering such short term mortgages, lenders prefer to make their money approving remortgages rather than let the borrower save in the long term.