Lending figures will struggle to improve - Mortgages - News - Moneyfacts

News

Lending figures will struggle to improve

Lending figures will struggle to improve

Category: Mortgages

Updated: 27/01/2009
First Published: 26/01/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Until borrowers can get a better deal than moving onto their lender's SVR, we are unlikely to see any significant improvements in lending figures.

Anyone with less than 25% deposit/equity will find that the new deals on offer are just too uncompetitive.

Deal

Rate

Average 2 year fixed

5.05%

Average 2 year tracker

4.11%

Average SVR

4.99%

Source: Moneyfacts.co.uk 26.1.09

Max LTV (Loan to Value)

Average 2 year fixed

Average 2 year tracker

60%

4.37%

4.05%

75%

4.80%

4.11%

85%

6.02%

4.79%

90%

6.29%

Not Available

Source: Moneyfacts.co.uk 26.1.09


Michelle Slade, analyst at Moneyfacts.co.uk, comments:

"There is simply no incentive at the moment for borrowers to go out and get a new deal. If you only have a small amount of equity in your home you are going to move onto your lender's standard variable rate (SVR) rather than pay over 6.00%.

"At a rate of 6.29% your monthly repayments on a £150,000 mortgage would be £993. If you are with Nationwide BS or Cheltenham & Gloucester your SVR is now 3.50%, which equates to £751 a month.

"It is going to take something pretty special to make a borrower pay £5,808 more over the two year term.

"Borrowers with less than 25% equity are in the majority, but they are being penalised with deals costing 2% more than on offer for those with 40% equity.

"Until we start to see competitive deals at 85% and even 90% LTV, we are not going to see any real improvements in the lending figures.

"Borrowers may want to borrow and lenders may start to lend again, but unless they lower rates on new deals we are going to continue with this stalemate position.

"The Government is asking banks to look at ways of lending responsibly. However, it seems that the banks are finding reasons not to lend at all."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Remortgaging bounces back

Remortgaging has been enjoying a welcome boost in recent months, despite September’s slight dip, with many homeowners capitalising on record low mortgage rates to boost their finances.

Bank of Mum and Dad holds the (house) key

The Bank of Mum and Dad is an important source of finance for many young adults, and it seems that they still hold the key – in more ways than one.

Fee-free mortgages on the rise

Mortgage rates may be at record lows, but for some people, the extra costs associated can make switching deals a financial impossibility. It’ll come as welcome news, then, that the number of fee-free deals has more than doubled over the past year!
 
Close