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Mortgages – don’t touch what you can’t afford

Mortgages – don’t touch what you can’t afford

Category: Mortgages

Updated: 02/02/2011
First Published: 02/02/2011

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 It is now over 6 months old so the content may be out of date.

The number of mortgages available from lenders has more than doubled in the last two years, but other factors continue to block buyer's routes to the housing market.

Research conducted by Moneyfacts shows that the number of residential mortgages fell to an all-time low two years ago, as the number of products dropped to just 1,097.

Today, the choice of mortgages has comfortably more than doubled to 2,447, with borrowers holding a 20% deposit seeing the number of deals increase by threefold over the period.

The range of mortgages priced at 80% loan-to-value has jumped from 97 to 390.

The tier with the largest number of products is 75% LTV, however – a result of lenders making their best deals available at this price.

Two years ago, the number of residential mortgages available to a buyer with a 25% deposit was 422; today, that number is 851.

The expansion has seen choice in the 60% LTV tier fall from 261 to 187.

Despite the rise in mortgage numbers, access to them remains restricted for many.

Latest figures from the Bank of England show that the number of mortgage approvals has fallen recently, while the cost of fixed rate mortgaged continues to rise.

An increase in rates could have been driven by mounting pressure on the Bank of England to increase interest rates.

Household budgets have also been stretched by rising inflation, an increase in VAT and pay freezes.

"Although lenders' windows may be full of best buy deals, it doesn't mean they want to lend. Borrower affordability remains the key factor in lending decisions and lenders remain strict over which borrowers they will accept," said Michelle Slade, spokesperson for

"Borrowers who have benefitted from record low interest rates for the last two years may be in for a shock when it comes to finding a new deal.

"Rising rates and the implementation of the Mortgage Market Review are likely to restrict affordability calculations further, meaning some borrowers will struggle to borrow as much as they need despite the increased number of mortgage products available."

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