Mixed outlook for the mortgage market
Darren Cook, mortgage expert at Moneyfacts.co.uk, comments:
“Amid continued turmoil within the financial markets, mortgage providers are continuing to withdraw their higher loan to value products from the market. Only 3,281 mortgage products are available today, the lowest number we have witnessed since the onslaught of the credit crunch.
“During the mortgage boom, products were driven by pricing and there was minimal margins attributed to risk or probable default. We now see that the market is becoming largely risk driven, which is evident from the demise of many products with loan to values of between 95 and 90 per cent.
“Property values are still falling and there is no indication at which level they will bottom out. Fears of negative equity and diminishing values of supporting security has resulted in providers hedging themselves by offering more mortgages that require a minimum deposit of 40%.
“Mortgages with a maximum loan to value of 60% have increased by 84% to 155 products and unfortunately for borrowers, this is where the better rates are to be found today.
“Choice may be reducing, but there are still enough products out there for borrowers to try and find a suitable deal that suits individual circumstances.
“The difficulties lie in the lack of liquidity within the market and providers having no appetite or being unable to lend on a larger scale. In essence, the price list shows that mortgages are getting a little cheaper, but the stock rooms are currently nearly empty.
|
10 August 2008 |
10 October 2008 |
Total number of products |
3,748 |
3,281 |
Average 2-year fixed |
6.90% |
6.32% |
Average 3-year fixed |
7.13% |
6.54% |
Average 2-year tracker |
6..58% |
6.28% |
Number of max 95% LTV |
85 |
53 |
Number of max 90% LTV |
474 |
337 |
Number of max 75% LTV |
557 |
459 |
Number of max 60% LTV |
84 |
155 |
Average max LTV |
80% |
78% |
2 year fixed average fee |
£964 |
£1,149 |
2 year tracker average fee |
£1,063 |
£1,134 |
Source: Moneyfacts.co.uk 10.10.08 |
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“Ten lenders including Halifax, Woolwich, Cheltenham & Gloucester and Royal Bank of Scotland have been quick off the mark in announcing that they will be passing on the full 0.50% cut in their SVRs. With an increasing number of customers on SVR, due to the lack of deals this will be a welcome relief.”
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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