Lenders try to make mortgage products appeal to first time buyers
After the recession, banks were forced to pull back on lending in order to recoup some of the money they lost when all of the lenders crashed at once. This forced the banks and lenders to tighten their rules and restrictions on lending, making customers who would have previously been considered desirable candidates for a mortgage suddenly undesirable and cutting back harshly on the amount of mortgage products available, and the amount of people actually able to buy a property.
Most mortgages required a deposit of at least 20%, and even at that amount customers were having to go through much stricter credit checks in order to obtain the mortgage, meaning plenty of potential borrowers found themselves rejected for the loans they wanted. Even customers with parental help ran into trouble, as banks stopped accepting help from family money as a valid means of paying for a mortgage.
In recent times, the mortgage market has started to loosen up a little. High LTV mortgages are back on the market and the credit checks have become slightly less strict. Even parental help has been allowed, and for first time buyers actively encouraged. However, now it is a case of the banks making their mortgage products appealing to first time buyers, in order to bring new business to them which will last for many years. The Stamp Duty holiday was a great way for lenders to snag new business from first time buyers, but as that ended on March 24th and the 1% tax has been reintroduced, banks are having to get a little more wily in order to appeal to customers who otherwise may be content to just stay renting.
Many banks have brought back mortgages which only require a 5% deposit, and 100% mortgages cannot be far behind. Lower application fees and a willingness to accept deposits from other sources than the borrowers savings have also been used as a great way to get potential borrowers to choose their particular lender.
And it does seem to be working, as the property market is starting to see a real boost in mortgage applications as well as property sales. This trend looks likely to continue for the near future, especially with first time buyers, as the banks compete to make their mortgage products as attractive as possible, creating some truly exciting and well priced mortgages.
Article by: Ben Goble, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager.
Tel: 0844 44 88 800