Mortgage borrowers warned to expect tough times ahead
The Bank of England’s quarterly credit conditions survey has revealed worrying new trends which hint at a very trying time for those looking to obtain a mortgage in the next year or so, as lenders tighten up on their lending and make conditions the most difficult they have been since 2008.
As home loan approvals dropped to the lowest in over a year last month, lenders intend to cut the credit given to households across the UK in order to secure themselves against possible crisis as the economy hits yet another road bump.
Interest only mortgages have already been rendered all but impossible to obtain over the past few months, as lenders brought in restrictions meaning customers with anything less than a 50% deposit and solid repayment vehicle are unlikely to have any luck with obtaining an interest only mortgages, and effectively ending interest only mortgages for contractors. And lenders haven’t stopped here as mortgage products are being pulled from their ranges and given stricter conditions across the board. The amount available to those seeking mortgages is likely to be pulled back yet more in the next few months, meaning that even though property prices remain low, many customers will still find themselves unable to afford to buy at the present time.
Those without clean credit histories are also likely to suffer as the lending criteria is tightened up, and those looking for contractor mortgages may find themselves struggling again after a relatively long period where contractor mortgages have been easier and easier to obtain, with specialist contractor mortgage companies springing up en-masse.
Interest rates are also going up, as many high street banks and lenders feel the need to raise their own personal interest rates in order to recoup some money lost during the past three years as the Bank of England base rate has remained at the incredibly low 0.5%. This will affect everyone on an SVR mortgage, bringing up their monthly repayments, although it will encourage more savers, who will see a more substantial return from their savings accounts.
The best advice for those looking to take out a mortgage this year is to pick their lender and mortgage product carefully, and do their research to ensure they will be able to pay off the mortgage repayments, as well as making sure they are likely to meet the lender’s criteria.
Article by: Jonathan Veers, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager.
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