Mortgages look to become far more difficult to obtain within the year
With the end of the stamp duty holiday imminent, as well as lenders starting to drastically tighten the restrictions of their mortgage loans, 2012 is looking to be a year which cuts back on the amount of people taking out mortgages and buying property - something which may prove devastating to the property market.
The stamp duty holiday, which ends in March, was taking a hefty chunk off of what is needed to buy a property. At a rate of 1%, a loan of £250,000 will then take on additional costs of £2,500 out of the buyers pocket, a cost which could have gone on things such as redecoration or the actual moving process. Add the cost of valuations and surveys as well as various taxes and those looking to buy property may be biting off more than they can chew.
Even if buyers are willing to swallow the extra costs involved with buying a home, they will still need to try to get a mortgage in the first place, something which is not as simple as it sounds with lender starting to up the restrictions on their loans. Both Lloyds and Santander have recently announced cuts and huge restrictions to their loans and other lenders look set to follow.
Whilst loans with low deposits are starting to return and become more popular, trying to draw in new business from those who have not managed to save a good amount of deposit for a house, the interest rates on these are often unfeasibly high and may cause buyers to struggle more than if they had tried to get together the money for a deposit in the first place. This means that for many it is working out cheaper to rent than to buy a property, and rent prices are continuing to rise as the year goes on.
This does not bode well for the economy in general, and just at a time when things were starting to recover from the recession, with lenders relaxing a little and starting to lend more. Now the self employed, people with bad credit and those with little for a deposit may have to face the fact that it could be a long time before they are in a position to buy a home.
Article by: Andy McBride, Associate Director at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager.
Tel: 0844 44 88 800
Email: media@contractormortgagesuk.com
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