The Bank of England has stated that first time buyers may be able to take advantage of the growing number of available mortgages in the first three months of 2012.
More Mortgages Available
Its latest Trends in Lending report The Bank of England stated that "lenders expect the availability of secured credit to households to increase slightly in 2012 Q1, with the rise concentrated on borrowers with high LTV [loan-to-value] ratios". The greater amount of finance would help many people who are continuing to rent make their first steps onto the property ladder. HSBC, alone has pledged to lend £3 billion to first-time buyers.
Less Deposit Required
Granted, that many of the mortgages on offer will focus on people with large deposits, but there are growing numbers of higher Loan to Value (LTV) mortgages being offered.
Moneyfacts, the financial data provider has said that although lower LTV mortgages are making something of a comeback, there are not enough deals available to meet the demand.
The number of mortgage products available for residential purchases has increased from 2,527 to 3,180 in the past 12 months. 90% and 95% loans have made a noticeable resurgence. However, many mortgage deals tend to be around for just 27 days before becoming fully subscribed, compared with a historic average of 30 days.
95% Mortgages
Moneyfacts found 49 mortgages available at 95% loan-to-value (LTV). This figure is more than double the 24 mortgage products on offer in January 2011, and gigantic increase from the mere three products you would have been offered in April 2009.
90% Mortgages
There are also 280 deals on offer at 90% LTV. This number shows a rise from the 199 mortgage products on the market in January a year ago and a staggering improvement on the 72 mortgages available in April 2009.
Why First Time Buyers Shouldn’t Wait to Buy
1. End of the Stamp Duty Holiday - The higher number of lenders willing to lend to first time buyers as well as the low-deposit deals on offer might tempt first time buyers to get the property transactions underway, but add to that the end of the current stamp duty holiday and there should be plenty of motivation to get first time buyers viewing properties. As of the March 24th, first time buyers who make a property purchase up to the value of £250,000 will be spared the expense of stamp duty. That is a saving of up to £2,500.
2. Concerns that Lenders May Further Tighten Lending Criteria– With the weak economy, particularly considering fears created by the crisis in Eurozone countries, there is a concern that banks and building societies may further tighten their criteria as 2012 progresses. So, it is best to take advantage as a first time buyer of a period when lenders are focused on lending to you, before conditions change.
Currently, there is the biggest choice of mortgages for those with 40% deposits, with 393 mortgage products found by Moneyfacts. This figure is up from 271 deals in January 2011 and 280 in April 2009.
"First-time buyers are always going to struggle to find an often unrealistic 40% deposit, so thankfully we are seeing the 90% and 95% LTVs start to return to the market," Moneyfacts spokeswoman Sylvia Waycot was quoted as saying in the Guardian. But she adds: "A lot of providers still prefer the assurance of a proven track record, which is shown by some of the incentives offered to those remortgaging such as free legal fees, free valuations or cashback.
"Despite an increasing number of mortgages appearing on the market, they are only around for an average of 27 days before being fully subscribed, which just goes to show there are still not enough mortgage deals around to satisfy demand."
Moneyfacts acknowledges that the improved figures remain a "far cry" from the choice available before the financial crisis, with nearly 12,000 deals offered in 2007. However, these figures call to mind the conversation one of our Northfields Sales Managers had with a vendor at the beginning of the credit crunch. Our Sales Manager explained that the number of mortgage products had dropped and quoted him a three digit number that would have disappointed most people. Surprisingly, he laughed. He said that when he had bought his property just after World War II there had been 3 mortgages available – total. In light of that, with 3,180 mortgages available today, we are 1000 times better off.
If you want to take advantage of the increasing number of first time buyer mortgages available before they become over-subscribed, contact Northfields and we can refer you to an independent mortgage advisor who can look at all the mortgages available and find the best deal for you. Remember that independent advisors will often have access to deals that won’t be available from high street banks. Don’t leave it too late, call us on 0208 840 6666 or e-mail at sales@northfields.co.uk to be referred for your free, no obligation mortgage consultation.
