I have to say it's worrying to see the government trying to prop up the type of easy credit we've seen previously and pouring out more money in an attempt to simply blow the housing bubble back up.
The government wants RBS and Lloyds TSB to boost loans to house buyers and small businesses as a condition of its injection of £37bn.
But the Council of Mortgage Lenders said the government's plan for major banks to return lending to 2007 levels was "not prudent or desirable".
The days of mortage lenders bending over for first time buyers who can wave 5% deposit at them are well and truly over. Mortage approvals have crashed because easy borrowing is over.
The interest rates are usually 5% or above though...
which is still pretty good. For the uk that is still a cheap interest rate if you look at historical data.
But the important bit is can you afford it at that interest rate, if yes it doesn't matter.
You have to remember the days of 4.2%, 100% and 10x salary are gone and wont be back anytime soon.
Yes they are harder, but still plenty on moneysupermarket and other sites. As long as you have over 5% and are only asking for 4.5% X your pay.
The number of mortgages available to buyers with a 5% deposit is shrinking fast, as lending is cut because of the credit crunch and falling house prices.
There are only 60 such deals currently available from lenders, according to the information service Moneyfacts.
That number is down from 384 at the start of April, and 860 a year ago.
Mortgages for 100% or more of a property's value disappeared at the start of the year and the range of all mortgage deals has since shrunk.
"Every week or so another lender drops out of lending at 95%," said Aaron Strutt of Chase de Vere mortgage brokers.
My mum is intending to possibly invest into a house with a close friend of hers but I just wanted some advice regarding whether this is feasible in the current market.
Bit more info: The house (haven't seen it myself) is a semi-detached with a view of a field from the back. It is badly in need of renovation and will need electrics/plumbing/papering/new kitchen etc. which will cost around the ~20K mark IIRC. The owner passed away and the relative to whom it was left resides in the USA so they just want it sold.
Considering all of the above the estate agents will let it go at 93K. (i.e. VERY cheap/good opportunity).
Now my mum has always been wise with investments in the past and is sure that after spending the necessary money needed to renovate that all things considered including renting the house to pay a 'interest only' mortgage it will be a good investment.
She's actually going into this with a friend that does so they'd be splitting it half way but I'm not sure what she is doing is the right thing? Money isn't a problem (considering the type of mortgage she intends to get above) so it won't all end in ruins per se, but after reading for example the newspaper article posted a few posts up I'm not so sure whether this is a good idea
Are house prices certain to fall as dramatically as predicted in your opinions? Would now be a bad time to buy said property in need of renovation as an investment? I mean wouldn't it be better to wait for the market to bottom out and wait for another such property going at a steal of a price to come up (I mean, theres always going to be these kinds of properties going ?!).
Thanks!
There really aren't, not compared to what has been about. The number of mortgage products available is a 1/3rd of what it once was (15000 down to 5000 (source)), and most of the casualties have been in the high LTV market.
For a better insight...
http://news.bbc.co.uk/1/hi/business/7654641.stm
So no, there are not 'plenty' of mortgages about for 95% LTV, in fact there's virtually nothing about at that level of lending.
All those people who wanted the market to crash because it will make houses more available to them really didn't understand what they were wishing for...
So there are 'only' 60 different mortgage products on the market for 95% LTV, but on the other hand if anyone has a 5% deposit and enough income to afford a place then they have a choice of 1 in 60, not exactly the end of the world, less available yes, but then you only need 1 mortgage, not 100...
At the moment the houses aren't more available no, but 2, 3 maybe even 4/5 years down the line, once the house prices have regained some semblance of sanity, they WILL be more available to first time buyers, assuming said buyers have at minimum a 5% deposit, preferably 10-15%...