02/12/2011
The truth about mortgages and rates
Everyone seems to be telling us that lenders aren’t lending, mortgage rates are sky high or 1st time buyers need a 25% deposit. All of which was the case, but not anymore!
Thankfully things have improved significantly, with lenders returning, existing lenders have more funds to lend, all of which is leading to competition. Previously the market was frozen, many lenders left, or closed their doors to new business and the lenders that stayed had limited funds, or just didn’t need to be competitive.
It is true that things have changed. People with credit problems will find it harder to secure a mortgage, the self-employed will have to fully prove their income and interest only mortgages are not as straight forward as they once were, however, even these cases are improving with the advent of competition and greater flexibility from lenders.
Mortgage rates for purchases are now available with just a 5 % deposit, with fixed rates around 5.99% or just 5.00% if you have a 10% deposit. How much you can borrow has improved with lenders looking to lend money on an affordability basis, which can mean lending up to 5 times joint incomes.
One of the most surprising elements of today’s market is re-mortgages. Many clients now find themselves on lenders standard variable rates, which can be 3, 4, 5 or even 6%. Due to increasing competition re-mortgage rates have tumbled, with rates as low as 1.9% and even with just 20% equity re-mortgage rates are available at around 2.5%.
So, before you become disheartened with the state of the mortgage market, book an appointment with your mortgage advisor to see first-hand whether you can obtain the mortgage you desire, whether you are a 1st time buyer or someone looking to save money on their mortgage by obtaining a lower interest rate.
