Restrictions on Mortgage Deposits Easing
Deposit Restrictions Easing
As of the beginning of February the percentage of new mortgage deals that require a 25% or greater deposit has dropped below 50% for the first time in 2 years to 46%. This seems to be a sign that lenders are easing back on their loan restrictions, even though they have warned they are still facing tight restrictions on their lending.
The number of 80% mortgages has risen threefold over the same 2 year period with the level of mortgage deals overall doubling to 2,447 deals.
Michelle Slade, spokesperson for Moneyfacts.co.uk said, “Although lenders’ windows may be full of best buy deals, it doesn’t mean they want to lend. Borrower affordability remains the key factor in lending decisions and lenders remain strict over which borrowers they will accept.
“Borrowers who have benefitted from record low interest rates for the last two years may be in for a shock when it comes to finding a new deal.
“Rising rates and the implementation of the Mortgage Market Review are likely to restrict affordability calculations further, meaning some borrowers will struggle to borrow as much as they need despite the increased number of mortgage products available.”
According the Council of Mortgage Lenders the emergency funding provided by the Treasury and the Bank of England of £230 billion still has to be repaid, along with loans to commercial lenders. This means prospective borrowers don’t stand much of a chance of having more funding being available to them.
“The shortage of mortgage funding has left the UK with a dysfunctional market, with restricted choice and competition, particularly for higher-risk customers,” said the Council of Mortgage Lenders (CML).
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