Home Loans
May 8th, 2008 | By admin | Category: finance, property newsThe credit crunch is tightening its grip on Britain with the number of home loans given hitting its lowest level for 9 years. This suggests the mortgage market is shrinking probably a result of continuing problems in the banking sector.
According to the CML or Council of Mortgage lenders the number of loans for property purchases fell to just over 50,000, which is the lowest level for 9 years. This drop in loans given means demand is lower which means potential falls in property values.
Part of the reason for this drop is the fact that lenders have tightened up lending criteria as well as asking for larger deposits. This indicates that lenders are finding it difficult to raise funds from other sources to provide mortgages for consumers. This means first time buyers are having a tougher time trying to get on the property market.
At the moment the average first-time mortgage dropped back from 3.38 to 3.32 times income. I think one way of helping first time buyers could be to increase the stamp duty threshold to help first time buyers get on the property ladder. But if they can’t raise a large enough deposit or even get approved this will have little effect.
One interesting observation is that it seems borrowers are moving away from fixed rate mortgages and opting for the more competitive rates on discount and tracker mortgages in the hope that interest rates will drop.
The credit crunch is tightening its grip on Britain with the number of home loans given hitting its lowest level for 9 years. This suggests the mortgage market is shrinking probably a result of continuing problems in the banking sector.
According to the CML or Council of Mortgage lenders the number of loans for property purchases fell to just over 50,000, which is the lowest level for 9 years. This drop in loans given means demand is lower which means potential falls in property values.
Part of the reason for this drop is the fact that lenders have tightened up lending criteria as well as asking for larger deposits. This indicates that lenders are finding it difficult to raise funds from other sources to provide mortgages for consumers. This means first time buyers are having a tougher time trying to get on the property market.
At the moment the average first-time mortgage dropped back from 3.38 to 3.32 times income. I think one way of helping first time buyers could be to increase the stamp duty threshold to help first time buyers get on the property ladder. But if they can’t raise a large enough deposit or even get approved this will have little effect.
One interesting observation is that it seems borrowers are moving away from fixed rate mortgages and opting for the more competitive rates on discount and tracker mortgages in the hope that interest rates will drop.
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