Mortgages – Where did it all go wrong and what now?
- Nick Oliver
- May 10, 2012
- 3 min read
Mortgages are somewhat difficult to acquire these days.B Going back to 2007, things were much easier and lending was at its peak.B Unfortunately, due to the credit crisis and irresponsible lending, the market collapsed and many lenders withdrew from lending.B Some have returned in a new format such as Kensington, IgroupB and Platform but many have closed to new lending, such as TMB (The Mortgage Business), Beacon Homeloans and SPML (Southern Pacific Mortgage Loans), Preferred, DB Mortgages (DB), Money Partners,B WAVE, Edeus, Future, Mortgages PLC, Swift, First National (FNMC) and GMAC (General Motors Automotive Corporation) Amber, Advantage, High Street Homeloans,B Rooftop, Infinity, LondonB Scottish, Victoria Mortgages, Capital Homeloans, Bristol & West to name those that spring to mind.
Whilst there are still lenders out there prepared to lend, the lending criteria has been tightened up considerably to such an extent that even insignificant adverse credit can preclude an applicant from bhigh streetb lending.B A missed credit card payment, small arrears or a historic default perhaps for a catalogue, or a small County Court Judgement (CCJ), can all force the applicant to apply to a specialist lender at a higher rate than they expected to pay.B In addition, the deposit that is needed from the applicant is much higher than previously and this is forcing many first time buyers to remain at home for longer, whilst they save up a bigger deposit.B This all leads to a very depressed mortgage market. Whilst the government has created new schemes such as Newbuy, these have been found to be very limited and only available to first time buyers purchasing a new property from selected builders.
At the peak of lending, there were in excess of 40,000 Mortgage Brokers.B Today, according to the Financial Services Authority, this number has dwindled to less than 10,000 and more are leaving.B Many have diversified into get rich quick schemes such as so called bdebt managementb and the loathsome bPayment Protectionb claim companies.B Central Mortgages has not found it necessary to diversify and have remained an independent mortgage broker through difficult times.
Looking towards the future, there are new lenders who take a more positive view of lending and ignore the odd credit mishap that bhigh streetb lenders refuse to understand and rates are at an all time low. As such, lending is still available to those who want it, whether they are first time buyers, movers or remortgagers.
The next area that generates a lot of interest is buy to let.B Instead of keeping money on deposit at the bank, where it is actually loosing value*, many of our clients are buying property to let out.B The benefit is that you have a bricks and mortar investment, the potential for the property to increase and income from rental.B Only 25% deposit is required to get into the buy to let arena. As such, if there is money in the bank, it may be a better investment putting it into property than letting it rot away.
*With interest rates so low, the effect of inflation on deposit monies means that the actual buying power of deposit monies is decreasing all the time.B If the deposit rate is 3.8%, less inflation at 2.8% and tax at 20%, a depositor is only netting about .3% account. (Sources: Thisismoney.co.uk. moneysupermarket.com).
Central Mortgages (Essex) Ltd – 01277 630183 info@centralmortgages.net
Comentarios