Mortgages

The 100 percent mortgages have been off the market for four months now. The banks and other lenders were told not to sell any more 100 percent mortgages as a result of the credit crunch. So now the 95 percent mortgages may be in jeopardy. UK housing prices have fallen by 6.9 percent because of the difficulty in getting a mortgage of late, according to Nationwide. While this is great news for the home buyer the seller is struggling to make what they need out of the house. But, what does this have to do with the mortgages? Well the housing prices are becoming more favourable for the buyer, which means those who want to purchase a house are trying for mortgages.

With the 100 percent mortgages being off the market, the next step is the 95 percent mortgages, if the consumer has the funds to do this. The consumer has to have at least a 5 percent deposit along with the arrangement fee. Despite the lowering costs on the houses many don’t have a great deal of savings. Some of the banks realise this and their 95 percent mortgages are here to stay.

Other banks are sliding closer and closer to the line of despair. They are being forced to charge higher interest rates to consumers that have deals ending. They are also having to take away all but the 75 to 85 percent mortgages. These banks and lenders don’t want to close or sell out. They have been selling mortgages that are defaulting or even those in good standing to banks that can rescue them from the turmoil. However, it still means that a lot of the 95 percent mortgages are leaving the market.

Nationwide, Skipton, Halifax, Direct Line, and NatWest still have their 95 percent mortgages on the market. The consumer needs to qualify for the loan though. The interest rates are all between 6.34 percent and 6.74 percent. So even the rates are great, but they are variable after two years. The arrangement fees vary from 299 to 999 pounds, with a high lending charge.

It is a great deal if the consumer can afford it and has the right background. For most of the borrowers the 5 percent deposit is too high as they don’t have the savings. Added to the deposit is the lack of credit history or favourable credit history. Consumers are acting too slowly with their debts to fix a situation.

A lot of the consumers are waiting until their mortgage comes up during July to find a new deal. For them it could be too late. They are already being forced to pay the higher interest rate as the two year fixed ends. This stress on their income has required late payments or at least a struggle.

Not all 95 percent mortgages will be removed from the market. It will be certain banks and building societies that just can’t afford the best deal. So, for consumers it is a race to get mortgages that aren’t too expensive.

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This entry was posted on Wednesday, July 9th, 2008 at 7:30 am and is filed under Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.