Date: 27/10/2009
The council of mortgage lenders’ August figures shows a 37% per cent year on year fall. At first glance this doesn’t bode well for the property market, however, the figures don’t seem quite such bad news for the housing market as it first appears. The fall is largely due to remortgage business and for the first time, new lending for house purchase accounts for 50% of total lending in the month.

Remortgages are falling because borrowers prefer to stay on the lenders’ Standard Variable Rate (SVR), where they are low. House prices have fallen and borrowers who originally had 75% of their purchase price now find they need to borrow 90% of their properties value. Disqualifying them from the best mortgage rates on offer.

Borrowers have little to gain by fixing, with many fixes above the best SVRs, why pay an arrangement fee for a new mortgage when they can stay on the SVR for nothing.

The cheapest mortgage rates and top products in the market, are only available at 60 per cent loan to value. The number of mortgages available with 40% deposit has increased 61% in the six months to may 2009, practically the only sector of the market to show growth.

Mortgage lending doesn’t appear to be shrinking as fast as it has done over the past two years but we’re not out of the woods yet. Lenders are still trying to reduce their balance sheets, attempting to limit their liabilities rather than grow their share of the mortgage business. We have to wait until they start to think a little more ambitiously again.

CLIFFTONS have an independent mortgage broker who has access to over 2000 different mortgage products. If you are loooking for a mortgage, please call 01202 789699.

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Your home may be repossessed if you do not keep up repayments on your mortgage.