Home Owner Loan Criteria Easing
Over the course of the past couple of years or so, it has been increasingly difficult for anyone looking for a new home owner loan to be able to find a competitive cheap loan deal, unless they had a particularly large deposit to meet lenders’ maximum loan to value criteria.
But new research from Moneyfacts has shown that the number of home owner loan products which require a borrowers to have a minimum deposit of at least 25 per cent, has fallen to its lowest level for the past two years.
The research reveals that only around 46 per cent of all the home owner loan and mortgage products which are available on the market now restrict potential borrowers to a maximum amount of just 75 per cent loan to value.
This suggests that there are some signs of easing lending criteria within the home owner loan market, which is particularly good news for first time buyers, many of whom will struggle to raise a large enough deposit to meet the previous maximum loan to value requirements.
Despite this good news, those looking for a higher loan to value home owner loan or mortgage are still likely to have to pay a significantly higher interest rate, than someone with a large deposit and with lenders still being extremely cautious about who they are prepared to offer loans to, high loan to value deals are likely to be scrutinised very closely, with many being rejected or loans offered on different terms than originally applied for.
Michelle Slade of Moneyfacts said “The availability of mortgages continues to improve and encouragingly it is borrowers with a smaller deposit that are seeing the biggest increase in numbers. However, just because lenders have increased the number of deals available, it doesn’t mean that more mortgages are being approved.”
