Remortgages Increase, But First Time Buyers Down
There has been a healthy increase in the re-mortgage market over the past few months according to recent survey figures.
The British Bankers Association (BBA) announced that there was a rise in the number of re-mortgages completing throughout the month of April and this news was backed up by the Intermediary Mortgage Lenders Association (IMLA) who confirmed that there had been a 1% increase in re-mortgage deals and that this type of loan now accounted for 49% of all mortgage loans. The IMLA are also predicting this area of home loans to increase throughout the year, as borrower’s existing fixed and discounted rate mortgage deals come to an end.
Both organisations agreed that re-mortgage activity in the mainstream home loan market has been strong and is improving, but warned that borrowers who may have a less than perfect credit rating may find it difficult to obtain a suitable re-mortgage deal for themselves.
On the other hand, things don’t look quite so good for first time buyers, who are struggling to get their foot on the first rung of the property ladder. Although property prices have fallen slightly over the past few months, the average property value in the UK currently stands at £178,555, according to the Nationwide Building Society and this is still much more than can be afforded by many first time buyers, who may be on relatively low wages.
The other problem facing those looking for a loan on their first home is the level of restrictions applied by lenders to their current ranges of mortgage deals. The high loan to value deals on home loans have practically disappeared altogether, meaning buyers have to scrape together a larger deposit, coupled with the fact that low introductory rates on mortgages have also gone, meaning that monthly repayments will also be higher than previously.
Although this may appear to be a grim outlook for first time buyers, in reality this is simply a return to responsible lending from the banks and building societies and in the long term, both lenders and borrowers alike will benefit from these changes. In the short term however, it is likely that those looking to buy their first home will continue to struggle in making that first step.
