Thursday, May 14, 2009
Let's return to lax lending standards
Times: Abbey loosens criteria for most popular home loans
Abbey, the country’s second-largest mortgage lender, will relax the lending criteria on its most popular home loans tomorrow, providing a significant boost to the mortgage market.
The lender, which is owned by Santander, is lowering the minimum deposit required for its best fixed-rate deals from 40% to 30%, making its most competitive deals available to tens of thousands more prospective homeowners.
James Carter, of Independent James, a broker, said: “This is a positive move in a market that has seen nothing but a tightening of criteria for the last year. It is sign that Abbey has faith that monthly house price falls are easing and homeowners should expect that other lenders will have to follow suit.”
Posted by little professor @ 01:03 PM (738 views) Add Comment
5 Comments
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1. quiet guy said...
30% equity?
I don't think this is really all that relevant. Santander might be able to gain some market share from their rivals. As long as they are diligent in checking salaries etc, a 30% equity stake provides the lender with a reasonable degree of safety against defaults.
Nothing here to see for most FTBers and those in negative equity. Move along please ...
2. jack c said...
To counterbalance this - "Nationwide tightens affordability criteria" from yesterdays mortgagestrategy publication www.mortgagestrategy.co.uk/cgi-bin/item.cgi?id=186426&d=403&h=401&f=402
More to the point best of luck to anyone who tries obtaining a mortgage from the Santander group of Co's eg A&L or Abbey - absolute nightmare to deal with !
3. mark wadsworth said...
As a BBC article pointed out a couple of days ago, all the people with loads of cash for a deposit have either already bought or are sitting tight, so banks have to drop deposit requirements from 40% to 30% or they wouldn't be lending anything.
30% seems sensible though, the banks can still value the properties as low as possible and THEN demand a 'smaller' deposit.
4. An Bearin Bui said...
Wow! So for the average property in the UK, I now only need 45k to get the best fixed rate deal instead of 60k! A whole 15k saving is going to make all the difference to the mortgage market... (not).
5. Tqo31 said...
@Mark 3.
Or to look at it another way, with steep(ish) falls already behind us perhaps lenders think that there is 'only' another 30% to go?
Surely it's the multiples that are teh most telling marker of prudent vs. reckless lending?