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Mortgage Restrictions Lifted

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The proportion of mortgage deals needing more than a 25% deposit has fallen to a two-year low.

Moneyfacts says only 46% of mortgages currently on offer now ask for a deposit of that size.

The figures indicate that some lenders may be relaxing their strict mortgage rationing of the past two years.

However lenders have warned that they still face severe restrictions on their ability to lend to home buyers.

At the beginning of this month the percentage of new mortgage deals that demanded at least a 25% down payment fell below 50% for the first time in exactly two years.

However Michelle Slade of the Moneyfacts pointed out that the size of a deposit is no longer the only method which lenders use to allocate mortgage funds.

"The availability of mortgages continues to improve and encouragingly its those for borrowers with a smaller deposit that are seeing the biggest increase in numbers," she said.

"However, just because lenders have increased the number of deals available, it doesn't mean that more mortgages are being approved.

"In fact latest figures from the Bank of England show another drop in the number of approvals [in December 2010]," she added.

The Council of Mortgage Lenders (CML) pointed out that UK banks and other mortgage lenders still had to repay £230bn of emergency state funding advanced to them by the Treasury and the Bank of England during the banking crisis of 2008 and 2009.

Along with having to repay loans to commercial lenders, this means there is little prospect of making more money available to prospective borrowers.

"The shortage of mortgage funding has left the UK with a dysfunctional market, with restricted choice and competition, particularly for higher-risk customers," said the Council of Mortgage Lenders (CML).

Separate research from Lloyds bank suggests that falling house prices will continue to choke activity in the market.

The bank says nearly a fifth of first-time owners did not have enough equity in their properties to move.

Research among its own mortgage customers by Lloyds, which owns the Halifax mortgage lender, found that 9% of so-called "second steppers" - those who want to sell their first home and move up the property ladder - are unable to do so because house prices have fallen since they first bought.

The bank estimates that 9% of these second steppers are in negative equity, while a further 9% have less than 10% equity in their homes, hindering their ability to borrow a larger mortgage and move to a bigger home.

When Lloyds quizzed a sample of 500 of its borrowers who had bought their first home in the past five years, only 13% said they would cut their asking price if they could not sell for the amount they were currently asking.

"Without movement from second steppers, movement on the ladder comes to a standstill," said Lloyds.

"For many, a necessary move to enable them to start a family or re-locate with work is held back by an erosion of equity and a widening gap between the cost of a first-time buyer and second step property," it added.

Edited by exiges

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Separate Bank of England data showed that net mortgage lending, after repayments, was £8.15bn in 2010, down from £11.3bn in 2009 and the
lowest level since the Bank's records began
. For December, net lending shrunk by £298m, as homeowners repaid more than they borrowed – only the third time this has happened since records began in 1993.
The Council of Mortgage Lenders has predicted that
net lending will drop even further to £6bn this year.
Activity in the mortgage
market remains subdued
, with the number of mortgage approvals falling by 10pc in December to 42,563 – the lowest level since March 2009.

Worst since records began. Double digit drop in a month. Horrible forecast for this year. And this is "subdued?" I wonder what a crash will look like? :lol:

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High LTV mortgages have always been and still are available. It's the high rates they charge which make them so unappealing and with just be every bank upping their new mortgage rates at the moment I doubt this will change.

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mortgages on offer.

sounds like they have skilled craftsmen carefully shaping and moulding mortgages into products.

some are well made and are expensive...others are a bit scratched, seconds if you will, that are a bit cheaper.

odd that each and every one is using the same, identical, money.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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