Mortgage Lending Realism

[crown]

http://thecrownblogspot.blogspot.com/2008/...ng-realism.html

I just wanted to comment on some of the dire mortgage lending news out at the moment.

It is certainly true that if you are a riskier borrower defined as having less than a 10% deposit or have any bad debt or cannot prove your salary, then it is very difficult to get a mortgage approved.

However if you are a prime borrower with a decent deposit or equity in your property, you are employed or have accounts as self employed and have no bad debt, then there is no problem getting a mortgage although the rates will be higher than they were 3 years ago.

But to me this is just lending returning to normal. The lenders have seen common sense and are now lending responsibly after years of madness.

The reason that mortgage lending has collapsed is not that the lenders are no longer lending, but that they are no longer willing to lend to the more riskier borrower. Prime borrowers who could get a mortgage approved are sitting on the sidelines having seen the market for what it is - horribly overvalued.

So to sum up - mortgage lending has almost returned to normal. Lenders are checking incomes, requiring a deposit, requiring a clean borrowing history. They are still lending historically higher multipliers, but this will also be changing over the coming months.

So for any market commentators who think that the housing market will recover once the market returns to normal, the market HAS returned to normal.

[crown]

nice one crown.good to hear,still cant believe anyone is writing 75% ltv BTL.what btl doing at the mo?what are the minimum terms

BTL at 85% is still possible, but almost impossible on the criteria for rent coverage. BTL lending has also gone back to sensible lending.

for example with birmingham midshires a rental income of £700 will get you a mortgage of £102,000 with a fee of £2500 and a mortgage IO payment of £560. Now in the Brighton area to buy a property where you can charge £700 rent is going to cost you around £160,000. So you need a £58,000 deposit which is a LTV of 64% - way below the 85% max.

So even if you had this size deposit in cash it should signify that if you bought you would only be able to sell again to someone with a sizeable deposit. This should stop anyone from bothering to buy until that property came down to the £120,000 mark.