Saturday, January 26, 2008

Abbey has effectively shut the door on first-time buyers

Abbey tightens its lending criteria

Abbey has effectively shut the door on first-time buyers by lifting interest rates on mortgages that require no deposit by 1.15 percentage points to 7.99 per cent – almost 2.5 percentage points higher than base rate which stands at 5.5 per cent. The rates have been imposed on tracker mortgages at 100 per cent loan-to-value (LTV) for new borrowers, but would-be buyers looking for the security of a fixed rate deal also face paying steep rates, even though they have remained unchanged.

Posted by jack c @ 07:48 PM (935 views)
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5 thoughts on “Abbey has effectively shut the door on first-time buyers

  • This should serve as a warning to FTBs – the banks are actually doing you a favour, and doing the market a favour by accelerating the crash.

    Nowhere near as negative as it sounds.

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  • crash bandicoot says:

    Are they still giving out 6x salary or have they closed that stable door too?

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  • I imagine 6x salary is technically unaffordable at 8%.

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  • crash bandicoot says:

    I think that you are right, but that’s little relief for the folks who have already borrowed 6x salary. Sooner or later they will be exposed to these increasess too. Ironically their only hope is that the banks keep them isolated from rate rises as far as possible because their debt will not be covered by their asset value.

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  • I don’t think 100% mortgages are healthy. If people have to save for a deposit before they buy, that should encourage better financial habits which will help them throughout their lives. Surely this current problem has come about because people haven’t had to save because they’ve always had access to easy credit.

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