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Thinking about a mortgage
The total amount of mortgage lending increased against predictions by 6% in February. In January, lending was at its lowest point for 10 years at £8.7billion, but by February the figure had risen to £9.2billion. This is in spite of low house prices due to an increase in properties coming on to the market.
People seem more inclined to take out a mortgage now that the economy is showing slight signs of a recovery and interest rates continue to remain low. In fact, the number of people in arrears on their mortgage dropped by 4% in the final quarter of 2009.
However, although getting a mortgage is becoming easier again, a return to extremely high loan-to-value ratios looks unlikely. FSA chairman Lord Turner is calling for an end to 100% mortgages stating that borrowers should save for a deposit to encourage a nation of savers not debtors.
But what about first time buyers, people that don't have a partner to buy a property with and people who have gone into negative equity as a result of the financial crisis?
There are now 2,053 mortgages available on the market, which is a 70% increase on April 2009 when the market bottomed out. It's also a 28% increase from the start of 2010, so things are looking good. However, the vast majority of these mortgages are at the low loan-to-value end of the market. There are 680 75% mortgages and 360 60% mortgages meaning big deposits and or high earnings.
At the other end of the scale, there are only 13 95% mortgages and 152 90% mortgages. However, this is a rather large improvement on January figures, up by 44% and 33% respectively. The signs are good for the situation to get even better. This increased availability brings with it more competition, therefore prices should fall and the number of high loan-to-value mortgages should increase further.
Because of all this competition it is vital you shop around before committing to one mortgage provider. Use online tools such as mortgage calculators, comparison websites and reviews. Go into branches and speak to mortgage advisers weighing up a variety of options and types of mortgage.
Choose banks that have won awards for their services or ask friends and family to give a personal recommendation.