FTB mortgage rates now higher than in 2007, despite fall in base rate from 5% to 0.5%

carolt

Or - why the market will fall further:

http://www.guardian.co.uk/business/2009/jun/13/mortgage-first-time-buyerd


Rates have also started rising after a year of falls. Yesterday, a number of big lenders put up the cost of their fixed-rate mortgages and experts suggest other lenders will follow suit.

First-time buyers are already paying a high price for their borrowing – in January 2007, the base rate stood at 5% and the average interest rate on a 90% home loan was 6.2%. Today, the average rate on a first-time buyer loan stands at 6.23%, 5.73% above bank base rate.

Boulger said tightened lending criteria meant first-time buyers applying for a large loan had a two-in-three chance of being rejected, with lenders only interested in "squeaky clean" borrowers with perfect credit records.

Although figures this week from the Council of Mortgage Lenders showed a rise in new borrowers in April, numbers remain low by historic standards and experts say the market cannot recover until first-time buyers can find loans.

Running_Horse

I'm guessing this is for the mortgage board, or the zoo?

carolt

No, not really - I think it's pretty relevant to FTB's buying now - hence it's here.

Running_Horse

Yes, because as we all know FTBs are too stupid to read the words "house price" or "mortgage" on a list of forums. Or would that be thread starters?

carolt

The 'zoo' as you correctly call it, is only 'open' to those who are logged in - not many - I'm not usually logged in when I pop in. I'm a regular, and didn't even know it was there!

Plus, as a would-be FTB myself, this is the first board I came to, not the mortgages board - that is more for info related tto specific mortgage problems - I likewise didn't know of its existence for months if not years after first reading and posting on this board.

But thanks for bumping my thread - sure that will help a few.

Chris2685

What's the zoo?

carolt

He means the House Prices board.

But I don't think this is primarily a house prices issue, although obviously it will have a knock on effect in that area.

But it's a useful piece of knowledge for those looking to buy now, and backs up my own research.

We nearly bought at peak - in Feb 2007 - and the mortgages we were offered then were at far better rates than we could get now, meaning that the falls in house prices since aren't fully reflected in falls in monthy payments.

Whilst lots of people talk about 'greater affordability' now due to falling prices and low interest rates, they forget that low interest rates DON'T apply to FTB's - except for the tiny minority with huge deposits.

Indeed, rates are actually MORE expensive now, despite the fall in base rates.

Meaning house prices, or certainly those of FTB-type properties, are going to have to fall further to allow for this.

Chris2685

carolt wrote: »

He means the House Prices board.

Ah, I thought so but wasn't sure. I like some of the topics in there, but they just get big too fast and I cba reading them if I haven't been keeping up. I know what the zoo reference is in aid of though, it's a shame so much bickering (rather than good debate) goes on in there!

Yakubu22

Chris2685 wrote: »

Ah, I thought so but wasn't sure. I like some of the topics in there, but they just get big too fast and I cba reading them if I haven't been keeping up. I know what the zoo reference is in aid of though, it's a shame so much bickering (rather than good debate) goes on in there!

It's all very entertaing though...seriously, it probably is more suitable for that forum

silvercar

But surely all the clued up buyers who have been holding back on buying for the last two years will now have built up massive deposits and be able to access great mortgage deals. Or was that just the theory?

Bit of a dilemma then in retrospect. Should someone have bought two years ago on a low fix or base rate tracker at base -0.74% (I think that was the lowest possible) but paid 15-20% more for their property, or have held out and now get the house cheap but face a much higher interest rate?

Lotus-eater

If it was me I would prefer a cheaper house thanks Interest rates change all the time, house prices paid for, last for the length of the mortgage.