Sudden drop in mortgage deals on offer
Published: 3rd Apr 2012 13:07:43
The number of mortgage deals on offer has fallen back suddenly, after rising steadily towards the end of last year.
The number of deals peaked at 2,757 in February, the highest monthly figure since 2007, said Moneyfacts.
They then dropped back to 2,325 and 2,288 in March and April respectively.
Moneyfacts suggested lenders may have been responding to some first-time buyers trying to complete deals before the expiry of their stamp duty holiday on homes worth up to £250,000.
This policy ended on 24 March, after the government declared that it had done little to help many first-timers buy a new home while the housing industry was still gripped by severe mortgage rationing.
Louise Holmes at Moneyfacts said: "The main reasons for the fluctuation in the number of higher loan-to-value (LTV) products will be due to the stamp duty holiday coming to an end and the introduction of the government's NewBuy scheme."
NewBuy is a scheme intended to help 100,000 people in England buy a newly built property.
The government and house builders are guaranteeing the top slice of any losses that lenders might face if borrowers default, thus enabling the participating lenders to offer loans with a smaller level of deposit than before.
Ray Boulger, of mortgage brokers John Charcol, suggested that the increase in the number of mortgage deals late last year may have been due to lenders looking for more profitable borrowers, who could be charged higher interest rates.
Some lenders, such as Santander, have now certainly reduced the number of products they offer”
"There was a steady improvement in the number of higher LTV deals around, for 80%, 85% and 90% mortgages," he said.
"But some lenders, such as Santander, have now certainly reduced the number of products they offer."
The Moneyfacts figures show that nearly two-thirds of all deals on offer still require a downpayment from the borrower of 20% or more of the property's value.
The UK property market looks likely to continue stagnating in the coming year.
Last week the Bank of England's survey of lending intentions, for the first quarter of 2012, reported that banks expect to cut their mortgage lending in the next few months, despite expecting a rise in demand from would-be borrowers.
"Over the past three months, credit scoring criteria had been tightened and there had been a fall in the proportion of loan applications being approved," the Bank said.
"This was the first time lenders had reported a fall in expected secured credit availability since [the second quarter of ] 2010, reflecting the tightening in wholesale funding conditions since mid-2011 and bank balance sheet pressures.
"Other factors such as changing risk appetite, market share objectives and expectations of house prices were also expected to pull down on credit availability," the Bank added.
In the past few months, lenders have severely restricted their lending on interest-only mortgages, ahead of the introduction of new rules by the Financial Services Authority (FSA), which are designed to restrict this sort of risky borrowing.
Meanwhile several lenders have announced plans to put up the interest rates on their standard variable rate (SVR) deals, citing the rising cost of financing these loans by borrowing in the wholesale financial markets.
The most recent lender to announce this was the Co-operative Bank on Monday, following similar moves by the Halifax, the Bank of Ireland, and the Clydesdale and Yorkshire banks.
At 02:00:50 in HeadlinesThe Archbishop of Canterbury has spoken of the struggle to do "what is right and just to all" over the issue of gay marriage within the Church of England.
At 01:36:37 in HeadlinesTeachers' unions are demanding that schools in England should only employ fully-qualified teachers.
At 00:46:49 in EntertainmentSusanne du Toit won last year's BP Portrait Prize, one of the UK's most prestigious visual arts awards.
At 00:42:23 in EnglandTristram Hunt, Labour's shadow education secretary, is to warn against religious extremism in schools.
At 00:30:17 in ScotlandA groups of Highland clans are to hold an anniversary celebration in Inverness this weekend.
At 00:28:13 in ScotlandThe chief executive of Edinburgh Airport has hit out at state support for other airports, claiming it is "distorting" competition.
At 00:26:03 in WorldFew chemicals are as familiar as table salt. The white crystals are the most common food seasoning in the world and an essential part of the human diet.
At 00:02:57 in BusinessPeople convicted of commercial crimes overseas could be banned from running UK firms in a bid to tackle "rogue directors", Vince Cable has said.
At 23:55:54 in HeadlinesPope Francis has led Easter's Way of the Cross procession in Rome, with prayers for the poor and the abandoned.
At 23:55:01 in SportTottenham manager Tim Sherwood has admitted that he does not know his best team because so many of his players are "much of a muchness".
Harvard CitationBBC News, 2012. Sudden drop in mortgage deals on offer [Online] (Updated 3rd Apr 2012)
Available at: http://www.ukwirednews.com/news/1420413/Sudden-drop-in-mortgage-deals-on-offer [Accessed 19th Apr 2014]
News In Other Categories
Tristram Hunt, Labour's shadow education secretary, is to warn against religious extremism in schools.
People convicted of commercial crimes overseas could be banned from running UK firms in a bid to tackle "rogue directors", Vince Cable has said.
A groups of Highland clans are to hold an anniversary celebration in Inverness this weekend.
An appeal has been made for people to report deliberately started fires after crews spent several hours tackling a blaze at two properties in Flintshire.
How do you tell the world about your remote-controlled flying fish toys?