Mortgage lending levels have to decline further

11-15-2009 09:00

Moneyfacts Group PLC, a financial information company, has stated today that during the last weeks several lenders, such as Leeds BS, Northern Rock, Abbey, Nationwide BS, Woolwich and Halifax, have moved to lower mortgage rates, as they are still far away from the low levels at the start of 2009.

Higher monthly costs

Lenders raised the mortgage levels in the following months, as they decreased the rates after the decline in bank rates to 0.50%.
Borrowers with a 40% deposit seeking for a mortgage with a value of £150.000 now have to pay £45 more monthly than they had to pay for the exact same mortgage a half year ago.

Optimistic moves

“Although lenders have made optimistic moves regarding lower rates, it will take more to compensate the extensive rises of the last months,” Michelle Slade, analyst at Moneyfacts.co.uk, said.

Bigger margin

“Currently, the costs of financing on the swap rate market are less than they were a half year ago. Borrowers will wonder why the banks are cashing a bigger margin for the same deal. Signs that credit conditions are gradually easing, together with slowly declining rates should put borrowers in an optimistic mood.”

Loan-to-value (LTV) ratio

“Several lenders are raising the loan-to-value (LTV) ratio up to which their most favorable deals are accessible, as other lenders implicate that they will increase the loan-to-value ratios. This concerns lenders such as Tipton & Coseley BS, Ipswich BS, Nottingham BS, Woolwich, Nationwide BS.”

Deposit deals augmented

“During the last four weeks alone the number of available 10% deposit deals has augmented to 109 from 88, as the total number of available deals has dropped and reached for the first time since January 2009 the level of 1,800.”