Mortgage lending continues to fall
The Council of Mortgage lenders (CML) have reported that their was only 33,000 new loans granted in November, that’s a 17% reduction compared with last month. First time buyers are finding that they have to put down a large deposit. On average a first time buyer has to put down an 18% deposit of the properties value.
Larger deposits protect lenders from falling house prices. For 95% or even 90% mortgage products to find there way back into the mortgage tables house prices will have to stabilise. When you take a mortgage out the property is used as security against the loan. Banks are restricting there lending to the lowest risk investments therefore providng a wider margin of equity as protection.
The CML predicted that lending would fall further in the next few months.
“Limited mortgage funding and reduced consumer demand will weaken lending activity further in coming months,” said the CML’s director general, Michael Coogan.
“The flow of funds to the mortgage market will not improve this year without further intervention by government,” he warned.
Borrowers are being advise to use any savings from mortgage rate reductions to reduce there loan thus decreasing there loan to value against there property. By doing this you will stand a better chance of getting the best mortgage deal available when your current deal comes to an end.
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