Mortgages for borrowers with small deposits, or high LTV mortgages, have been in the news a lot recently, as First-Time buyers have staged something of a comeback over the past few months.
Even though it has been hard not to get swept up in the swathes of political nonsense going on at present, with MPs even willing to resign from their parties to try to affect some kind of change, it is important to remember that there is a market out there and for most people, life goes on regardless. And so it should.
In fact, despite all the shenanigans, the mortgage market is still in rude health.
The focus on the First-Time Buyer market and mortgages available to buyers with smaller deposits have helped to push competition in this area of the market. In fact, it has got so competitive that research from Defaqto last week showed that the rates available on 95% Loan-to-Value mortgages had dropped to record lows.
This has been linked with the growth in mortgage approvals across the board as reports by E.surve surveyors believe this was driven by borrowers with small deposits.
We have seen a definite move from lenders to be more competitive in the high LTV end of the market, especially as First Time Buyers seem to have been staging a comeback over the past few months.
It looks like a buyers’ market at the moment with interest rates at a level where many buyers think they will not go any lower, as well as more availability of property due to tax changes in the BTL market. This has all helped to entice buyers who have previously put their search on hold.
From a lenders perspective, competition has been so intense that they have naturally worked up the risk curve to where they can charge slightly higher rates and follow where the buyers are.
There has also been a welcome dose of innovation in this space, with lenders such as Barclays, Halifax and Bank of Ireland taking advantage of the Bank of Mum & Dad who want to hold on to their savings rather than simply give them to their kids. Family guarantee mortgages have been developed that fills a much-needed gap and allow borrowers access to better rates and higher LTV’s.
I expect this battle for first-time buyers will continue to be a key part of the market for the remainder of the year.
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