Mortgages Uncovered

Mortgage borrowing dropped 19% from the beginning of May 2007 to May 2008, as cautious banks restrained their borrowing criteria with first time buyers.

Figures show that gross mortgage lending was at an estimated £25.5 billion showing19 per cent fall over 12 months compared to May 2007 when figures were £31.5 billion.

According to The Council of Mortgage Lenders the remortgaging activity did stay strong, meaning that existing homeowners are actually supporting the market and it is first time buyers that are expected to pay more to secure new mortgages at higher expensive rates.

Mortgage lenders have hiked up interest on their accounts and increased borrowing fees on 2-year fixed rate loans to a staggering £1,300 in 6 months alone. Some banks have actually changed their deals up to 19 times since January 2008.

From April 2008, first time buyers’ average deposit deals increase to 13 per cent which is the highest level in over 3 years state CML.

Director General at CML, Michael Coogan is quoted as saying:

“The remortgage market remains on track to meet our forecast for growth this year, demonstrating the resilience of the market despite recent bad news.  However, by comparison, the next few months will remain very weak for house purchase activity for the funding reasons which are now well rehearsed.  We still await first signs of the Bank of England’s Special Liquidity Scheme indirectly helping to ease the current log jam.”