For the first time since before the current recession started, there is a real feeling of optimism within the mortgage market. This has been fuelled by some help from the authorities too, here we will look at a few of those factors.
Fund for lending scheme
Firstly (and majorly) the Fund for lending scheme, this is a government backed initiative which thirty five lenders have already signed up to. They are offered low borrowing rates from the money markets in return for lending to small businesses and individuals via the bank or building societies mortgage portfolio. This has been around for almost two years now but crucially the lenders taking part have been told to focus more on lending to those potential homebuyers with lower cash deposits or equity in their property as initially the lenders came under some criticism for using the money simply to provide lower rates to the low risk 'sub 60%' borrowing market.
There has also been a total change in the regulatory hierarchy this spring and the new regulator overseeing the sale, funding and advice of mortgages (The FCA) has made several encouraging statements regarding helping to revive the housing market. Their predecessor the FSA had started the ball rolling by telling the lenders to stop penalising the so called 'mortgage prisoners', these are the people who have found it very difficult to find finance to move or remortgage. It's estimated that up to an amazing 45% of those who bought between 2005 and now could fall into this category (source: FSA, MMR data pack 2012), be it due to tightening lender criteria, drop in property price or income or personal change (such as redundancy or bankruptcy), it seems we should see something to help these people by the time 2013 is out.
All this coupled with low borrowing rates in the money markets have brought rates for most down to all time lows, particularly if you are willing to take a short term two year rate. Of course you need to get bespoke advice to ensure what will work best for your circumstances.
Importance of advice
As I touched on in the last paragraph, the importance of advice is more critical than ever in finding the funds to buy or refinance your home, a YouGov/Countrywide survey in November 2012 suggested that 29% of those turned down for a mortgage when they directly approached a bank or building society subsequently had success when employing the service of a broker. The internet search engines are great for quotes but you really need an expert to ensure the best option for your personal situation, you'd employ a mechanic to fix your car and you'd go and see a dentist about your teeth so surely it's logical to utilise an expert to help advise you on the most important financial decisions of your life.
Dean Mason - Cemap, Cert PFS. Practice Principal Masons Financial Planning.
(image by By Stuart Miles, freedigitalphotos.net)