The Guardian reports today that HSBC has become the second lender in recent days to relax its "loan to value" (LTV) limits, making its leading tracker product available to 75% rather than 60% "loan to value".
Whilst these small movements will help borrowers with 25% deposit/equity the problems for clients looking for high LTVs endure.
I have had a very good, longstanding client of mine call me today to let me know he has accepted an offer on his home. He is looking to move and needs to borrow 90% of the purchase price of his next house. The loan he needs is under two times his annual earnings.
The options available to him are, frankly, awful.
Many lenders can't agree 90% at all (including the likes of Woolwich andNationwide).
His existing lender (Halifax) are offering a fixed rate at an absolutely eyewatering 7.49% for five years. Abbey would offer 7.09% also fixed for five years, but this has a staggering £2,499 arrangement fee (almost 3% of the mortgage amount) which cannot be added to the loan. (Contrast this also to Abbey's latest five year fixed rate offering at 4.49% for borrowers with a 40% deposit.)
C&G are not much better, offering 6.29% also for five years (an on-line special).
It's not just the interest rates and fees that are punitive at high LTV borrowing - it is the range of products that are available. Historically, at 90% there would have been a full suite of products to choose from - tracker rates or fixed rates for between two and ten years. Now if you want to borrow 90% to buy a home you are basically having to commit to one of these extortionate interest rates for half a decade.
Anyone looking to borrow 90% is going to have a hard enough time as it is trying to find a lender that will help them. The problem is compounded by the fact that when you do find one, the interest rate options are so unpalatable that many people are put off bothering at all.
Whilst these small movements will help borrowers with 25% deposit/equity the problems for clients looking for high LTVs endure.
I have had a very good, longstanding client of mine call me today to let me know he has accepted an offer on his home. He is looking to move and needs to borrow 90% of the purchase price of his next house. The loan he needs is under two times his annual earnings.
The options available to him are, frankly, awful.
Many lenders can't agree 90% at all (including the likes of Woolwich andNationwide).
His existing lender (Halifax) are offering a fixed rate at an absolutely eyewatering 7.49% for five years. Abbey would offer 7.09% also fixed for five years, but this has a staggering £2,499 arrangement fee (almost 3% of the mortgage amount) which cannot be added to the loan. (Contrast this also to Abbey's latest five year fixed rate offering at 4.49% for borrowers with a 40% deposit.)
C&G are not much better, offering 6.29% also for five years (an on-line special).
It's not just the interest rates and fees that are punitive at high LTV borrowing - it is the range of products that are available. Historically, at 90% there would have been a full suite of products to choose from - tracker rates or fixed rates for between two and ten years. Now if you want to borrow 90% to buy a home you are basically having to commit to one of these extortionate interest rates for half a decade.
Anyone looking to borrow 90% is going to have a hard enough time as it is trying to find a lender that will help them. The problem is compounded by the fact that when you do find one, the interest rate options are so unpalatable that many people are put off bothering at all.
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