Will this mean we see some rates rising? Banks need £11bn more for a very rainy day https://t.co/JCEwLgkaQx
23rd February 2017
It has been a thumping start to the year, with lenders seemingly falling over themselves to make early inroads into their targets and jockeying for position once more within the Best buy tables.
As more lenders enter the fray, led by the new digital breed such as Atom Bank, as well as a growing number of hitherto solely Buy To Let lenders who, faced with declining numbers of BTL mortgages given recent tax changes, are anxious to now get involved in the more specialist residential market where they can replace their lost lending.
There are however, two sides to this battle. On the one hand lenders can fight purely on rate alone, but we have been in this low interest rate environment for a while now and as the cost of funds have increased recently, the only way for lenders to continue to reduce rates is to cut their profit margins further. This hurts!
We now have a secondary battle taking place, which is around criteria. Lenders are actively looking for areas to improve so they can lend to more people without having to drastically reduce their margins.
This is good news.
In the mortgage market we work hard to make sure that our clients can actually get the funding they require, especially for the growing numbers of self-employed, contractors and older borrowers who automatically believe that mortgages are not available for them. These latest moves have undoubtedly opened up the market, so no-one needs to belief that they are automatically dis-enfranchised.
As a result we have seen the entry of no less than three lenders now able to lend to those with only one years accounts. We have seen more lenders working hard on their self-employed proposition, able to now understand and take retained profits into account for example.
Where contractors are concerned, more lenders have now finessed their proposition to be able to offer borrowers who work in this way more choice, with some excellent product options now available.
Older borrowers have more to cheer about also, no longer having to feel cut off looking to obtain a loan beyond the age of 50, with all Building Societies and most of the larger lenders extending their maximum ages, some dispensing with them altogether.
Of course there are still some hurdles to overcome, especially where raising a deposit is concerned, but there are still a good range of options around for those with just a 10% and even for those with just 5% deposit there is still a choice.
The biggest hurdle remains affordability calculations, but even here there is a change in the direction of travel, with a good choice of lenders who are able to underwrite sensibly rather than impose draconian rules on how much you spend on coffees or haircuts each week!
Whilst it is not a return to the days of easy credit, which no one wants, the pendulum is swinging slowly back to a sensible place, where those with good credit profiles can borrow the amounts they need to get their dream home.
It is just more important than ever to get professional advice, so why not contact us now to discuss your requirements. You may just be pleasantly surprised.
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Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008", "Best Press Spokesperson" in 2011 and is the current holder of the British Mortgage Awards “Best Marketeer” title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.