Are lenders low mortgage rate deals only offered to existing home-owners?
Are lenders low mortgage rate deals only offered to existing home-owners?
According to first-time buyers, lenders offering low mortgage rate deals are over looking those wanting to get a foot on the bottom rung of the housing ladder.
Young buyers say lenders tend to reserve the best mortgage deals for existing home-owners. Lenders say this is not correct as every week more first-time deals are launched. This is backed up by Council of Mortgage Lenders who say their figures show the number of mortgages to first-time buyers increased by 7 % in December.
Lenders say that current home-owners may have a slight advantage over first-time buyers, however when all factors are considered there are actually a lot of similarities between the two groups. Both first-time buyers and existing borrowers want low mortgage rate deals and as more experts predict likely rate increases both groups are tending to prefer longer term fixed rate products.
First-time buyers previously experienced difficulty in raising the high deposits demanded by lenders but, as more lenders offer 90 and 95 % loan to value deals this is proving to be less of an obstacle. Existing home-owners did have an advantage over first-timers on deposit levels, as previously high levels of equity enabled them to grab the best deals.
However, with a drop in house prices came a fall in equity levels and it was the high equity levels that were used to secure great deals. As more home-owners lose their equity advantage and more first time deals are launched, the playing field is levelling.
It is important for both groups to be aware that if mortgage lending criteria continues to tighten as predicted, then both groups of borrowers will find it harder to achieve lenders low mortgage rate deals in 2012 unless they have a good deposit or plenty of equity and a clean credit score.
