Good news for borrowers with smaller deposits as 95% mortgages re-enter the market

Monica Bradley, our associate Independent Financial Adviser from Kingswood Law, comments on the latest Bank of England base rate decision.

Not for the first time in recent months the policy setters have chosen the “wait and see” approach presumably while they await fourth quarter 2011 economic growth data and the next set of inflation figures. 

For January the Monetary Policy Committee therefore voted for no change in the Bank of England base rate. The Eurozone crisis remains unresolved and we can only hope that the politicians are able to reach agreement to resolve the situation for the longer term rather than the series of sticking plasters that have left the markets unimpressed.


December saw the anticipated seasonal slowdown in the housing and mortgage market, although activity amongst purchasers and remortgage borrowers was ahead of the same period in 2010. 

 

As you would expect in the current economic climate many purchasers continue to opt for the certainty that fixed rate mortgages offer, with 3 out of 4 buyers electing to fix. Those homeowners remortgaging are also still firmly in favour of fixed rates but the proportion is slightly less, with just under two thirds choosing fixed rate deals.

Moneyfacts report that January saw changes in the average rates available, with the average 2, 3 and 5 year fixed rates and 2 year tracker rate all rising very slightly. The average fixed mortgage rates for January are 4.27% (2 year), 4.53% (3 year) and 4.61% (5 year) all of which are below the same period twelve months ago, although average 2 year trackers at 3.50% are marginally above this time last year.

In line with the seasonal slowdown in mortgage activity, lenders reduced the number of products available during December with the number of available deals dropping to a little over 7,000, down by around 5% on the previous month. Already this year we have witnessed several lenders refresh and re-price their mortgage products for the new year, a new lender in the shape of Accord Mortgages start to offer mortgages at 90% loan to value and Newcastle Building Society re-enter the 95% loan to value market. This is good news for borrowers with smaller deposits or lower levels of equity allowing more potential buyers to access the market.

Monica Bradley is from Kingswood Law.  For further information on how the latest base rate decision affects you, please call 020 8643 7777.

With offices in the heart of Cheam Village, within walking distance of Christies’ Cheam office, and backed by a robust administration team, you can rest assured that you will be in safe hands when Kingswood Law takes care of your finances. As such, when you are considering purchasing a new home, remortgaging or buy to let, Christies recommends using Kingswood Law to ensure you find the best deal and the one most suited to you and your circumstances. In addition, Kingswood Law offers specialist advice on protecting your home, income and family, as well as a comprehensive estate-planning service*.

If you would like further information about their services please call 020 8643 7777 or visit www.christiesworld.com and click on Financial Services. Christies Estate Agents work in close association with Kingswood Law to offer its customers unbiased independent mortgage advice.

*Estate Planning services are provided by the Countrywide Group. Your home may be repossessed if you do not keep up repayments on your mortgage. A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £95. Your home may be repossessed if you do not keep up repayments on your mortgage.


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