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Mortgages Getting Harder to Get in the UK

445 mortgage products withdrawn in a day!

Monday saw the biggest withdrawal of Mortgage products ever seen in one day. Michelle Slade, analyst at Moneyfacts said that Black Monday saw 445 products withdrawn from the Market. There were 3,525 residential mortgage products on offer before Monday this fell to 2,988, but even worse was the Buy to Let products down from 662 to 481. Michelle Slade said commented" With an 11.4% cull in mortgage products Monday was the largest ever decline in mortgage products available to the public. By the end of Monday there were just 3,469 products left from 2,914. She continued " The current Turmoil has hit the Buy to Let sector the hardest with almost 60% of products withdrawn but the residential sector is not far behind"

One of the biggest causes of the withdrawal of Buy to let products was mortgages application Bradford and Bingley withdrawing its entire range, along with UCB Home Loans and The Mortgage works who have both temporarily withdrawn there product ranges due to unprecedented business levels.

Halifax, Bank of Scotland Mortgages, Bristol & West Mortgages, Intelligent Finance and Newcastle BS have also restricted the range of products that they now have on offer.

"This news will be another blow for mortgage borrowers, as not only do they now have a more restricted choice, but the insecurity in the money markets has caused many lenders to increase their mortgage rates.

"If more lenders decide to take the same stance and withdraw their range on a temporary basis, it is likely to cause a bottleneck for the remaining lenders.

"As the pressure on these lenders increases, service is likely to suffer. As a result we may see further lenders being forced temporarily to withdraw their mortgages application range.

"Coupled with the liquidity problems in the markets, it may be that we see further increases with this phenomenon in other aspects of lending, such as loans and overdraft rates.

"It appears that lenders are slowly turning the tap off on the number of mortgage products available and their appetite to lend. If the problems continue we have to start asking the question, will the tap will be turned off completely until stable markets return?"

So what does this mean for the average house buyer or the home owner who is coming off a fixed rate deal and wants to re mortgage?

The lenders who are still actively in the market and really tightening up on their lending criteria and even if you see some fantastic rates advertised very few people can actually get a mortgage. I have a client who had their house valued in March 2008 at £167,000 for lending purposes, unfortunately they didn't try to mortgages application remortgage until September. They have had valuations done from two leading lenders for Mortgage purposes and this what they came back with

Lender 1 Valuation £136,000 this equates to a £31,000 drop in value or 19% drop in value. At first I thought this must be a mistake. But on questioning the Lender on behalf of the client they were adamant that that was the valuation they would use for Mortgage purposes. The client needed £136,000 to remortgage and pay off her father who had stumped up some money so she could get on the property ladder two years ago. This lender would only lend £120,000 based on the new valuation.

Lender 2 valuation £130,000 this equates to a £36,000 drop in value or 22% drop in value. Again the lender was quizzed but to no avail they would only lend £116,000 not enough!!.

This shocked me as they actually paid more for the property two years ago than both lenders had mortgages application valued the property at and they had added a double garage and completely renovated the house.

In the end the client has stuck with their original lender and moved to an interest only repayment vehicle for affordability but they have been so disgusted with the whole process that they have decided to emigrate to Australia!!.

So what should you be looking for from a Lender.

1) Some lenders are now applying an upfront non refundable application fee generally £100. If your Loan to Value is quite high (above 75%) be very very wary of paying anything upfront as when they come to do the valuation you may not qualify for their products and you will loose your money.

2) Do lots and lots of research. Use the comparison sites such as moneysupermarket.com to find what look like good deals that fit your requirements.

3) Then go to the lenders sites and recheck your research. Make sure you mortgages application read all the facts and figures prior to making an application

4) Try to get a realistic valuation of your property. Contact at least 3 local estate agents and get 3 valuations done. Tell them you need a quick sale to get a valuation somewhere near what the lenders will value you it at.

5) Then go to the Land Registry. Here you can look up how much properties have sold for recently. Be aware though that these figures are historic so allow for further reductions on these prices.

6) If you do make an application to a lender and they send out a valuer make sure that they come to do the valuation when you are in. Do not accept a drive by valuation. When the valuer comes round make sure you point out any improvements you have made, make sure you point out what other properties have sold for in the last month and try to get the valuation as high as possible.

7) Be careful how many lenders you mortgages application apply to this will show up on your credit score so choose wisely.

8) If a rate seems too good to be true it probably is. Always look at the large well known lenders, if you haven't heard of them don't go there.

9) Finally once you have done all your research find a good Mortgage broker and use them to access the whole of the Market (Make sure they are whole of market not a tied agent)

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