The crucial topic in this weekend’s press was the clampdown on lending from Britain’s major banks and building societies. Reportedly, the effects of the ‘credit crunch’ are beginning to deepen and it is becoming difficult for existing and new borrowers to secure the best rates.
Across the majority of weekend newspapers, articles discussed the realities facing first-time buyers, many of whom have little or no deposit when purchasing their first home. In recent weeks, Lloyds TSB and RBS pulled their mortgages for those with deposits of less than 10%. Nationwide, too announced that it’s most competitive deals would only be available for those with a minimum 25% deposit. Over the past 3 months, 23 lenders have increased the size of deposit they require, with each change closely watched by the media.
Several papers picked up on the huge expenses facing first-time buyers, including mortgage application fees, surveyors' valuations, legal expenses, and stamp duty. Coupled with a reduction in high loan-to-value deals, the outlook for those hoping to purchase at the moment appears bleak. However, a number of useful articles also looked into other means of getting on to the property ladder, through shared ownership, key worker schemes, and Open Market HomeBuy.
The coverage of lender’s movements does not just affect new borrowers. Existing borrowers, with little or no equity in their homes are being warned to expect considerable increases in monthly payments when their current deal comes to an end, especially if they are with a lender who no longer operates in a high loan-to-value market. Experts hope that an increase in property prices and borrowers making overpayments on their mortgage will help combat the risk of negative equity.