Money sections this weekend looked at the ongoing issues with loan-to-value, the benefits of tracker deals and the importance of making overpayments towards a mortgage. The Observer revealed that despite falling house prices, hefty mortgage downpayments on new homes are freezing first-time buyers out of the property market. Only a handful of lenders now consider new-builds and those that do may ask for borrowers to put down a deposit totalling as much as 50% of the asking price. In addition, the paper noted that sharp falls in interest rates may have been welcome news to homeowners on tracker rate mortgages, but, rather than simply sit back and enjoy the extra money, those borrowers could drastically reduce the size of their loan by making overpayments. The Sunday Times had a guide offering advice to the thousands of homeowners who will find themselves in a ‘mortgage blackspot’ this year. House prices have already fallen by 17% and are set to fall a further 10% in 2009, so borrowers with less than 40% equity or deposit need to take action to get the best possible rate. Experts urged the importance of overpaying to improve equity, remortgaging in advance, checking the small print for clauses in a mortgage contract. Finally, the Mail on Sunday revealed that thousands of people are set to pay as little as 8 pence per month for their mortgage after the Bank of England sets interest rates to a record low of 1 per cent this week. They include those who took out interest-only loans with C&G in 2007 at 1.01 per cent below base rate- in theory meaning they should be charging the bank for their mortgage.
What the papers say - 1st February 2009