The Daily Express focused on the sub-prime market this week, and looked at the handful of lenders who will still offer mortgages to people with mild credit problems, such as Beacon Homeloans, GE Money and Platform Homeloans. These loans may be helpful to some, but lenders will not generally consider anyone with missed payments within the last 6 to 12 months, and rates are considerably higher than mainstream deals. Experts therefore advised borrowers to try and clean up their credit records before applying for a mortgage, and with competitive Standard Variable Rates still available, some people may be better off staying where they are for the time being. The Daily Mail reported on the ongoing rate war between Government backed banks such as Northern Rock and those benefiting from overseas backing, including Abbey and Alliance & Leicester, who have all launched best buy rates in the last week. Competition has certainly returned to the market, but these deals tend to be restrictive both in terms of available funding and deposit required. Smaller building societies are also finding themselves priced out of the market as they struggle to try and match these rates, hindered by their higher costs. The Mail also revealed that Northern Rock is to stop offering equity release mortgages, while elsewhere there was news that homeowners with controversial Shared Appreciation Mortgages now owe on average of 4.4 times what they originally borrowed – which is the equivalent to an interest rate of 35%. A recent High court ruling will allow these homeowners collectively to sue the relevant providers.
What the papers say - 7th October 2009