What the papers say- 19th and 20th February 2011

This weekend’s financial press focused once again on the anticipated rise in interest rates. Mortgage brokers in the Independent, Sunday Express and Sunday Times reported that a lot of borrowers are now looking to secure a fixed rate to limit their exposure to increases, but many warned that they may have already missed the bottom of the market. Fixing is not for everyone of course, and as the gap between fixed and variable rates widens, many may be tempted to stay put, but again brokers highlighted the importance of ensuring that repayments are affordable if rates were to rise faster than expected. The thorny subject of credit scoring and declined mortgage applications reared its ugly head again, with the Times and the Guardian urging lenders to be more open about the reasons for declining, and to provide more information on the methods used to assess risk. Experts said that smaller societies with manual rather than electronic underwriting often have a more sensible approach. The plight of the First Time Buyer also got several mentions following last week’s housing summit. The good news is that lenders are recognising that size of deposit is the biggest barrier, and as reported in the Sunday Express and Sunday Telegraph, some are adopting a different approach to lending by launching more parent-assisted deals. Developers such as Taylor Wimpey have joined forces with building societies to offer a 95% mortgage, while Barratt are offering unsecured loans of up to £50,000 at competitive rates to provide a deposit. Elsewhere the Mail on Sunday looked at homeowners who have got onto the ladder by joining forces with friends to purchase together. Many lenders will lend to up to 4 unrelated people, with the mortgage amount based on the 2 largest salaries, but brokers warned that all applicants will be liable for the payments, and advised drawing up a contract confirming tenancy prior to purchase to avoid problems further down the line.

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