The Lloyds Banking Group became the latest set of lenders to introduce tougher criteria last week, when it announced that it would no longer accept cash savings, including ISA’s, as a suitable repayment vehicle, and would also further restrict the use of stocks and shares. The Guardian, Telegraph and Sunday Times all reported on these latest changes, and brokers warned that it was becoming increasingly difficult to secure an interest only mortgage even with a repayment plan in place. The Observer emphasised the point that those with existing interest-only mortgages who may want to move property or remortgage are likely to find themselves severely disadvantaged - especially older borrowers who have had a sensible repayment strategy in place for many years, but now do not meet lender criteria and are less likely to be able to afford to a full repayment mortgage. Elsewhere, the Financial Times looked at hybrid deals – which allow borrowers to take a tracker rate for the first 2 years of the deal followed by a 3 year fixed rate. Brokers suggested that this type of deal carries benefits over a traditional ‘switch-to-fix’ product as customers now where they stand with future payments. The Independent on Sunday warned that mortgage rates could rise dramatically if Britain loses its AAA credit rating, so this type of longer-term deal could give homeowners the peace of mind they require.
What the papers say - 18th and 19th February 2012