First Direct returns to the mortgage market
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Another piece of tentative good news, this could become a habit. First Direct, which suspended its mortgage services to new customers six weeks ago, as begun offering them once again.
First Direct stopped offering home loans on 1 April after being deluged by new applicants as the mortgage drought took hold. It was the first bank to withdraw its entire mortgage range to avoid being swamped by new business, but it said it could now handle new applications after clearing its backlog.
First Direct’s parent group, HSBC, has been taking a big share of the market for new mortgages though its Rate matcher offer which has been pitched at people who are trying to move their loans from other lenders, such as the Northern Rock. It offers to match their expiring fixed rates and, according to the bank, has attracted four times the number of enquiries that it would normally receive.
As a result of the credit crunch most lenders have been rationing their lending by withdrawing existing mortgage deals and pushing up the price of the remaining loan packages they have on offer.
Typically, borrowers are now being asked to pay higher interest rates and to put down deposits of at least 10%. This compares with offers of 110% mortgages a little over a year ago.
The reason that these pieces of good news are only tentative is that there are plenty of other, more ominous, signs to go with them.
For example, The Royal Institution of Chartered Surveyors (Rics) has warned that the number of property sales this year might fall by 40% as new borrowers find it impossible to raise the money they need to buy a house or flat.
The return of First Direct to the mortgage market and the activities of HSBC demonstrate that first time buyers can still find the financing to buy their own home. The lesson is that buyers will need to save up a certain amount to use as a deposit rather than borrowing the full amount.
If anything this means that the market is once again orientating itself around providing a good service to sensible and reliable borrowers while high risk and imprudent borrowers will, quite rightly, find themselves with nowhere to go.
May 25th, 2008 at 9:42 am
A Glimpse At Special Mortgage Programs
Lenders love to give out mortgages. They like to give them because they earn a lot of money from them. Also, real estate is a great investment that goes up in value over time. That is why lenders work hard to bring you choices in mortgages and even offer you special mortgage programs.
First Time Home Buyers
First time home buyers are usually given many special programs from which to choose. Lenders like to help people realize the dream of home ownership by offering programs that help with everything from down payments to closing costs. They also know that if you get a mortgage with them they’ll have your business for many years to come which equals great profit for them.
Government Programs
There are also a lot of programs offered by the government that help people buy a home. These programs can help lower down payments or reduce monthly payments. They can also help people with bad credit. Homebuyers are great for the economy so the government wants to help you buy your home.
Try to find out what special programs and financial offerings might be available to help you become a homeowner which can be the best financial investment you will ever make.
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