Thu, May 24, 2012, 09:43 BST - UK Markets close in 6 hrs 47 mins

Discover Yahoo! With Your Friends

Explore news, videos, and much more based on what your friends are reading and watching. Publish your own activity and retain full control.

To get started, first

YOUR FRIENDS' ACTIVITY

    Lenders Warned As 95% Mortgages Return

    By (c) Sky News 2012 | Sky News – Sun, Feb 12, 2012 17:11 GMT

    Low-deposit mortgage deals are back on offer for first-time buyers after the financial crisis left many struggling to get on the property ladder.

    But there is concern that a surge in 95% loans could lead to lending spiralling out of control as it did before the crash.

    Bernard Clarke, from the Council of Mortgage Lenders, says credit checks will be stringent to make sure that does not happen.

    "The safety nets need to work on both sides, really," he said.

    "Lenders still need to be very cautious in assessing the ability of a borrower to repay a loan and borrowers need to think long and hard about taking on such a long-term commitment as a 25-year mortgage."

    Francesca Loftus and James Roberts struggled to save enough for the large deposit they needed.

    James, 24, said: "We wanted to be able to put money in our own pot and save something so we moved home.

    "We thought we'd saved enough and then we went to see a financial adviser and he said we would need to save more."

    They will get the keys to their new-build in Felixstowe in a matter of weeks but they only managed to buy with the help of the Government and housebuilder-backed FirstBuy scheme.

    New mortgages on offer should help other first-time buyers.

    An online search on one price comparison website found 71 deals offering 95% loans.

    It means those buying the average home worth £160,000 will need as little as an £8,000 deposit.

    At Hopkins Homes in Suffolk the new mortgages and schemes such as FirstBuy have helped boost inquiries.

    "Without first-time buyers it really does create a slowdown in a market. It makes it stagnate," said Lee Barnard, the company's sales and marketing director.

    "We need to get first-time buyers onto the property ladder, which will enable people to move on and secure larger properties."

    The downside is that many of the low-deposit loans on offer come with a higher interest rate and only around a third are approved for first-time buyers.

    Philip Bullman, of the National Association of Estate Agents, says the problem is finding a way of getting the housing market flowing again and the new mortgages are a step in the right direction.

    But what will not help, he says, is the stamp duty holiday coming to an end for first-time buyers on March 24.

    "It's an anti-inspirational tax. It's another blow to first time buyers."

     

    11 comments

    • Andy L
      Andy L  •  Glasgow, Scotland  •  3 months ago
      "credit checks will be stringent to make sure that does not happen"
      Sure I'm sure they said something similar in the last 2 resseions that the uk & that was in. Just as long as the lenders (and investment banking lot) can get to burn the proverbial candle at both ends & still make a large proffit who's to say that the next Leman Bro. banking crisis isn't already being lined up far the next big crash in 10 to 20 odd years time
      • survivor
        survivor 3 months ago
        You are responsible for your own credit position and must not have mortgage payments exceeding 30% of net take home pay. Credit checks should not concern you if you look after your finances.
      • Andy L
        Andy L 3 months ago
        But IF the so called self (lier) assesment things do come back (if not by a differant name) then who's to say that such things wont happen over & over again
      • PeterD
        PeterD 3 months ago
        Agreed. Some people will be fiscaly responsible & prudent but when those house prices start to take off.........

        ........here we go again!!!
    • DR.JOY K.JOSEPH
      DR.JOY K.JOSEPH  •  London, England  •  3 months ago
      The reality is far away from this. The mortgage agents and the estate agents are playing a big game absorbing a lot of money from both the buyers and sellers. The government has to start a new scheme of build and transfer affordable houses to the first hand buyers. The government may establish a corporation under each council and transfer fund directly to them instead of to the banks. The stamp duty should be exempted until full recovery.

      Dr.Joy K.Joseph
      Working for the Financial Discipline of the Global Family
      • boatman
        boatman 3 months ago
        you got a thumbs down first I wonder if they should declare an interest
    • A Yahoo! user
      A Yahoo! user  •  3 months ago
      What happens if they lose their jobs? There's an awful lot of assumptions going on here too.
      • survivor
        survivor 3 months ago
        Becoming redundant is a possibility and cannot be insured against. However, you should always try to build a cash reserve of three months outgoings or £5000 whichever is the bigger and this will help until another job is found.
      • NHS Worker - Manchester.
        NHS Worker - Manchester. 3 months ago
        Survivor... There are many many working people living hand to mouth.. no holidays, no car, no luxuries etc.. saving £50 probably isnt possible, saving £500 is a dream,£5000 is probably a 30 years project!
      • David
        David 3 months ago
        If you cant afford to save, you cant afford to borrow. Sage advice, I reckon.
    • Trevor
      Trevor  •  London, England  •  3 months ago
      Surely Mr Philip Bullman of the National Association of Estate Agent said (or meant to say) when describing the ending of the Stamp Duty Holiday for first time buyers, "it was anti-aspirational" (not anti-inspirational)!
      • colin
        colin 3 months ago
        Yes, I think the "inspirational" tax is yet to be invented.
      • survivor
        survivor 3 months ago
        Its at 50%!
    • Marchnites
      Marchnites  •  3 months ago
      Just shows that the 'experts' still haven't grasped the fact that this sort of thing will only start it all again.
      • PeterD
        PeterD 3 months ago
        Oh! but the 'experts' have grasped the facts. It's the 'experts' who make big fat profits out of all this. And who are the 'experts'? Why, those executive bankers of course, who'll need bailing out again at our expense........
    • Anonymous
      Anonymous  •  3 months ago
      yes, the banks lend. But, they dont force you to borrow. Why blame the banks when the borrower has equal or actually, more responsibility. If you cant afford, don't borrow!! that simple.
    • boatman
      boatman  •  3 months ago
      Well yahoo your system is so shoddy I cannot believe we now have 3 headlines on the same subject You need to get off fence and become efficient at what your doing or quit
    • survivor
      survivor  •  3 months ago
      If you want to be more financially secure then do not allow mortgage payments to exceed 30% of net take home pay. Use mortgage protection insurance to cover illness but an Income Protection Plan is far superior but costs more. Talk to someone who is trained in financial planning rather than a financial adviser who does not tend to think longer term. If you exceed the 30% figure then you are taking a big risk with your family's financial future.
    • MoremysticDave
      MoremysticDave  •  3 months ago
      It is just a natural result of the low rates - just like 2004. Some people clearly do not learn.
    • NHS Worker - Manchester.
      NHS Worker - Manchester.  •  Peterborough, England  •  3 months ago
      Off we go again... lend lend lend and what happens? yep, people will struggle to make the repayments when the interest rates go up...

      Can some financial regulation authority jump on this practice please....immediately?
    • Shane B
      Shane B  •  Trowbridge, England  •  3 months ago
      it just means base rate's are gonna stay at 0.5% forever... like japan
     Post a comment