Six months ago we had 15000 mortgage deals to choose from, and now we are down to 5000 having lost another 500 in the last week alone.
The pressure on lenders particularly the smaller ones with good deals still on offer, is more than most of them can cope with as they receive an avalanche of mortgage applications until they have to close the door to new applications.
Some of the smaller lenders who tend to serve the local community have tried to restrict their current business to a geographical area in order to preserve funds, and to lend at the standard variable rate only.
As would be mortgage clients will see, lenders are using the up front fee to subsidize the rate of interest that they are charging. The average fee being charged is now around £1500, with some lenders in the buy to let market charging a fee of 2.5% of the mortgage. What appears to be a very competitive interest rate is being underpinned by an up front fee, which is now running in to thousands of pounds.
It will be very interesting to see what fees the HSBC charge when they launch their interest rate match scheme for clients coming out of their currents mortgage deals, what appears to be good may just have that little sting in the tail. In the current mortgage market where lenders tend to re-price their mortgage deals almost every week, they are certainly not going to give anything away for free. The fee charged will almost certainly hold the key to the rate charged.
Clients who are looking to purchase or re-mortgage should use the services of an Independent Financial Adviser who has access to the whole of the market and can find the most competitive mortgage deal to suit you. When you have received your mortgage illustration, KFI, you should make up your mind fairly quickly to go ahead in order that you can secure the deal you have chosen. Your adviser will in most cases be able to submit your application on line which would secure the de al you have chosen.
The current mortgage market is not easy and prospective borrowers should make sure that they have a deposit, at least 5% of the purchase price and that they have allowed for the associated costs of buying. For clients that have a clean credit record they will have the choice of the plans available, and getting a copy of your credit file before you decide to enter the buying process is a good idea, to make sure that you have not overlooked any little blip in your payment history in the past. Having made sure that your credit history is fine a visit to your Independent adviser will tell you what mortgage deals are available to you and all the costs involved in the buying process. Your next step is either your friendly estate agent or to the many property sites that are on line and enable you to view properties from the comfort of your front room.
Michael Alexander is an expert in mortgages for borrowers with previous credit problems. http://www.amortgage4you.co.uk/
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