Before last summer these would have gone though, it seems they just don't want to lend, and have become overly fussy. As for sub prime lending one could feel sorry for some of those people coming out a benefit periods and looking for an affordable mortgage rate.
(PRWEB) February 11, 2008
Over the last eight months the money markets have had a battering, with higher interest, causing money to be more expensive to buy on the money markets. These extra costs then filter down to the end users, or creditees. With the world markets being so cautious, many banks have removed their risk when lending by cutting back criteria, especially in the mortgage sector. This was not always the story, with many believing credit has always been easy to get, especially in recent years. The latest figures from The Debt Counsellors online survey, shows that out 43 percent strongly agreed that credit was easy, only 9 percent said it wasn't. But we may see a shift in this figure over the next few years, especially regarding mortgages.
"The market today has seen a shift in attitudes of banks when lending on mortgages. Many High St Banks expect spotless credit records, even to the point of declining cases where the applicant missed a couple of silly payments," Matthew Murray from EA Money mortgage brokers stated. "Before last summer these would have gone though, it seems they just don't want to lend, and have become overly fussy. As for sub prime lending one could feel sorry for some of those people coming out a benefit periods and looking for an affordable mortgage rate."
The Sub Prime market is geared towards people with bad credit, but all lenders in this sector have removed many of the more, forgiving criteria they once had. This, coupled with the rise in rates, means that someone coming out of an affordable rate, after the end of a benefit period, say a 2 year fix, will find their options are limited.
"The rates have gone up over the last 8 months or so, so even if the criteria weren't changed many people would be looking at an increase in monthly mortgage costs," Matthew went on to say. "But many of those that may have 'just' gained a mortgage 2 years ago would have their backs against the wall and may have to stay with their existing lender and may have a huge increase on their repayments."
Although rates have increased in the last two years, the news today of a cut, will hopefully help many mortgagees in terms of their affordability and paying debts. Today, the average mortgage in the UK is around £125,000. With the 0.25 percent decrease today an average mortgage of £125,000 will see a decrease of £312.50 per year only if the mortgage is on a tracker or variable rate.
Overall, the cut in interest rates, coupled with the previous reductions, could help those in financial 'dire straights'. It may not be by very much but it's certainly better that an increase.
To find out more about how The Debt Counsellors can help reduce your debt burden and how to become debt free in 36-60 months, please call: 0800 018 6018 or visit http://www.debtcounsellors.co.uk