Why the Mortgage Market Has Changed Forever

Posted by allanmadams on December 26th, 2009 at 03:10pm

Historially it was relatively easy to get a home mortgage. All you did was either pop down your local bank or building society and sit down with the mortgage advisor who discussed all your options.

And the best part was that the lenders were bending over backwards to get hold of your money. The majority of lenders always had plenty of mortgage choices. You could choose from a repayment or an endowment mortgage. You could have fixed interest or tracker rate mortgages which followed the base line interest rates. The large amount of mortgages were developed to encourage borrowers to get themselves into debt.

But now the lenders are being very cautious with their large pots of money. It is now the lenders who are facing tougher restrictions on who they offer home loans to every day. They are effectively being told, or warned, that they must introduce more stringent strategies to work out whether applicants are able to repay the loans.

Borrowers will no longer have the same options as before. One mortgage type called the 100% mortgage will now be confined to history. This encouraged lots of borrowers onto the property ladder where they did not have the required deposit. Although lots of borrowers had no problem to keep up with repayments it also left lots of borrowers overstretched as they took on mortgages that they could not repay.

Now that lenders are being a lot stricter about who the lend their money to, it would appear that they have gone totally in the other direction. As a result only those with a good credit history are benefiting from goo deals as lenders tighten their lending criteria. This in itself is not a bad thing but it is certainly having a poor effect on the housing market. Now there are so many people unable to find a mortgage and those in a position to move cant move because they are unable to find buyers. This domino effect will remain until such time as lenders relax and gain more confidence with the market again.

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Tags: Home loans, home mortgages, mortgages

Under mortgage refinancing Tags: Home loans, home mortgages, mortgages