The situation as I see it!
Money seems to be in short supply; interest rates offered by banks for saving money remains diabolical; unemployment is expected to increase by quarter of a million as students leave university and college and members of Parliament from all sides of the political spectrum have exploited their expenses for years. Meanwhile the Royal Bank of Scotland which we all co-own has warned that they are preparing for two "very tough" years after they announced yet more losses for the first three months of this year. Confidence is a fine gray line and the experts are still scrambling around trying to find solutions and answers. Do we really believe that the recession is near the end?
The Bank of England decided to keep interest rates at 0.5% which is at an all time low after their monthly monetary meeting yesterday. It is thought that they are more concerned with the results of quantitative easing which are implemented earlier this year to inject money into the economy. They are now studying the economy for signs of improvements as they continue to print loads of money in an effort to get the economy moving again.
Estate agents around the country are reporting that more people were showing an interest in buying properties. One institute announcements house prices starting to climb while another says they are still falling, who should we believe? The Halifax reported that housing affordability for first-time-buyers had improved substantively and was the best for six years in other words the house price to earning ratio had improved. Unfortunately, the average first-time-buyer still needs to find around £ 20,000 as a deposit and to cover legal expenses. The amount of money spent on a mortgage each month had dropped from 48% in 2007 to 31% in 2009 primarily due to the cut in interest rates for borrowers on tracker rate and standard rate mortgages. This has not been the case for homeowners on a fixed rate mortgages.
Number of Mortgage schemes available increases
Mortgage Brain, is one of two live mortgage systems used by mortgage brokers' to search the market for the best mortgage and remortgage product for clients. They have reported an 8% increase in last month's mortgage product available. The number of products available in March 2009 was 3,091 and on the 5th May 2009 it rose to 3,322 products available. Whilst this looks like a glimmer of hope it should be remembered that at the height of mortgage lending there was some 23,000 plus products available to homeowners to choose from.
During the past twelve months the number of mortgage products available has remained bleak with a 73% drop from this time last year. It seems that over the past two months the number of new mortgage schemes available has risen by 22%, which is good news. Although this information can be seen as encouraging I do not believe that there is yet any indication that the market will bounce back today or tomorrow. There are bigger issues that need resolving first.
The stark Facts
This information is great news for borrowers and homeowners looking to borrow money for a mortgage up to 85% of the value of their home. Mortgage Lenders are still not showing any signs of offering mortgages to new clients with any adverse credit. If you have missed a mortgage, credit card or loan payments and you have less than 15% equity in your home then there is limited number of mortgage schemes available to you. Your only option is to remain with your current lender and take what they offer. Not an ideal situation I know! But hopefully you still have a roof over your head.