Mortgage rates: 10% mortgages to make a comeback in 2021 – ‘banks want to lend’

Martin Lewis advises on mortgage holidays in latest lockdown

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People wanting to get on the property ladder will likely have more of a chance this year as certainty returns to the housing market amid the Covid vaccine rollout. According to figures released by shopping comparison site MoneyFacts, there were about 160 deals available for buyers looking to purchase the property with a 10 percent deposit at the end of January – down from 779 in March. The average two-year fixed deal has also risen to 3.65 percent, up from 2.57 percent last year.

Peter Licourinos from Heritage Investment Group and Property Master Academy told the future looks brighter for those looking to buy.

He said: “HSBC were one of the banks to follow suit in bringing 10 percent mortgages this year, following the trail fo Halifax, Coventry and Natwest.

“This really is welcome news to patient buyers and those that have been set back or do not have a lot of equity or savings available.

“It is also good news for brokers and mortgage customers with rates almost as low as they were in March 2020.

“There is positive news in the air and the market opening back up to a wider audience.”

Mr Licourinos said the situation shows a positive change from the last year, which was a very tough 12 months for the housing market.

He explained: “We have seen lots of changes over the past 12 months, with mortgages becoming harder to come by without substantial deposits, and due to the mortgage companies needing to be diligent and sensible with how they lend and who they lend to.

“This has certainly been frustrating for many who were considering buying or in the prospect of buying.

“The prospect became impossible, or more time consuming, with a lot more data asked for and hoops to jump through and bigger deposits necessary.”

Mr Licourinos said in his view, 2021 will be a better year for those looking to buy without a huge deposit.

He explained: “Banks want and need to lend, and we have seen signs of things changing with favourable 75 percent LTV (Loan to Value) buy-to-let rates become more inviting for investors, and substantially lower rates for higher deposits.”

LTV is a term used when talking mortgages, and is all about how much your borrowing is in relation to how much the actual property is worth.

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The LTV is a percentage figure that reflects the proportion of your property that is mortgaged, and the amount that is yours, which is usually covered by your down payment.

For example, if you have a mortgage of £150,000 on a house that is worth £200,000, you have a loan-to-value of 75 percent – therefore leaving you with £50,000 as equity.

Mr Licourinos added: “Things have been more positive for first-time-buyers, with more 90 percent mortgages becoming available with the criteria beginning to become more favourable again too.

“Rates are not far behind where we were pre-Covid, which is great news for the consumer confidence and the economy.

“The housing market is such a huge sector, generating mass income for the Government and link revenue to other sectors.

“Everyone will be behind the positive changes and this continuing, and it has certainly been welcome news in 2021.”

The expert told everyone in his industry he has discussed the issue with see the same criteria relaxing a little, as well as more first-time buyers registered so far this year than in total last year, meaning the outlook seems to be somewhat of a consensus.

He concluded: “With this set to continue, 2021 looks like it could prove to be a stable property market after all.

“The news of the stamp duty cut potentially being extended later this month could be the cherry on top and even more positive news for everyone.”

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