85% mortgages

Through the – well, do we call it a boom now? 100% mortgage and higher were commonplace and a ‘good’ deposit was 10% (the threshold where the better rates started appearing).

There were further thresholds at 15% deposit and 25% deposit and occasionally at 40% deposit, but that was unusual.

Since the crunch, 25% deposit has been pretty much essential and 40% good. Mortgages are available for those with smaller deposits, but at a premium.

C & G have been at the mainly 75% end of the scale for a while – but they are releasing products now at 85% range and a further set at the 90% range. They aren’t brilliant rates – above 6%, for the 90% products, but hey, it’s a start.

This is good – this could signal the start of competition for the low deposit end of the business and that is another sign of common sense starting to overcome panic in the mortgage market.

It also seems to be a signal that some people think the worst of the drop in house prices is over, and while it may not be totally bottomed out, it’s close enough for more lenders to take an interest in 90% lending.

100% mortgages – reports of their demise etc…

A couple of weeks ago I arranged a ‘rate swap’ for a client with Halifax – the client was with Halifax already and as their house had fallen in value a remortgage to a new lender was out of the question, so we looked at products the Halifax hasd to offer their existing customers.

I called them up – I needed to know if they revalued the house (it would be handy if they didn’t) but, they do, they have a computer that does it. I asked if they’d be OK with the remortgage as the maximum loan to value was 95% and the lady on the phane said they were OK up to 120% loan to value.

This is good – if a client is unlucky enough to have ended up in negative equity, they don’t need that luck compunding by being unable to get a decent mortgage rate.

Today The Coventry Building Society joined in – their existing borrowers can rate swap up to 100% loan to value.

These are both ‘common sense’ decisions – not risk decisions.

The lenders in question already have the liability, they are reducing risk by making the mortgage more affordable.

It’s good to see ‘proper thinking’ again – the panic of the last 18 months needs to abate and I hope this is a sign…