As house prices fall, number of 95pc mortgages hits post-crisis high
I suspect the welcome fall in house prices reported here is mainly an urban phenomenon. I suspect it also leaves us with a still very long wait before the pace of house building really start to erode the iniquitous impact of a dearth of new housing on the availability of house in many rural places which people of modest means can either afford to rent or purchase. This story tells us:
The number of mortgages being offered for buyers with very small deposits has hit its highest level in 10 years.
According to data firm Moneyfacts, lenders introduced 37 new deals for borrowers with a deposit of only 5pc last month, bringing the total number beyond 300 for the first time since April 2008.
Before the crash, mortgages for 100pc, or even more, of a property’s value were common. Many were offered on an interest-only basis, meaning the capital was not being repaid, and many borrowers lost their homes when the markets collapsed.
The news comes on the same day data from estate agents Your Move suggested prices in London had fallen by 2.6pc in the past 12 months. Month-by-month prices were also down in the East of England region.
Falling house prices combined with rising borrowing will fuel fears homeowners could fall into negative equity – and risk being unable to remortgage.
But respected market expert Ray Boulger, of mortgage brokers John Charcol, said there should be no cause for alarm – even saying lenders should look to increase loan to values further.
“One of the biggest differences between now and 2008 is any high equity mortgages now need to be on a repayment basis,” he said. “While the regulations don’t ban this, the way they are structured means there needs to be a credible repayment plan, so offering interest-only at this level is very difficult.”