Homebuyers being affected by phantom mortgages

A recent report has shown how many would be borrowers looking for mortgage loans are being adversely affected because of phantom mortgages that are being offered by lenders only to then be pulled from the shelves before the borrower can actually get the mortgage deal. Some officials have claimed that a number of lenders have been offering mortgage deals that do not actually exist in order to comply with pressure from the government.

A number of mortgage brokers have claimed that lenders are creating phantom mortgages in order to make the government happy after having pressure put on them with regards to increasing lending levels. However, the brokers claim that lenders are then pulling these deals off the shelves before borrowers can sign up to them because in actual fact they do not really exist.

According to one broker: ‘It would appear that some lenders are in the 90% loan-to-value market in name and product – perhaps to satisfy the Government’s request for banks to lend – but the reality is that they don’t want to lend at this level because they feel it is still too risky and reject borrowers who apply.’

Another broker said: ‘The market is tighter now and lenders are far more cautious. Lending criteria have tightened significantly. One of the major problems is valuations. Lenders and valuers are being more cautious on prices and that can mean lenders won’t offer a 90% loan-to-value mortgage.’