Act quickly to get a new mortgage

Despite the global credit crunch that has brought chaos and turmoil to the money markets, many people still find themselves looking for a mortgage. Some people looking for a mortgage may be first time buyers, but there are also those who have special deals on their mortgage, such as a fixed rate, which may be coming to an end.

These homeowners may also be looking for special mortgage deals to replace their existing mortgage when the term expires in order to maintain affordability.

However, finding a mortgage these days is not as simple as it has been in the past, and with the effects of the global credit crunch still causing problems in the financial markets, and the increased stringency put into place by lenders, those looking for a new or replacement mortgage will need to act quickly to ensure that they do not miss out on competitive deals and do not become ineligible for certain deals as lenders continue to tighten up on their lending.

Over recent weeks brokers have been urging consumers that need to take out a new or replacement mortgage to act quickly, stating that lenders are taking their most competitive deals off the shelves in record time, which is resulting in reduced accessibility for borrowers.

Those who do not act quickly could find themselves left out in the cold, and although this could prove to be a pain for first time buyers it could prove to be the downfall of those currently on special rates that need to switch to a more affordable mortgage.

Many people will be coming off cheap fixed rate mortgages over the coming months, and in order to reduce the chances of repossession they will need to secure a more affordable mortgage deal ready for when their existing ones end.

Industry professionals have stated that mortgage lenders are being far more careful about who they are prepared to lend to, adding that the increased stringency that lenders have put into place with regards to their mortgage lending criteria could mean that those that were eligible for competitive mortgage deals in the past may no longer be eligible.

Lenders are expected to continue tightening up on lending, with accessibility to finance from the wholesale markets becoming more and more restricted, so again it is vital for consumers to act quickly.

Industry officials have stated that lenders are making it increasingly difficult for consumers to get mortgages that are affordable, and many consumers are going to end up paying for the losses that lenders have incurred as a result of the credit crunch due to the higher rates that the borrowers will be charged.

Many lenders have taken a range of products off the market – sub-prime mortgages, 100% mortgages, and 125% mortgages are amongst those to disappear. New customers may also find it more difficult to secure finance from smaller lenders, with many putting a stop to new lending and others restricting new lending to consumers in the local area.

Commenting on the disappearance of many mortgage deals, one industry professional stated: ‘They are being pulled quickly and without notice.

Borrowers would have been able to get 100% a couple of months £155,000 is the current average mortgage ago, now we are looking at 95% being under threat. People could have been fixed on a 4.5% deal - or even lower - and now they are looking at 5.5% or 5.75%. ‘

He added: ‘Lenders are lending, but there is no room for complacency. People need to act quickly. Lenders are not looking for large volumes of business and they are looking for less risky business.’ An official from the Council of Mortgage Lenders added: ‘Demand for mortgages remains strong but cannot be fully met from existing funding. This has led many lenders to reduce their product ranges, increase their mortgage prices and, in some cases, to reduce their lending capacity.

As credit conditions change markedly from day to day, lenders will continue to rapidly adapt their products and pricing to match. This is a vital response to the uncertain conditions.’

In another recent report the Chancellor of the Exchequer. Alistair Darling, was accused of leaving first time buyers out in the cold when it came to making it easier for them to get a mortgage. After Darling gave his speech one industry official said: ‘Today’s speech offers no real respite for first time buyers.

The credit crunch has meant that more and more lenders are reluctant to offer mortgages to aspiring home owners. The position for them is worsened by the fact that there is little or no disincentive for landlord-investors to purchase those properties historically destined for first time buyers. The Government continues to leave the next generation high and dry by offering almost no relief in terms of tax or stamp duty.’