36 Percent Fall in First Time Buyer Loans

Mortgage lending companies in the UK have seen a significant decrease in the first time home buyer loan section of the industry. According to April there was a 5 percent decrease that totalled about 26.1 billion pounds. A total of 36 percent has occurred since April. UK mortgage lenders are making it more difficult for the first time home buyers to get a loan. In fact they have made the deposit down so high that it is up 13 percent from a comparison of three years ago. This is why the loans are slumping to 36 percent.

The gross loan amount for April rose by 8 percent to 26.1 billion pounds in two consecutive months, but that is still a significant decrease from previous years. The Council of Mortgage Lenders were asked about this and they even show a 5 percent fall compared to 2007.

Even though April has fallen a little less than the 24 percent of March, these numbers are a lot higher than the year before. The Council Mortgage Lenders are still expecting a soft year for the loan industry.

Michael Coogan a representative of the CML stated that the house purchase volume on a monthly basis is continuing to lower since last year. This lowering amount is going to show a weakening in the loan market. The approvals of loans have also decreased by a significant amount.

The average deposit the first time home buyers need in order to get a loan is up 13 percent since April. This percentage is what the buyer needs for a deposit on the loan, so that the loan is not a 100 percent. The UK banks have also changed the lending criteria they are offering loans by.

The US subprime market is the reason for these changes. Northern Rock almost collapsed because of the US subprime market, but a saving grace was the Bank of England. Halifax announced that they are going to change their tracker mortgages to require 40 percent in a deposit from borrowers. That is a significant increase for any deposit.

For April the numbers of loans being awarded to first time buyers was 18,500. This was actually up 4 percent since March, but it is down by 36 percent since April of last year. These numbers are not a new thing to read about, but the fact that it is now June and we are still seeing these kinds of numbers is a little disheartening.

The ratio for borrowing against the consumer salaries has also been tightened from 3.35 to 3.3 times. In this case a person is not allowed to borrow more than they make, and the percentage that they can borrow for what they make has lowered making it more difficult for those who don’t make a lot of money to get a house.

Britons are also trying to get more secure loans such as fixed rate deals. In fact the applications have risen from 54 percent to 59 percent in April.

Back To Financial News June 2008

100 Percent Mortgages
36 Percent Fall in First Time Buyer Loans
Arrangement Fees for Mortgages
Bank Account Situations
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