Q. My partner and I are extremely keen to purchase our first property but are having major difficulty trying to find a mortgage with a reasonable LVT (loan to value). We only have a 10% deposit which seems is not enough for most of the high street lenders. Is this still the aftermath of the 2007 property market crash? And what are your predictions with regards to interest rates during 2011?
A. Yes I’m afraid it is the aftermath of the crash that is responsible for such cautious lending still being in place, not that any of us are keen to see irresponsible lending as that is the very thing that got us in this mess in the first place! However, it does seem very unfair that there are first time buyers like yourself that are responsible lenders still having such difficulty trying to find a decent mortgage to help you on to that first rung of the property ladder. Many first-time buyers must save the equivalent of more than a year’s salary to be able to afford a deposit for a home, according to the Council of Mortgage Lenders (CML). The typical deposit stood at £12,700 at the start of 2007, but rose to £31,500 by the second half of 2010. The figures were released as housing and lending bodies faced government calls to help first-time buyers. The government estimates 1.4 million households want to own their own home, but face a mortgage squeeze. Nobody wants to see the return of the irresponsible lending of a few years ago. Nevertheless 90%-plus mortgages, which previous generations of first-time buyers were able to take for granted, are now prohibitive on the grounds of both availability and cost. I remain concerned about the impact on the market as a whole of the historically low turnover in first-time buyer housing transactions as there are many more would-be middle market purchasers who are unable to proceed due to the lack of first time buyers in the housing chain. The bank interest rates were left unchanged again at 0.50% at the February meeting, the 23rd month in a row. So when will the Bank of England make the first move to raise the base rate, and how quickly will rates rise in 2011, 2012 and beyond? Various Economist’s have lots of conflicting reports out there but from what I can see it looks likely that they will be held till at least September 2011, I’m sure for most of us that would indeed be music to our ears with the current financial climate still looking so unsettled.