Although there are now 66% more mortgages available than there were in January, a lot of people are still struggling to obtain sufficient finance to buy properties.
Only one in twelve of the contractor mortgage deals currently on offer allow a minimum deposit of 10%, whilst over half require a down payment of at least 25%. According to the CML, this means first-time buyers need to find an average of £35,000 as a deposit.
First-time buyers especially are still finding significant obstacles even though the UK mortgage market is supposed to be over the worst. If the trend for a 25% deposit continues, first-time buyers will be priced out of the housing market and this will lead to problems in the future.
Mortgage lending may well continue to be rationed because next year lenders are going to need to start repaying the government for the loans they received via the emergency support schemes.
The government is trying to kick start the mortgage market by abolishing stamp duty for two years for anyone buying a first home up to the value of a quarter of a million pounds.
The CML is also concerned that the Mortgage Market Review proposals pose a significant threat to the mortgage industry, a move which is in direct conflict with the government’s promise to extend homeownership.
The FSA has already said that the MMR will lead to a regime of heavier regulation, less choice and less competition. Mortgage lending is now predicted to fall short of the previously forecasted £150bn this year and further regulation will only cause the market to shrink further.
The trade body admits that whilst there is a definite case for regulatory reform, there needs to be extensive consultations on the future shape of the housing market before any new measures are implemented.
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