Available mortgages down by 10%
Updated on 10 November 2008
The number of different mortgage deals available fell by 10% as lenders continued to pull rates following last week's interest rate cut.
There are now just 2,345 different mortgages available across the whole market, compared with 2,602 on Friday and well down on the 15,599 that were around in July last year before the credit crunch first struck.
Within this total, first-time buyers have been hit particularly hard, with only 32 different loans available for people with a 5% deposit, compared with 38 on Friday and more than one thousand in July 2007.
But a quarter of these mortgages are only available to people living in Northern Ireland, while many have such tight credit scoring conditions that it would be difficult for many first-time buyers, who typically do not have such full credit histories as remortgagers, to qualify for them.
Even if first-time buyers are able to qualify for a 95% mortgage they will pay a huge premium in terms of the rate. The best fixed rate deal available for a loan to value ratio of 95% is currently 6.75%, compared with a leading rate of 4.89% for people borrowing only 60% of their home's value.
The number of different mortgages for people borrowing 90% of their home's value is also continuing to shrink, falling to 171, down from 212 at the end of last week.
Lenders scrambled to withdraw their tracker mortgages last week in the wake of the Bank of England's surprise 1.5% interest rate cut, with 33 lenders pulling their entire tracker range.
The majority are expected to relaunch them this week, but it is unlikely that new borrowers will benefit from the full base rate reduction as wholesale funding costs continue to remain stubbornly high.
The key inter-bank lending rate three-month Libor, upon which variable rate mortgages are based, fell by a further 0.075% to 4.42%, after a 1% drop on Friday last week. But the rate still remains nearly 1.5% higher than the base rate of 3%, well up on its pre-credit crunch range of between 0.15% and 0.2%.
The high cost of inter-bank funding limits the options for lenders in passing on last week's interest rate cut.
These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.
