The announcement in America that interest rates are expected to be held at their current level until 2015 is reassuring for mortgage borrowers here. If the US keeps rates low, the Bank of England will have to follow.
This means that those who can remortgage to a cheaper tracker rate are safe to do so — for the next couple of years at least. And it is encouraging to see that the government initiative, Funding for Lending, is beginning to have the desired effect of making more 90 per cent loan-to-value (LTV) mortgages available — even if buyers are still wary of making the leap while house prices in many areas outside London and the South- East are still falling.
New findings from Moneyfacts show that there has been a signficant increase in larger loans to value. There were 802 products available at 85 per cent LTV and above in September, up from 766 in August, including 15 more at 90 per cent and five at 95 per cent LTVs.
The good news is that with weak demand, mortgage rates continue to fall and there are some interesting products around for those who need to borrow 90 per cent of the purchase price. HSBC is offering a fee-free lifetime tracker up to 90 per cent loan to value for first-time buyers and home movers at the competitive rate 4.49 per cent. The average 90 per cent loan is five per cent or more.
HSBC has also launched a seven-year fee-free fixed rate mortgage for loans up to 90 per cent at 4.89 per cent aimed at first time buyers. Not all first-time buyers will want to lock themselves in for seven years but the 90 per cent mortgage is also available as a two, three and five year fix. The mortgages have no booking fee, standard valuation or completion fee and are also available to house movers.
Peter Dockar, head of mortgages at HSBC, points out: "We have consistently offered competitive rates on our mortgages and these latest products offer first-time buyers the helping hand they need to get onto the property ladder with a market-leading rate and no upfront fees." There is no doubt that HSBC rates are very competitive but brokers warn that applicants must have a squeaky clean credit track record to qualify.
However, building industry experts are calling on government to do more. Speaking at a recent housing conference Steve Morgan, the veteran housebuilder, said that although the Coalition has introduced a state-backed mortgage indemnity guarantee, NewBuy, for new build properties, intended to reduce the deposit needed to buy a home, he wants to see this indemnity guarantee to be made available for second-hand homes as well.
Mortgage broker Ray Boulger of John Charcol points out that it is not only first-time buyers who are struggling to buy a property with a small deposit. "Many first- and second-time movers are in at least as difficult a position, with little or no equity in their current property."
He also wants to see the government FirstBuy scheme extended to all buyers and calls on government to reform the way mortgage indemnity guarantees are treated by the regulator so that more 90 per cent loans could be made available. Given that stimulating the housing industry is the quickest way of kick-starting growth in the economy, it is difficult to see why the government is being so slow to respond.