An increasing number of first time home buyers are finding it extremely difficult to get mortgage loans in UK. Mortgage lenders are rejecting home loan applications at a record rate. According to a latest report released by British Bankers’ Association (BBA), approvals for home purchase loans plunged to a 4 month low of 34,813 in June 2010. The figure is down from 36,418 in May 2010. Mortgage lenders are rejecting 90% of the loan applications on receiving low deposits. Hence, the home buyer needs to decide the amount of money he can put down on the purchase price of the house. This will help a first time home buyer know mortgage how much can I borrow for a easily.
Mortgage applications being rejected at record rates
According to a renowned mortgage specialist, mortgage loan applications are being discarded on slightest pretexts such as late credit card payments. Moreover, one mortgage lender even accepted of rejecting 90% of the applications it gets for 90% LTV (loan-to-value) home loans. It has been reported that the total value of mortgage lending has been below average in the first quarter of 2010.
The first-time home buyers need to larger deposit than any point of time. The borrowers are required to make at least 25% down payment on the purchase price of the homes. Now, the average cost of a first house is around £142,457. This price is around 4.6 times higher than that of the average UK wage. Hence, it becomes quite difficult for the borrowers to make that much of down payment. But most lenders are refusing to approve loan applications with less than 25% down payment. So, if an individual is planning to take out a mortgage loan in UK, then it is advisable to check whether or not he can put down 25% of the purchase price of the house. This will help him know for a ‘mortgage how much can I borrow’ immediately.
The above facts are indicating that the UK mortgage market might be on the verge of a fresh crash. The Halifax home price index has already dropped for 3 consecutive months. According to the latest report of Royal Institution of Chartered Surveyors, the home buyers demand had dropped to its lowest point in 2010. According to a renowned economist, the home prices are likely to drop further by 3% to 5% in the second quarter of 2010.
- First Time Buyer Suffer Mortgage Squeeze – Express.co.uk
- Mortgage Approvals Hit Four Month Low – Scotsman.com