Firsttime Buyers Left out Of Mortgage Rate Cuts
As a mortgage adviser, over the last 6 months I have seen fixed rates for 90% loan to value products move very little. For example, I saw a first time buyer in July of 2008 and offered a 90% LTV product with Nationwide of 6.59%. Today if I looked for the same product for a firsttime buyer with a 10% deposit I would get 6.09% with C&G. Only 0.5% difference. The Nationwide’s product was a 2 year fixed and now the C&G is requiring a first time buyer to fix the rate for 5 years.
By comparison a second time buyer who requires a 75% LTV product would have been offered a rate in June of 6.45% with Nationwide for a 2 year fixed rate. Today the same applicant would be offered a rate of 4.49% for a 2 year fixed rate with C&G. This gives a drop of 1.96%.
I am not suggesting that the rates should be the same. However until the gap between the two loan to values shortens then we will still see house prices falling. High interest rates where firsttime buyers are forced to fix the rate for 5 years are discouraging couples and singles from entering the housing market. In addition whereas a year ago a first time buyer could purchase a property with a 5% deposit now they need a minimum of 10% thus they are being hit on three sides, higher rates, higher deposits and longer term fixed rates.
Until lenders make things easier then house purchases from first time buyers will remain low. However once the banks ease the situation and give first time buyers a fair deal we will see the housing market and house prices stabilise and begin to increase again.
This is what I think about the Royal bank of scotland. RBS boss Fred goodwin should be stripped of the pension he doesn’t deserve. If they pay him a profit related percentage he will get minus figures. Taking away his pension is the best option.