Potential Property Buyers to Face Tougher Mortgage Criteria
Published on January 22, 2012 | Author: Harish
Market Activity Could Drop So Sell House Quick
Potential buyers may have to rethink their decision to purchase a home before the housing market stabilizes regardless of how determined they are to step onto the property ladder. This concern was raised after the Bank of England’s latest monthly survey revealed that lenders are on the verge of tightening their lending even more than they already have. The bank’s report suggested that many of who may qualify now may not do so in the coming months.
It also revealed that many who may qualify at the moment are shying away from lenders, causing a drop in the number of new mortgage applicants. Possible measures that are currently scaring away people include taking into consideration the current steady fall in prices when determining how much to lend for a house. This could lead to even bigger deposits being required despite the fact that some buyers are already being forced to find 20% to 25% of the house value.
Smaller deposits may cease to exist, or loans given with anything under 20% may become extremely rare. The obvious issue this presents is a decrease in buyers. First-time buyers are even more affected because many are young and do not have the level of credibility banks will be looking for. Second-timers will also be affected because the value of their current homes will weigh on their level of creditability in their lender’s eyes.
Overall, secured loans will not be as easy to get as before, because the valued of the main type of securing (houses) keeps falling. With banks being unaware of how much the security will be worth later, or the actual disposable income within the household in a few weeks, they are not in any hurry to lend. In the meantime, homeowners who are depending on these would-be mortgagers to sell house fast in order to stem their own economic meltdown are losing hope daily.
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