Lack of Mortgages critical, says North London Mortgage Broker, London Mortgage Advice Thursday, 15th April 2010

Last month’s budget, has, as yet, failed to translate into sales.With estate agents seeing an increase in inquiries, prompted in part by the stamp duty exemption.

The househunting season is off to a slow start as mortgage lenders frustrate borrowers’ attempts to buy.

It is not your usual spring market. All year, inquiries have been rising, searches are up 10% in the past six weeks, but transactions aren’t following. Lack of mortgages is a critical problem for the market Higher rates on mortgages for first-time buyers and buy-to-let borrowers, and the need for bigger deposits to get the best deals, could keep house prices low for the next five years.

Some of Britain’s biggest lenders are again tightening lending criteria. For example, Lloyds Banking Group, the taxpayer-backed bank facing a looming funding shortage, has made it difficult for first-timers and buy-to-let borrowers in recent weeks.

Halifax,increased its best two-year fix for first-timers from leaving anyone needing more than 80% of the purchase price.

Abbey and Alliance & Leicester, that looked to increase its share of the market at the start of the credit crunch, is becoming more cautious.

A lot of people are being turned down by Abbey and A&L lately, even where borrowers have a deposit of 25%. In some cases they’re being over-cautious.

However, private banking arms of high street lenders are stepping into the breach. For example, Barclays Wealth has recently launched into the mortgage market, offering cheap trackers even to first-time buyers. We look at where homebuyers should turn.

Lenders are competing the most fiercely for borrowers with large deposits — or lots of equity in their homes. This means a deposit of at least 40%.

Lloyds is scaling back on lending to those who choose to take a loan beyond their standard retirement age. Previously, if the customer was more than five years from retirement, their current income was used to assess affordability.

The changes mean that customers who choose a term that exceeds their anticipated retirement age and are more than five years away from retirement will have only two-thirds of their current income taken into account, plus a single person’s state pension income.

Lloyds has announced that it will no longer lend to under-25s looking for a buy-to-let deal.

Aldermore, formerly known as Ruffler bank, said it will offer loans to self-employed borrowers who are being excluded by high street banks when it launches its residential mortgages later this year.

Kensington, owned by Investec, the South African bank, said last week that it will consider customers who have had up to two county court judgments against them totalling no more than £750 as long as these have been repaid for more than six months.