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27 March 2008 ‘There are a lot of lenders who are only offering the Standard Variable Rate to their existing customers when they come to the end of a deal,’ warns Richard Morea of mortgage broker London & Country. ‘They want to to get rid of their riskier lending.’ With millions of homeowners looking for a remortgage deal, this could be disastrous for many. If you are lucky enough to be with the tiny Stafford Railway Building Society this won’t be too painful as their SVR is 5.99% but for the unlucky borrowers with BM Solutions, an HBoS subsidiary, the SVR is a hefty 7.69%. Borrowers with the Halifax, the largest mortgage lender, will pay 7.25%. The credit crunch is leaving many mortgage lenders short of funds. There is expected to be an estimated £50 billion shortfall on demand of around £300 billion this year. Inevitably life is getting tougher for homebuyers looking for a mortgage or remortgage and costs are rising. According to the Council of Mortgage Lenders, in 2005, 2006 and 2007 some 61%, 65% and 73% respectively of all mortgages were signed up at fixed rates, predominantly two and three year deals. This represents some 1.322 million mortgages in 2005, 1.466 million in 2006 and 1.513 million in 2007. Most of these borrowers are going to be out there looking for a new deal. ‘Borrowers with mortgage arrears will have the most difficulty,’ warns Morea. ‘Lenders view this as the worst behavior.’ But he points out that if the arrears were due to circumstances beyond your control, like redundancy, and you are now back in work and paying off the arrears, most lenders will be sympathetic. ‘But different lenders have different criteria and everything will depend on individual circumstances.’ Source |
