Many first time buyers facing soaring mortgage rates
According to recent figures from the Bank of England, many first time buyers are now facing crippling mortgage rates, with many being hit by the highest mortgage rates in over seven years. Data from the central bank suggests that in some cases first time buyers are being hit with interest rates on mortgages that are at the highest since 2000.
Data shows that at the end of February the interest rates on two year fixed rate mortgages worth 95% of the value of the home soared to 6.55%, which was the highest since 2000. Many first time buyers looking for increased stability and with very little deposit to put down tend to go for deals such as this, and this group is likely to be hardest hit as a result of this.
The surge in mortgage rates comes despite tow recent interest rates cuts, which took the base rate down to 5.25% from 5.75% – the two 0.25% cuts were applied in December of 2007 and in February of this year.
One industry official stated: ‘Banks are clearly now engaged in more active risk-pricing when it comes to mortgage lending, with riskier borrowers failing to benefit from the fall in expectations of policy rates. For first-time buyers this could clearly be a problem.’
In a separate report the Council of Mortgage Lenders has stated that the number of new home loans that have been taken out in January of this year has plummeted to just over fifth thousand, which is close to half of the number of new home loans taken out in August of last year before the credit crunch took hold.
Recent additions:
- Darling addresses long term fixed rate mortgages in budget
- No change in interest rates for March
- House builder warns on house prices
- Buy to let mortgage figures soar
- Are Cheap Mortgages Coming Back on the Market?
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