The decline in new mortgages issued also appears to have significant geographic factors.  More than 90% of housing considered affordable is located in the northern part of the United Kingdom, with only about 5% of such housing located in the south.  This imbalance of affordable housing means that Britons in the south face significant challenges when it comes to home buying.

One of these challenges concerns the necessary deposit that buyers must furnish in order to obtain a mortgage.  Just as with a car loan, a down payment is necessary, but tighter lending standards mean that the average deposit required of first-time buyers in 2011 was in excess of £27,000.  Just four years ago, that figure stood closer to £18,000.

Buyers must, therefore, wait and save for much longer before they are in a position where a house purchase becomes feasible.  Not all the news on the housing market is bleak, however.  Home ownership in 2011 was more affordable than in the seven years prior, due to the continued slide in prices.  In fact, to purchase property in almost half of all local authority districts required only four years or less of the purchaser’s annual salary.

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First Time Homebuyers Seek Affordable Housing in Falling Market

The goal of the proposed reforms was to “prevent a return of the risky mortgage lending seen in boom times,” but financial analysts have been quick to point out that the cure may well be worse than the disease if it traps the housing market in a spiralling decline.  When homeowners are not able to refinance and those who wish to buy a house cannot find adequate financing, a meltdown in the mortgage market can be the result.

Tacitly acknowledging this, FSA has amended its original plans based on feedback received.  Instead of a number of hard and fast rules, the regulator will require lenders to exercise common sense.  All loans issued must be assessed to be sure that borrowers can truly afford them, and these assessments must include the fact that low interest rates may rise over time.  Debt management considerations for interest-only loans are even stricter: borrowers must provide information about a creditable means of repayment when the full loan comes due.

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FSA Revises Plans to Limit Mortgage Availability

Remortgages were also sharply up on a month-by-month basis, with the total number increasing almost 10% from July to August.  In terms of funds lent, the one-month increase was as high as 5%.  These gains were not a result of relaxed lending standards; the average value loaned hovered around 80% of the total value of properties purchased.

While the number of people seeking remortgage loans was on the rise, first time home buying activity also saw an increase, with almost 10% more buyers obtaining a mortgage in August 2011 than in August 2010.

Paul Smee, who serves as General Director of the Council of Mortgage Lenders, remarked upon the upswing in mortgage borrowing, commenting that “even though it is impossible to ignore the knocks to confidence emanating from the euro zone, August lending showed welcome signs of life.  With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low-rate environment is a benefit to those with mortgages even against the backdrop of the gloom in the wider economy.”

The average price of a home in the UK currently stands at approximately £210,000.

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Low Interest Rates Spurs Increases in Mortgage Borrowing

The decline in price matches a corresponding but significantly larger decline in the number of buyers interested in obtaining mortgages for new homes. New homebuyers were down more than 2.5% during the month of September. Other indications of a return to recession conditions include a growing gap between the asking prices sellers are requesting and the sale prices the properties actually fetch when transactions are finalised. On average, sellers are agreeing to a discount of almost 8% off their asking prices. Other signs of recession include an increase in the average time between the date a property is listed and the date of sale. That time has now reached almost ten weeks.

“As the gap between supply and demand widens, we are likely to see an acceleration in the level of price falls as we head towards the end of the year,” commented Richard Donnell, who serves as a research director at market data collection firm Hometrack. Donnell also commented that the decline is expected to be most severe in the northern part of the country.

All indications suggest that the housing market’s slight recovery has ended. Even London properties and country houses, long regarded as resistant to price declines, now appear to be declining in value. The situation, while unfortunate for sellers, also means that mortgages are becoming more affordable than has been true in recent years.

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Decline in Demand for Mortgages Drives Home Prices Down

It is no secret that applicants who pose less risk to lenders are more likely to receive the most in terms of lower rates and other amenities.  Reducing that risk can be accomplished in several ways, starting with checking your credit reports for inaccurate or outdated information.  Even if they are current and accurate, this will help you be prepared to answer any questions that lenders may have about a particular line item.

Also use the time to pay off some of your monetary obligations, if possible.  Fewer obligations translate into more of the income that can go toward a mortgage payment without creating additional stress on the budget.  This means less of a chance you will default on the payments.

Having more money to go toward a mortgage deposit will also help, since the figure to finance will be lower.  If you need considerably less than the property’s market value as part of the mortgage, that also helps to reduce risk to lenders.

Even if you don’t plan on trying to buy a home immediately, see this as a good time to start getting your affairs in order.  Doing so will allow you to be ready when the time comes and you will be able to take advantage of some of the better offers.

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Lull in Mortgage Lending may Mean Time to Improve Your Circumstances

Take some time to look around your area and determine if there is a home you would like to own.  Make sure the home is within a price range that will fit into your budget and income level nicely, without creating any type of difficulties meeting other obligations.  Also take a good look at how much of a deposit could be applied to the purchase.  Keep in mind that a larger deposit means less to finance, which will be in you favour in the long run.

Also make sure your financial affairs are in order.  Before applying for a mortgage, all debts should be paid up to date and there should be no question of your ability to afford a reasonable monthly mortgage payment.  If you have not done so already, obtain copies of your credit reports and go over each one closely.  Lenders are highly likely to consult at least two of those reports, if not all three, so taking steps to make sure what they see is current and accurate is very important.

Keep in mind that as the mortgage wars heat up, more lenders will be coming to the table with lower interest rates on selected loans.  Make sure you are up to date on who is offering what, and don’t hesitate to compare terms as well as rates.  Doing so could allow you to lock in a much better deal than you thought possible.

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Mortgage Rate Wars may be to Your Benefit

One approach is to educate yourself on how the process works.  Spending some time on sites like CashMyGold can help you get a better idea of what to expect.  With some research, you can get a better idea of what buyers look for in a gold piece and hopefully match what they want with what you have.

If there are local establishments that buy gold jewellery, take your pieces around for an assessment.  Before accepting the first offer that comes your way, make it a point to check offers from several different buyers.  You may be surprised to find that at least a couple of offers are a little higher than others, based on what the buyer has in mind for the pieces.

Don’t forget to contact local jewellers as well.  Some will buy older pieces with an eye toward using the gold and any stones included in the pieces for the creation of new jewellery.  While it may take a little time and effort, selling your old gold can be a lucrative enterprise, one that helps to alleviate some of the stress on the household budget and makes life a little easier to manage.

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Time to Sell Your Gold?

While not yet spread to every region in the country, the return of the no-deposit mortgage is a hopeful sign for the marketplace and for consumers who are managing their debts responsibly but do not have the funds on hand to provide a deposit. While in the past it was possible to get around the deposit by securing what is known as a guarantor mortgage, not everyone had the luxury of a parent or other loved one willing to guarantee the loan.

Qualifying for a no-deposit mortgage may still be beyond the capabilities of some. Just as with other types of mortgages, lenders will look closely at current income and debt levels, the credit worthiness of the applicant, and other factors that may indicate an undesirable amount of risk associated with approving the loan. For applicants who have solid credit ratings, equitable incomes, and are managing their current debts responsibly, the chances of obtaining a mortgage without a deposit are very good. Before deciding you would not qualify, talk with a lender offering this type of financing; you may be pleasantly surprised.

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Return of the 100% Mortgage Bodes Well for Some

It is important to note that while there is competition between lenders, consumers still have to prove they do not present an unacceptable level of risk when applying for a mortgage loan. This means taking some time to take a look at the state of your credit and your finances in general. Often, it’s a good idea to see what can be done to improve your credit rating and reduce your other debts before submitting that first application.

To that end, do make sure all your credit cards and other obligations are paid up to date. This indicates that you are capable of managing your debt responsibly. At the same time, it never hurts to pay down those debts a bit.  If all your cards are not near the limit, that also speaks well of how you manage money. Don’t forget to have some funds set aside in an interest bearing account that can be used as a deposit on the mortgage. Lenders tend to favour those with decent credit and who appear to have made preparations before attempting to secure a mortgage.

Don’t be discouraged if one lender turns you down. Learn what you can from the experience, make a few more changes in your finances, and try again. In time, you will find the right lender and be able to fulfil your dream of becoming a homeowner.

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Increase in Mortgage Lending a Good Sign for Consumers

In many ways, finding the right mortgage is just as important as the right home.  The goal is to find something you can live with over the long-term, fits well into your household budget, and allows you to enjoy an equitable quality of life.  While easier said than done, there is a good chance that at least a few lenders can offer exactly what you need.

Before submitting an application to any potential lender, take some time to assess your circumstances. Know how much you can reasonably afford in terms of a monthly mortgage payment, make sure all your current debt obligations are current, and that in general you can present yourself as a good risk to lenders.  Doing so will make it much easier to obtain more competitive interest rates and terms, which will save a great deal of money over the life of the mortgage.

Don’t be discouraged if it takes time to find the right lender and never jump on the first affirmative offer you receive. Take time to compare options, read the terms of the loan contracts carefully, and make sure you understand exactly what responsibilities come with the mortgage. Once you are convinced a certain lender and offer are the best for your circumstances, sign the contract and get ready to move into the home of your choice.

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Falling House Prices May Be In Your Favour