Friday, April 04, 2008

Good news, sensible lending returns

and everyone focuses on first tome buyers, again:

The UK's largest mortgage lender, the Halifax, is targeting buyers who can
pay larger deposits.
It said new deals would see borrowers who put down a 25% deposit getting a deal with a lower rate than those with less money to put down.

Seems fair enough, lower risk gets better deal. Isn't that sensible lending?
But the highest loan-to-value (LTV) offer will be 95% from Monday, compared
with the previous high of 97%.

More sense returning then. Only lending to people who have shown they can save and that they can live without the money needed to make the repayments.

The squeeze on first-time buyers, who are often short of money to put down
as a deposit, echoes other lenders in the market.

First-time buyers must find at least 5% of a property's value for a deposit in deals being offered from Monday, rather than 3%.

Taking the average Land Registry house price of £185,616, that is an increase in the minimum deposit of a typical home from £5,568 to £9,280

Good. If you can't afford to save that much money then you shouldn't be considering taking out a mortgage of £185,616 that requires a repayment of c£1,300 per month (25 years repayment mortgage @7%). This is the sensible lending everyone has been asking for and all they are saying is that to get the mortgage all you have to do is save the equivalent amount for 6 months or so.

I really don't understand why the beeb is making such a fuss of this.

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