The Credit Crunch cry Messages are presenting a rather misleading picture of the end of 2008 Mortgage Market. On the promising side, it is correct to say that the prices, which has been cut by some of the leading banks and building societies. But there are two underlying facts that are not so easily put forward. For one thing, the prices are approaching their pre-credit crunch levels (they still have a long way) in front of him but, but nobody ever mentioned that the prime interest rate was 5.75% inAugust 2007, although it is only 5% now. In fact, mortgage rates should be three quarters of a percent lower than before the subprime crisis, before we go on the road for a show of national celebration.
Secondly, and more importantly to me, banks are cutting extreme caution in terms of deals it. In reality it is only the sub-60% LTV mortgages, which are cut as. LTV stands for loan to value, "and it is a measure of how much you depositsit on a purchase, or how much equity you have when you remortgage. In my experience, most purchases take place at 80-100% LTV level, and most remortgages instead of 50-80% of the LTV levels (with LTV below 50% tend to be current with their mortgage lenders until their stay is over). Therefore, like in reality, something like good news is on the surface simple and easy to grab a bit of headline.
It's a bit like Tesco push prices up on milk and bread and then makes agreat song and dance when it cuts the price on plums or something long-forgotten items.
I believe that the mortgage market until either a) 95% mortgage interest rates come to stay below 6% is flat (I have a 125% mortgage with Northern Rock to 5.79 in 2006), or b) more banks and building companies begin to accept "Vendor Gifted deposit.
Otherwise, there is nothing really to scream about. This means that mortgage rates are back before the credit crunch levels are simply talkingcobblers. In February this year I could have taken a 3 year fixed Buy to let mortgage with BM Solutions at 4.99% or a 90%LTV 3 year tracker with the Halifax at 5.59%. Today these deals are available respectively at 5.89% and 6.34%. Where on Earth is that pre- Credit Crunch levels?
Once again – ignore the papers and find out the facts before making your financial decisions.
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Ross Taylor is the Author of "Mortgages, Money and Magic" and "The No BS Credit Crunch Ready Guide to Buy to be in 2008. Ross specializes a successful Financial Adviser first time buyers and Buy to Let. He has more than £ 2 million worth of properties in the UK and regularly gives lectures on Financial Planning.
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