Call for 90% mortgage return
In order to stop house sales falling off when the stamp duty holiday ends in March, nervous lenders are being urged to bring back the 90% mortgage. This high loan to value mortgage was largely withdrawn last March by major mortgage lenders with a fear of a financial crisis over coronavirus. This led to more than 25% of all potential buyers abandon their new home plans. More mortgage offers of 90% are appearing but it is a small number.
This type of mortgage is considered to be the first choice for first-time buyers and with stamp duty holiday ending, many of these buyers will be looking for that incentive to move. It will really help those who struggle to find a 20% deposit, who will find it easier with only a 10% deposit.
Most people think it is a good idea as it will enable more first-time buyers to become homeowners and will keep the housing market moving. It seems that 18-34 year-olds feel very positive about the 90% mortgage reintroduction as it will enable them to get on the property ladder sooner.
Although many may favour the return of 90% mortgages, just over half of buyers are wary of them. Although it is a help to get buyers on the ladder it does not come without risks as the interest rate needs to be taken into consideration. It may be more prudent for first-time buyers to save longer for a larger deposit and therefore a lower interest rate.
It is very important to get this right so a financial adviser can really help here. Contact Mathew if you would like to discus your mortgage options on 01778 341658