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the appliance of Science
Sarah Davidson gets to grips with all the latest public research on mortgage trends and behavioural analysis and finds a market struggling to get back on its feet
Remember that experiment many of us had to do at school involving a mouse, a piece of cheese (or peanut butter) and a maze? The aim was to get the mouse to learn
how to negotiate the maze to reach the incentive – food. Pretty simple. But imagine your clients
are the mouse, the cheese is their dream to own their own home and the maze is a lot more complicated. Welcome to the UK mortgage market. Ask the average person thinking about
remortgaging or even worse, trying to buy their first house and you’ll get the dazed and confused look of a lab rat. “It’s impossible to get a mortgage,”
they’ll say. It’s a fair enough assessment of the UK
mortgage market given how jammed up the market has been for the past four years. Indeed, last month research from
Kensington revealed that the majority of borrowers on their lenders’ standard variable rates have made a conscious decision to not remortgage. The survey carried out on 614 brokers
revealed that 53% said their customers had made a choice to remain on lender’s SVR. The thing is, it’s no longer looking quite
so true that they need to. Yes, it’s still hard to get a mortgage and yes, certain people who would have got one in the past will never (in the medium term at least) get a mortgage again, but it’s not impossible any longer. More expensive maybe, but not impossible. Research from price comparison
website
Moneysupermarket.com claimed last month there were 312 products available for those with a 10% deposit – the highest number since November 2008. The average interest rate on a 90% LTV
repayment mortgage has also begun to fall, dropping by 0.53% over the past year to an average of 5.87% the site says. Moneyfacts says it could find 270
mortgages at 90% LTV in July compared to 244 in June – a rise of 11%.
Borrowers gloomy But research by Legal & General Mortgage Club and the Association of Mortgage
28 mortgage introducer AUGUST 2011
Intermediaries shows one in four people believes their income is too low to be accepted for a mortgage and 20% believe they do not have a big enough deposit. The research also suggested only one in
three borrowers is confident they would be accepted for a new mortgage if they applied for one. Meanwhile, a survey of 8,000 20 to 45
year-olds by Halifax and the National Centre for Social Research revealed two thirds of non-homeowners believe they have no prospect whatsoever of buying a home. Halifax says the perception that banks
are not lending, the size of mortgage deposits necessary and a fear of the application process has prevented this generation from making any significant attempts to buy a home. A massive 84% say first-time buyers are
put off by a belief that banks do not want to lend to them and find excuses to turn them down while 92% see it as hard for first-time buyers to get a mortgage, with 60% seeing it as very hard or virtually impossible. Worryingly, 67% believe there is a
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