The Changing Face of Mortgages
Halifax, the UK’s largest mortgage lender, has turned its attention to borrowers with significant deposits.
To draw in this market Halifax is offering discount rates for borrows with capital. The best rate is reserved for borrowers with 25 per cent or more of the property value.
For struggling first-home buyers looking to get into the market with low deposits, there are even tighter rules which attracts a higher interest rate.
It was not unexpected, with a tight liquidity market and greater value put on low-risk borrowers, there is a growing trend for lenders to look at the quality of their loan books rather than quantity.
Halifax’s new mortgage packages is only one example of how the credit crisis gripping the global markets will affect the UK credit market in the long term.
In the short term these new lending packages will contribute to a slowdown in mortgage approvals and overall housing market weakness.
However in the long term the tougher credit rules will strengthen the credit market and bring renewed confidence to the domestic economy.
The question is who has to hurt now, for a brighter economic future. The answer seems to be struggling homeowners who are already sailing hard into the wind of high household debt and raising costs, and renters who are facing higher rents and major hurdles to buy into the housing market.
These two large groups are usually the first to suffer in any period of economic slowdown.
