The crunch on UK home mortgages is here. ?Banks and credit card companies are shying away from riskier customers by lifting rates and lowering credit limits ? adding to borrowers? woes after the Bank of England decided not to cut the base rate this week,? according to Sharlene Goff?s and Steve Lodge?s article, "Borrowers face higher rates and lower limits", on FT.com.
The people who are suffering the most from taking out UK home mortgage loans are those with low deposits. If you are taking out UK home mortgages for over 75 percent of the property?s value, the same article states that you can look forward to rates 1 percentage point higher than those with smaller loans. This is in contrast to a year ago, when those with loans upwards of 90 percent ?would have faced additional costs of less than half the current one percentage point,? Ray Boulger, of John Charcol mortgage brokers, said.
The financial situations of the public which are affecting the lenders and their attitudes towards credit (for UK home mortgages) do not look to ameliorate soon. Jamie Chisholm?s article Britain saving at lowest level since 1960s, published by FT.com, stated that ?Britons are saving the smallest slice of their pay packets since the beginning of the 1960s as they continue hitting the shops in spite of higher interest rates and taxes.? This ?trend will only heighten fears that households are spending at an unsustainable pace.?
Chisholm?s article goes on to say that the loose spending and tighter credit is a vicious cycle as UK home mortgages lenders will try to protect themselves a bit by passing on more costs via interest and increased fees to UK home mortgage borrowers, as previously mentioned. For example, ?Alliance&Leicester, the UK?s ninth-largest mortgage lender, has increased interest rates for new customers with less than a 25% deposit,? according to Gill Montia?s article on Finance Markets? website.
Tightening the belt and closely tracking one?s spending and borrowing will prove to help during this crunch on UK home mortgages. If you are in the market for UK home mortgages, however, good research is a must before signing on with any mortgage offer.