Cheap loans may be on the return, but only to those able to put down a significant down payment. Right now, it appears as though only those that are capable of putting down 50% or more will be able to get a cheap loan with competitive rates. This may put off home ownership for many, particularly those that are looking at expensive homes. While this equation does mean more equity for the homeowner, going to this kind of financial trouble for a cheap loan does not appeal to many, nor do first time buyers want to wait that long to get a house. Until the housing market recovers however, this may be the shape of the future to come.
Melanie Bien, director of Savills Private Finance, a mortgage broker, said: “It is only a matter of time before the best rates across the board are available to those with a 50 per cent deposit or equivalent level of equity in their homes.
“The maximum loan-to-value continues to creep downwards on the cheapest rates as lenders try to attract those with significant deposits or equity in their home because they regard them as being lower risk.”
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