Ever since news emerged that lenders were beginning to experience high rates of defaults on their loan books, particularly with their sub prime clients, there has been nothing but negative headlines and hard luck stories in the press regarding the mortgage and loan industry. However the first signs that the crisis may have peaked are beginning to emerge. This may be good news for millions of home owners who are struggling to remortgage their properties since lenders have pulled a multitude of products from the market in recent times.
Finding a good deal on a home loan was like taking candy from a baby in the early part of the decade. Lenders were falling over themselves to entice borrowers to sign on the dotted line for their latest discount rate product and were even offering incentives such as free valuations and cash back. How times have changed. Barely two years later it seems that door are being slammed in the faces of nearly everyone except the most credit worthy and cashed up home owners who apply for a remortgage product once their juicy fixed rate discounted mortgage period expires.
While home owners were all too happy to sign up for a typical two year fixed rate deal several years ago most of them didn’t expect the market to turn so sharply between now and then. In the current economic climate it is extremely difficult to find an appropriate product to remortgage your home and so many home owners are forced to remain with the same product and flip their lender’s harsh Standard Variable Rate. This can create substantial rate shock for some borrowers and has pushed many over the edge and into repossession.
Despite all this chaos the first signs that the worst of the credit crunch may be over are beginning to emerge. Lenders have begun reducing their interest rates, particularly on products for their least risky clients, without being prompted by the Bank of England by way of a base rate cut. This means that lenders are starting to put products onto the market to attract new business. This is something that has not occurred much in the last year or so as lenders have been wary of almost all new business.
The rapid rate in which mortgage and remortgage products were disappearing from the market has also reduced. Lenders seem to have re-evaluated their lending criteria to a point that they are happy to dip their toes in the water for a bit longer despite the fact the market is still cold. While these signs are promising they are in no way an indication that the credit crunch is about to be assigned to the history books. There is still a long way to go before home owners can remortgage to the kind of favourable deals that were widely available several years ago.
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