Although requests for new mortgages are down, the reverse is happening with remortgages. According to the Council on Mortgage Lenders, the market for remortgages has seen an increase of 43% since last year. It total, there were more than 85,000 requests for a remortgage loan in January, up from 59,000 in December of 2007.
Michael Coogan, director general of the CML, said: “The wholesale funding markets remain largely closed and mortgage funding still remains constrained. This is now having a discernible impact on lending criteria and the ability of first-time buyers to get into the housing market.”
Loan to value ratios are also falling. The majority of first time home buyers took out a mortgage for 88% of the home’s value, which is down from 90% the month before. Those who were moving to a different home also saw a decrease in the loan to value ratio with the average being around 70%, which is down from 73% in December. Banks are tightening up their lending restrictions and many are dropping the LTV ratios in an effort to shore up their failing businesses. The amount of a homes value versus their total income also dropped from 3.38 in December to 3.32 in January.
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