Increased demand for mortgage lending expected
The mortgage industry expects to see further demand for mortgages among consumers in 2014 and that demand remains healthy rather than excessive.
The Mortgage Advice Bureau have noticed an increase willingness to lend to those with smaller deposit less than 10%, with credit scoring being more relaxed.
Demand for mortgages was at its highest rate in six-years in the final quarter of 2013, and was boosted by the government's Help to Buy scheme, raising further concerns about its effect on the housing market.
Greater competition from buy-to-let investors has increased the purchase price and reduced the supply of suitable properties for first time buyers or home movers.
Widespread demand for Help to Buy
Banks and building societies told the central bank that demand was supported by first time buyer and home mover interest in the Government's Help to Buy scheme.Help to Buy can be used for older properties as well as new build homes.
The scheme allows homebuyers to place a deposit of only 5% for properties up to £600,000 and receive from the government an interest free equity loan of a 5% of the property value. The balance is a mortgage from a lender based on the individual’s income.
Help to Buy promotes new homeownership for people that are renting and is not available to switching remortgage buyers or buy-to-let investors.
However, this increased demand has raised further concerns about the effect of the Help to Buy scheme and the threat of a housing price bubble.
"Our problem with Help to Buy when it launched was that prices were already too high relative to income and all the scheme is doing is pushing that equilibrium even further," said Phil Lachowycz, UK economist at Fathom Consulting.
More 10% deposit mortgages
Lenders are expecting the availability of mortgages to increase significantly in the first quarter of 2014 and in particular offering borrowers deals where only a 10% deposit is required.There are more lenders willing to offer mortgages with 10% deposits as the appetite for risk has increased, mainly due to greater confidence in the market. This has been assisted by the Help to Buy scheme where the deposit is only 5% of the property value.
Help with the deposit to buy a home can come from family members as the equity release buyer can access cash using a lifetime mortgage and gift to a child or grandchild.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage cost calculator and equity release mortgage calculator.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even buy a more expensive home.
Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.
Mortgage Best Buys
These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.
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| 1.18% Fixed Rate |
| 60% Loan to Value |
| £1,034 App Fee |
| Until 31/10/2022 |
| Reverts to 3.59% |
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| 1.19% Fixed Rate |
| 60% Loan to Value |
| £999 App Fee |
| 2-Years Time |
| Reverts to 3.59% |
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| 1.16% Fixed Rate |
| 60% Loan to Value |
| £1,525 App Fee |
| Until 01/11/2022 |
| Reverts to 4.09% |
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| 1.17% Fixed Rate |
| 60% Loan to Value |
| £1,025 App Fee |
| Until 31/09/2022 |
| Reverts to 3.59% |
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Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.
Equity Release - Equity Released from your home will be secured against it. Mortgages – Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. Think carefully before securing other debts against your home. The information contained in this website is subject to the UK regulatory regime and is therefore intended for consumers based in the UK.
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London City Mortgages Limited is a registered company in England & Wales under company number 09278987. London City Mortgages Limited is an Appointed Representative (FCA no. 655965) of Blackstone Moregate Limited (FCA no. 459051) which is authorised and regulated by the Financial Conduct Authority. LCM and LCM Equity Release are trading names of London City Mortgages Limited.