Are we seeing a return to low deposit mortgages?
When you consider the number of 10% deposit mortgages has fallen from 1197 last year to just 95 today this is a perfect reflection of the difficult funding arrangements home buyers have been experiencing. However, the marked rate reduction announced by HSBC would appear to be a significant turning point in not only the low deposit mortgage market but the mortgage market as a whole.
As we covered in one of our recent post, excluding the 4.99% rate available through HSBC, the next best 10% deposit mortgage is available at 5.99%. This difference is sure to instigate a significant period of competition with both nationalised and non-nationalised banks looking to step up their mortgage funding operations. Whether the improvement in funding is as a direct consequence of government barracking behind-the-scenes or a return of confidence to the market place is debatable, but matters do seem to be changing.
The significant funding by both nationalised and non-nationalised banking operations will see a constant drip feed and improvement of funding available to the mortgage market. As and when confidence begins to recover, with signs that this may be about to start, we should see a significant increase in competition in the sector. There are concerns that slowly but surely we could return to the low deposit low mortgage rate environment which has caused so much damage over the last 18 months, but governments around the world appears set to ensure this does not happen.
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