Falling rates and easing criteria: it’s getting easier to obtain a mortgage


Mortgage rates continue to fall on the back of the Government’s Funding for Lending scheme, while lenders are crucially now also loosening criteria. It has never been easier – certainly not in the past five years – to get a mortgage.

This is great news for those who have been holding back from moving, concerned that it’s not worth applying for a mortgage because they wouldn’t get one anyway. It is also good news for those who haven’t bothered looking into remortgaging for much the same reason. Now is the time to act, and while rates may fall further still, they are already at historic lows. What have you got to lose?

On the rate front, two-year fixes are available at less than 2 per cent, five-year fixes at less than 3 per cent and now even ten-year fixes at less than 4 per cent. Of course, you will need a sizeable deposit of around 40 per cent of the purchase price to qualify for the best rates but further up the loan-to-value curve, pricing has also fallen.

What is really encouraging is that criteria are easing too. For every lender tightening its interest-only criteria or making it tougher for older borrowers to get a mortgage, there are others who are realising that the way to bring in more business and grow their loan book is to be more flexible, not less.

The private banks have continued to lend throughout the financial crisis and are still often the best option for the right sort of client. They have an understanding of borrowers with complex income streams – taking retained profits in a business or bonuses into account – that is simply not the case on the high street.

We’ve also seen some improvements for contractors and on buy-to-let, with several lenders loosening previously tight criteria in the past few weeks. It all adds to a more positive market that is well worth exploring if you have been holding off applying for funding.

However, as usual, caveats apply. While lenders are demonstrating more of an appetite to lend, it is still worth seeking independent mortgage advice. There may be more options available at better rates but sourcing them all yourself is a tricky business. Why not speak to an expert who spends their working day sifting through what’s available and who can advise you accordingly?

Jonathan Harris
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Jonathan Harris