Jun 10
21
The rental market in Colchester is currently at an all time high as would-be first time buyers continue to find it difficult to get a mortgage approved by a lender. It has been recognised that many of the mortgages that have been refused have been so because of tighter lending regulations, even though the applicants could afford repayments. With the FSA to be abolished, and the Budget on the horizon, Colchester residents are justifiably wondering whether or not they will be renting for years to come when they could actually be paying off a home loan.
The restructuring of the mortgage market has raised fears that high LTV loan approvals will be even more difficult to come by, but industry experts are hoping that the changes will mean more competitively priced high LTV loans based on new lending regulations. This is good news for potential first time buyers who are currently trapped in the rentals market because they cannot raise sufficient deposit whilst paying the high rental rate.
If the lending criteria is changed to accept borrowers who can demonstrate their ability to make monthly repayments, i.e. through evidence of paying rent every month even though they are unable to access a significant deposit for a mortgage, then the property market might finally be able to open up for first time buyers. The mood is however cautious over high LTV approvals as banks avoid high risk loans, an issue that will be addressed by the Bank of England as it takes over responsibility from the FSA.
Rather than restricting mortgages for borrowers, the aim is to help keep lenders on the right path through reformed lending rules. This has the potential to allow loans to be approved according to criteria that are not arbitrary, which should bring an end to those with enough money but no deposit being refused a mortgage. Sensibility dictates that if a resident can afford to make and keep up payments on a rented property, they can do the same for a mortgage, the Bank of England just needs to provide a way out of the rental trap.
