Mortgage crunch: Is it really a disaster?

The last week has seen the number of mortgages on the market contract by ten per cent, but this is not a disaster for those remortgaging and home buyers.

With the failure of Bradford & Bingley and financial crises pushing up inter bank lending rates to the highest in seven years, there are now just 2,988 residential mortgages available to borrowers and 481 buy-to-let deals on the market.

However, Andrew Hagger of Moneynet.co.uk, believes claims the UK mortgage market could dry up are just scare stories.

“Shock horror! - So now we only have just shy of 3,500 mortgage products to choose from, is that really such a disaster? - the answer is 'no'," he said.

"It is these type of scare stories that increase levels of confusion and misapprehension among consumers and contribute to the very low levels of new mortgage business that are currently being written.”

He added: “Confidence amongst consumers is understandably at an extremely low point and the last thing we need is to worry people into thinking that there’ll soon be nowhere left for them to remortgage to when their current deal expires.”

Mr Hagger explained the reason why the UK mortgage market was so large – with over 15,000 deals on offer – was due to the vast combination of products offered by sub prime lenders looking to meet ever growing sales targets.

“The demise of sub prime products, self cert mortgages and some of the higher LTV offerings is no bad thing," he said.

"If we had maintained traditional banking values where customers were expected to put down a deposit when buying a home and that those with a poor credit history paid interest rates in line with their risk profile, then perhaps we wouldn’t be in quite such a mess that we are now.”

He went on to claim if mortgage customers have a decent credit rating and are looking for a loan to value of 80 per cent or less, there are still plenty of mortgages to choose from.

“Whilst banks may be reluctant to lend to each other, there is no evidence that they’re not prepared to lend to Joe public," he said.

Mortgage deals currently on offer include:

Britannia BS 6.14% £499 fee up to 90% LTV 2-year fixed

Nationwide BS 6.43% £599 fee up to 90% LTV for first-time buyers 2 year fixed

Halifax 6.89% No fee up to 90% LTV for first-time buyers (95% if current account held) 5-year fixed

C&G 6.35% £995 fee up to 90% LTV 2-Year fixed

First Direct 5.79% £598 fee to 80% LTV 2-Year fixed

Yorkshire BS 6.29% £495 fee to 90% LTV 2-Year fixed

HSBC 6.27% £499 fee to 90% LTV 2-Year fixed

“This is by no means an exhaustive list, but just proves that there are still high LTV products available from some of the biggest names in the mortgage arena, so whilst some of the more high risk and non mainstream products may have fallen by the wayside, the shelves are by no means empty when it comes to finding a new home loan," Mr Hagger claimed.

"SWAP rates are fluctuating rapidly which has recently led to a flurry of rate increases being announced, however with swap rates dipping again by some 0.30 per cent since last Tuesday, lower fixed rates may once again be just around the corner."

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