Mortgages on the rise

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Home owners can revel in some good news for a change. Recent figures show that the number of mortgages available is rising which will lead to increased competition between lenders resulting in lower mortgage rates across the board. There are now 2,053 mortgages on the market, this is 70% more than in April last year when the market was at its lowest and 28% more than at the beginning of 2010.

Most mortgage growth had been within the low loan-to-value market, whereby customers required large deposits and/or high salaries and many mortgage brokers asked for at least a 30 to 40% deposit during the worst months of the recession. This priced first time buyers out of the market altogether.

Now however, the housing market is bouncing back. Lenders are becoming more accommodating now that house prices have bottomed out meaning higher loan-to-value mortgages are less risky for mortgage brokers.

However, it''s not all smooth sailing just yet. 100% mortgages no longer exist and 95% deals are few and far between as lenders are still nervous about giving too much away. There are 680 75% deals and 360 60% mortgages but only 152 90% rates and 13 95% mortgages. However, these high loan-to-value mortgages have increased by 44% and 33% respectively.

More good news for mortgage lenders and current mortgagees is revelations that there has been a 4% fall in the number of borrowers in arrears in the final quarter in last year. More promising still was the number of new arrears cases registered during the same period dropped by 9% to levels 39% lower than the same time the previous year. Repossessions have also fallen by 15% to their lowest rate since mid-2008.

These positive baby steps have occurred in large part because the Bank of England choose to break all records and lower the base interest rate from 5% in October 2008 to just 0.5% in March 2009. But also, new mortgages are more flexible.

If you want to lock in the current super-low interest rate set by the BoE then your best option is to buy into a fixed rate mortgage. These are also great for people looking to plan their monthly spending for months and years to come in spite of fluctuating interest rates.

Seeing as the Bank of England''s base interest rate is so incredibly low and is likely to remain so for some time, a base rate tracker mortgage might work best for you. Even if the base rate increases, it will be by a small margin until the economy is in the full-throws of a sustainable recovery.

However, if you''re worried about your personal and financial circumstances changing in the future, then a flexible mortgage which allows you to overpay, underpay or even take payment holidays is your best bet. Right now, rates are pretty attractive and loan-to-value rates are also becoming more favourable to first-time buyers.

If you''re confused by mortgages then make use of mortgage calculators. These tell you how much you may be able to borrow based on your income and any other loan repayments you have to make. You can then compare banks and building societies to find a loan amount you are comfortable with at a rate that you can afford to pay.

Article Source: http://depositarticles.com/

Christel Sachleben is the author of this article. Santander have a great mortgage calculator solution available online.

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