Mortgages -
Bad News For First Time Buyers - 11/05/2008
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It has been revealed that Alliance and Leicester have become the latest loan lender to increase their rates for repayment of mortgages unless the buyer can cotribute at least a 25% deposit.
The ninth biggest mortgage lender in the country will add almost £900 to the overall cost of repaying a mortgage to those looking to borrow 90% of the property value. Those going for under 75% can expect more competitive rates and a better 2 year fixed-rate mortgage deals in plans unveiled this week.
This change has echoed other activity across the industry as Halifax and Nationwide have adopted similar policies, news that will have first time buyers drowning their sorrows.
Simon Tyler, of Chase De Vere Mortgage Management, said: "This is further bad news for those who want to borrow more than 75 per cent. Alliance and Leicester are clearly feeling the pressure from the excessive demand in the market.
The news is a further blow to the industry despite the surprise news that the Bank of England had held interest rates for mortgages at 5% following three consecetive months of change.
Whilst the freezing of rates may be welcome to some, leading economists to predict a further cut next month, others think that these uncertain times will only lead to a financial squeeze on potential homeowners.
Chief executive of the Torkshire Building Society said: ‘‘There is no going back, it’s hard to see global and domestic markets recovering in anything less than a two-year timescale, and when they do, they will operate very differently.
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