Changing Times Lead to Mortgage Uncertainty

Changing Times Lead to Mortgage Uncertainty

Changing Times are Upon Us

Problems with the mortgage industry recently led to an unprecedented crisis, which created global ripples within financial systems across the world. Risky lending and other unsound practices nearly brought the industry to its knees, so borrowers are currently experiencing the effects of a changing system. As a mortgage seeker, your concerns are affordability and keeping up with payments. But lenders and regulators have their own objectives, which can interfere with your mortgage experience.

New regulation and changes to the loan application process have led some observers to cite unfair practices. And even proponents of tighter lending rules recognize growing pains within the industry, which continues to evolve following its near collapse. Existing mortgage holders, for example, may be paying a high price for the low rates and mortgage promotions currently available to new buyers. It seems some of those holding notes are unable to shift into cheaper mortgages because they no longer qualify for financing under the new rules. And despite tightening regulations and other changes within the industry, detractors say that mortgage insiders continue to manipulate the system for higher profits.

Although financing continues to evolve, your mortgage success remains tied to sound financial principles. Consider the following influences as you navigate the ever-changing mortgage market.

New Rules for Lenders

Following the downturn, the Mortgage Market Review stepped in to get mortgages back on track. Despite positive reform resulting from the recommendations and further regulation from the Financial Conduct Authority; the new lending landscape can still be vexing to mortgage seekers. And since many of the rule changes are considered ‘guidance’, rather than law, lenders don’t always comply.

For borrowers, one of the most noticeable changes is the way banks evaluate credit and approve mortgage financing. To preserve the system, today’s loan applications require deeper insight into the financial histories of applicants. And monthly expenses of all sorts are now brought into consideration, as lenders evaluate what applicants can afford. The result for home buyers is longer approval times and extra effort accumulating required credentials. Your credit rating, of course, is still central to the process, so it must be protected – especially as lending tightens eligibility.

Best Time to Buy?

The ideal scenario for buyers is to purchase homes when prices are favorable and interest rates are low. One way to land the best deal on your next mortgage is to use all available resources to plot your course. The Bank of England forecasts, for example, help illustrate mortgage trends, which can give you an advantage as you prepare to buy a house. Various online resources, like those that compare interest rates and offer financial guidance, are also helpful for staying atop market conditions.

See Also

With fixed mortgage rates coming-in lower than ever, it is a great time for well-qualified buyers to make home purchases. Schemes like Help to Buy are still in-place to assist many buyers, and heavy price competition between mortgage providers has led to interest rates below 2 per cent for many fixed-rate financing options. Even variable rate loans have seen drastic interest rate cuts, with many affordable versions now available below 2.5 per cent. The Bank of England base rate continues to linger at its historical low .5 per cent, so lenders have responded with attractive financing for home buyers. And since many observers believe the Bank of England rate will not be adjusted over the next 6 months, the favorable mortgage conditions are expected to continue.

Making the most of your money includes maximizing your mortgage. Fortunately for most buyers, conditions have never been better, with extremely low interest rates available. New rules and regulation, however, complicate the process for some borrowers, especially those with past credit difficulties and others trapped in expensive existing mortgages. If your circumstances are complicated, seek formal financial advice to determine your best move. Otherwise, compare mortgage rates and use your positive credit history to land the best deal.

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