Liz Moir asked:




The news about the home loans industry in the recession varied all the time.

The original news at the beginning of the credit crunch was accurate when it was reported that these three home loan products were very much in the decline

The reason for that of course was obvious, as apart from people being unsure of their financial futures, the underwriting of lenders became so restricted that even those who wanted a mortgage, remortgage or secured loan were unable to obtain them.

Before the recession the criteria for these three products was very relaxed, and a great many people were eligible to apply for and be granted these loans.

Mortgages and remortgages were available up to 100% of the value of the property, and the Northern Rock advanced at up to 125% LTV.

These 125% plans were supposed to comprise of a 100% mortgage and a personal loan for the rest. However this was not the case, as the sum granted over this was secured on the property and added to the total borrowings of the applicant.

At that point self declarations of income were available for the self employed which meant that the applicants for remortgages, mortgages and secured loans simply declared their own earnings on a business letter head or on a plain sheet of paper accompanied by a business card.

Secured loans were extremely popular, with 100% LTV plans right up to 125% LTV available from a number of lenders.

Therefore it was apparent that the acceptances of applicants for these three loans declined as self declarations were totally abolished for mortgages and remortgages and equity margins were greatly reduced to a maximum of 85% with most mortgage lenders, while a few were prepared to lend up to to 90%.

Secured loans are now advanced at 75% for the self employed and 85% for those in employment.

One lender is prepared to accept self declarations for secured loans at 50% LTV.

The reason for applications declining is therefore obvious, but what is not so easy to understand is that from 2007 until the end of the recession in 2010, reports in the press and on television abounded with contradictory reports, stating one day that remortgages and mortgages were declining, and then not long after we were told by the same sources that they were very much on the up with more people applying.

Now in October, months after the recession, the same thing seems to be happening with reports that the home loans industry is showing great signs of improvement, to be told days later that mortgages were again in decline as the house prices slump again.

The applications for remortgages have not been as low for ten years.

It is to be wondered if there have been any improvements to home loans since the recession ended.

Arthur