With the housing market showing marked signs of recovery, especially in
the South and London, the number of homeowners mortgaging for more than
£500,000 is increasing. (Also see Latest Market Facts at the end of this
article.)
Previously, prospective borrowers for these mega mortgages have
experienced a mixed reception from the lenders – sometimes the lenders
would provide the facility but viewed them as higher risk. For that
reason lenders typically charged a premium rate of interest. But no
longer. The tide has turned.
Mega mortgages have well and truly joined the mainstream and lenders are
now competing hard for the business. Instead of facing a premium,
borrowers are being offered around a quarter of a percent less than
comparable deals for more normal sized mortgages. This is because
lenders are increasingly basing their lending decisions on the borrowers
ability to afford the mortgage with lesser emphasis being placed on the
security provided by the property. It also helps that interest rates
remain low.
If you’re a potential mega mortgage borrower, you’ll find that the banks
will generally be the most welcoming. Compared to building societies and
other mortgage lenders, banks tend to set higher lending limits. Some
smaller lenders still set a cap at £500,000 whilst others restrict the
amount they’ll lend against an individual property. But perhaps the best
way of finding a really competitive mega mortgage is to go through a
specialist mortgage broker. In the current market, any broker worth
their salt will be able to source a great deal on six and seven figure
mortgages.
For example, the Halifax will lend up to 90% on a 4.49% fixed rate for a
two years on mortgages up to £2 million. And the arrangement fee is just
£499. If you’ve got a larger deposit, at least 25%, then there are
several other deals around at 3.99% - again for a two year fix usually
with a fee of just a quarter of a percent.
Latest House Market Facts
In March 2006, the average achieved sales price was 94% of the asking price.
The average number of viewings to sales was 11.
During March 2006 house prices in England and Wales rose by 0.5% driven by
buoyant London market. London prices grew by 1.1%.
This is the fourth month in succession of house price growth. It’s also
the highest monthly rise since the summer 2004.
Over the last 12 months house prices rose by 0.1%.
The performance of the London market results from of a number of factors:
- A shortage of new housing coming onto the market
- London has underperformed in terms of house price growth over the last
few years. This in turn has meant that incomes and house prices in the
capital are more closely aligned than in other regions.
In other parts of England and Wales, levels of affordability remain
stretched.
At a local level away from London, prices have picked up – mainly in
cities in the South of England. Berkshire (0.7%) and East Sussex (0.6%)
performed well.
Cities in the North saw slower price growth, with Newcastle, Liverpool,
and Manchester all reporting growth of just 0.1%.
The under-performing counties were Derbyshire (-0.1%) and the Isle of
Wight (-0.1%).
The areas reporting the highest rises in March 2006 were all across London:
Central London & City (1.9%), East London (1.4%), North London (1.2%),
West London (1.2%), South-West London (1.0%) and South-East London (0.8%).
In March 2006 the national average house price stood at £162,500.
Resource Box
Scrouge online is a specialist finance website that offer Mortgages and
many other financial products to uk residents.
