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Life is a rollercoaster – well, mortgages are: some of the latest developments in a volatile market
One of the most common times of secured bad credit loans are mortgages and the past couple of weeks has been one of the most volatile times for a market which has recently been in peril due to the credit crunch.
One price comparison website has said that the market has been in decline as the recession has continued, although it is hoped that things are to get better as 'the worst of the recession is over', according to one financial expert. This claim has been counter-acted by a new mortgage deal from Nationwide.
First, to the reports that the mortgages market has been in decline. New statistics recently revealed that one quarter of homeowners could not get this type of secured loan due to the low amount of deals which are currently available in the market.
One housing company, Bovis Homes, believes that a lack of availability of mortgages in the market has been one of the reasons why the secured loans market has not been progressing very consistently in recent months.
The housing company were keen to note that even though even though potential for mortgage activity was in decline, the general situation had stabilised.
Meanwhile, as mentioned earlier, Nationwide have confirmed that they are resurrecting the 125% mortgage deal, which has been specifically targeted at people who are suffering from negative equity.
The secured loan, which is the first of its kind from the big lenders since the beginning of the recession, only requires a 5% deposit and other banks and loan companies are likely to follow suit with the deal.
Only people who are in a very unique situation with their housing are expected to benefit from the new deal, with the Government warning that should house prices fall, the building society could find themselves in a compromising position.
22% of homeowners were in negative equity as of the beginning of this year and as house prices are still in decline in some areas of Britain, it is believed that this mortgage deal could be difficult for some people who are in need of a boost.
There are fears from financial experts that the move is an unwise one, not only for the lender, but for the borrower who is still in a difficult situation.
Jonathan Davis said this: "You are taking people in negative equity and pushing more money down their throats to back an asset which is still going down in value. All the banks and building societies thought they were going to get their money back when they lent gargantuan sums in the run-up to 2007. They were clearly wrong and they are wrong again."
Some financial experts believe that this move could increase activity in the mortgage market and increase the amount of deals for consumers to obtain these secured loans. There are cries for the secured loan market as a whole to be boosted and for more options to be available to consumers in the future.