POTENTIAL home buyers, people wanting to remortgage and the millions approaching the end of fixed-rate deals this year have experienced a dark week with more lenders pulling products and pushing up rates.
To give but a few examples of bad news in the past seven days: First Direct pulled all mortgage deals for new customers; Co-operative Bank withdrew its two-year mortgages; Skipton Building Society put a stop to its three-year fixed rate and two of it
s tracker products and Woolwich increased its lifetime tracker rates offered through mortgage advisers by up to 0.4 per cent.
The mortgage drought is clear from the stark reality that the number of different products available dived by 12 per cent between Monday and Thursday, falling to 4,754. This compares with 15,599 different deals at the beginning of July 2007, before the credit crunch hit.
And the Bank of England also warned the squeeze on the availability of mortgages is expected to continue in the next three months.
As well as fewer products being available, lenders are becoming stricter about who they will give money to. Moneynet.co.uk, a comparison site, has warned that anyone with flawed credit histories is likely to be "rejected out of hand" and nothing less than a "flawless application" is likely to get through stringent new lending conditions.
Lesley Canavan, general manager of ESPC Money Management, said: "It's an unprecedented time in terms of difficulty, with lenders pulling products by the minute which makes it tricky to recommend products to clients."
But borrowers should not give up all hope as it's still possible to get a mortgage with some good advice.
As Canavan says: "There's still deals to be had and independent mortgage advisers with skills and knowledge know where to look. We have always assessed our clients' tolerance to interest-rate movements so they can avoid a 'payment shock'. For example, if someone was taking out a mortgage with a rate of 3.49 per cent, we would look how much that rate would have to increase before they would not be able to afford the repayments and need to sell their home."
You should carefully consider which broker to visit for advice.
Alan Watson, director of Stockbridge Group, a firm of independent brokers, explained: "Using a broker who has access to technology is vital at a time when lenders' rates are being withdrawn at little or no notice. The best-buy tables in last Sunday's broadsheets would have been redundant by 9am on Monday. In addition, a specialist mortgage broker will often have access to exclusive products that may not be generally available. Speak to family, friends or work colleagues to find a broker as a personal recommendation can be an excellent guidance."
Anyone approaching the end of their current mortgage deal should plan well ahead in the current tough environment.
They can protect themselves and buy some peace of mind by reserving a rate up to six months before they need to remortgage. The only cost is the valuation and possibly a non-refundable booking fee, depending on the lender, according to David Watson, head of independent mortgage broker Savills Private Finance Edinburgh.
He adds: "When you come to remortgage, if rates have fallen in the meantime you are under no obligation to take the reserved rate but can take the best-priced deal at the time."
It seems too many people are not aware that they are likely to have difficultly in remortgaging to a competitive rate. Some 62 per cent of those coming off a fixed-rate mortgage are hoping for another competitive deal but have done nothing about finding one, Equifax, an online credit information provider warned.
"It is vital that homeowners whose mortgages are coming to an end in the next few months, start preparing themselves now", said Neil Munroe, external affairs director at Equifax. "If they leave it too late, there's a danger that they will revert to the lender's standard rate, which could increase their repayments significantly."
But it is not all doom and gloom as there is still a lot of house-buying activity in Edinburgh, for example.
Warners said it has had 429 house listings between January and March this year, up from 367 at the same time in 2007 and it has reported 284 sales, up from 232 last year.
Scott Brown, estate agency partner at Warners, said: "Both our listings and sales are up. I would say fewer agents are doing more business. This week alone we have 41 new properties listed. I haven't noticed that people have stopped buying as they still want to move.
"The number of mortgage products available has been cut, but products are still there, they are just more expensive.
"There's no need for panic as the market remains buoyant and prices continue to rise in Edinburgh, just at a slower rate."
It is undoubtedly not an easy time to be trying to find a competitive mortgage, but the best tip is to get sound, independent advice from a broker who knows the market.
• To obtain a copy of The Scotsman Guide to Mortgages, produced in association with Albannach Financial Management, e-mail mymortgage@ albannachfm.co.uk or call 0800 953 0223.
The full article contains 884 words and appears in The Scotsman newspaper.
