Mortgages increasing in cost but not quantity

19 2008
A leading figure at an independent financial data company has claimed that the sub prime market is paying a heavy price as the credit crunch continues to set in.

David Black, principal consultant of banking for Defaqto.com, explained that the 'average' mortgage product in the sector is rising sharply in cost and decreasing in availability.

He pinpointed the fact that the average arrangement fee charged by popular three-year base rate tracker mortgages has increased by a whopping 121 per cent.

He said: "The worst hit part of the industry has been the sub prime sector but there's also been a lot of dissatisfaction amongst the mortgage broking community with provider distribution channel issues and dual pricing.

"Best buy mortgages often aren't staying on the shelf for very long and this means that speed really is of the essence if you see a mortgage deal that you want."

In addition, he pointed out that the average rate in the two-year fixed-rate market has gone up from 5.42 per cent to 6.71 per cent in the past 18 months.

The gloomy forecast for the mortgage market over the coming months certainly points to the benefits of renting as a short to mid-term solution for anyone looking to keep a tight rein on their finances.
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