Mortgages Remain Unattainable as Banks Rake in Profits

All that we’ve heard all year has been how irresponsible banks in the United States of America have been dishing out mortgages to people who had no hope of repaying or affording in the first place. Now as we head into a new year with global banking struggling to stay afloat many people who would have normally been approved for mortgages and other home loans are no longer able to get them.

Many people are unable to get loans in this country because of the way that banks all lend each other money and when many of the banks in this country started losing out because of the mis-sold mortgage business and some have either been on the brink of collapse (Northern Rock for example) and others have had to be bailed out by the government through state loans.

So has this rectified the situation? Not exactly, there is still a low approval rating for mortgages even if you were to put forward a large percentage of the total sum you require. Banks are now doing the complete opposite from the practices of the past few years and deeming almost everyone including those with impeccable credit ratings as a risk.

The trouble with this is that the Bank of England base rate has been repeatedly reduced over the past few months, especially once the news of the credit crunch and impending recession broke. You would expect that banks would then bring their mortgage rates down too to hopefully drum up some business but many banks are being accused of reaping profits whilst the public struggle to find realistic loans.

The base rate has dropped by 2.61 percent since October when everything started to go wrong for many lenders but the average fixed rate mortgage has dropped a paltry 0.71 percent. One mortgage lender has commented saying that many lenders who have made significant losses over the past months are now using the growing divide to gains some more profits on mortgages.

Those looking to get a tracker mortgage are then forced to go for a fixed rate option instead, fixed rate mortgages now account for 69% of the market compared to 51% at the same time last year. This figure is estimated to rise when people currently still on variable rate mortgages
come time to renew and find that they will have to remortgage on a fixed rate mortgage too.