Mortgages. The Return Of The Mega-Mortgage.
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The Return of the Mega-Mortgage
Summary
As the housing market recovers, particularly in the South and London, more homeowners are taking out mortgages over £500,000. This marks a shift in lender attitudes towards these "mega-mortgages," which were once seen as high-risk.The Rise of Mega-Mortgages
With signs of recovery in the housing market, especially in the South and London, there's a growing trend of homeowners securing mortgages over £500,000. Previously, lenders were hesitant about these loans, viewing them as high-risk and typically charging higher interest rates. However, attitudes have shifted significantly.Competitive Lending Environment
Mega-mortgages are now part of the mainstream lending market, with lenders actively competing for business. Borrowers are no longer facing premium rates; instead, they are being offered rates about a quarter of a percent lower than standard mortgage deals. This change is due to lenders focusing more on the borrower's ability to repay rather than the property's value. Low interest rates are also playing a supportive role.Banks Lead the Charge
For those seeking mega-mortgages, banks tend to be the most accommodating, often setting higher lending limits than building societies and other lenders. While some smaller lenders cap their loans at £500,000, banks are willing to offer more competitive terms. The best way to find an attractive mega-mortgage deal is through a specialist mortgage broker who can access deals on six and seven-figure loans.Market Examples
Halifax, for instance, offers loans up to 90% on a 4.49% fixed rate for two years on mortgages up to £2 million, with an arrangement fee of just £499. For those with at least a 25% deposit, other two-year fixed deals are available at 3.99%, typically with a quarter-percent fee.Latest Housing Market Facts
- In March, the average sales price hit 94% of the asking price.- Average viewings per sale stood at 11.
- House prices in England and Wales rose by 0.5%, driven by a strong London market, where prices increased by 1.1%.
- This marks the fourth consecutive month of price growth, the highest rise since summer 2004.
- Over the past year, house prices increased by 0.1%.
London Market Performance
Several factors contribute to London's robust market:- A shortage of new housing.
- Recent underperformance in price growth, aligning incomes and house prices more closely.
Regional Insights
- In the South of England, areas like Berkshire (0.7%) and East Sussex (0.6%) saw positive growth.- Northern cities like Newcastle, Liverpool, and Manchester reported modest growth of just 0.1%.
- Underperforming regions included Derbyshire (-0.1%) and the Isle of Wight (-0.1%).
Noteworthy Rises
Central London and surrounding areas reported the highest increases in March:- Central London & City (1.9%)
- East London (1.4%)
- North London (1.2%)
- West London (1.2%)
- South-West London (1.0%)
- South-East London (0.8%)
As of March, the national average house price was £162,500.
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