Professional mortgages 'could escape credit crunch'

15-Feb-2008

Professionals looking to secure a mortgage could find themselves in an advantageous position in the market, as these kinds of mortgages are well placed to sidestep the implications of the credit crunch.

Mortgage lenders are likely to be more accommodating to professionals such as doctors, dentists and lawyers when considering their applications as they have good potential as high-earners as their careers progress.

Whereas the chances of acquiring a 100 per cent mortgage are now substantially diminished as well as becoming more expensive, professional mortgages are one area where there appears to have been little change.

Professionals are well placed to approach lenders for higher loan to valuations, and will more than likely be able to borrow around five times the amount of their salary.

Commenting on the current mortgage situation for professionals, Richard Clark, head of product development and marketing for Scottish Widows, said: "The impact on this area of the market has been very much less than everywhere else because there are lenders who haven't changed any of their criteria for professionals at all."

He adds that Scottish Widows has a policy of treating all professionals that apply for mortgages the same regardless of their risk potential.

Professional applications should also be bolstered by the fact that the UK property market appears to be gaining momentum on the whole.

Data from the National Association of Estate Agent's (NAEA) monthly housing market survey has shown that there is an upward trend emerging.

With December typically slow in the market, January has seen a steady rise with an 11 per cent increase recorded, with first-time buyers responsible for some 14.5 per cent of all purchases.

Additionally, housing stock rose by around nine per cent and sales increased from five per cent in December to eight per cent in January.

Commenting on the improved outlook for the market, Peter Bolton King, chief executive at the NAEA, comments: "The return of buyers and particularly first time buyers early in 2008 marks a significant change in the fortunes of the market. I am confident that we have just started to see the benefit of the first interest rate cut in December and the latest quarter percent decrease in February will further help boost the confidence of all buyers and particularly first time buyers."

He added that buyers should not be dissuaded by the glut of bad press about the housing market urging buyers to keep such information in perspective. The market tends to be very different across various parts of the UK and it is recommended that prospective buyers talk to their agents to ascertain what is happening in that particular region.

In light of advice such as this, professional buyers in particular can perhaps afford to take recent horror stories with a pinch of salt as their standing automatically negates some of the recent trouble in the mortgage market.

Elsewhere, Halifax has announced that they are to raise rates on their tracker mortgages which will effectively 'ration' their mortgages for new applicants. A first-time buyer taking out a tracker mortgage for Halifax can now expect to pay 5.44 per cent as compared to the previous 5.24 per cent.

Commenting on this, Melanie Bien, director at independent mortgage broker Savills Private Finance, says: "Halifax did offer some of the leading tracker rates so is likely to have been inundated with business. This would explain why they have pulled these rates at such short notice and are repricing them upwards. This effectively prices them out of the market, as there are better priced rates available. Continued liquidity issues mean lenders are looking to improve margins where they can."

Ultimately, the recent developments in the property market should favour those looking for a professional mortgage in terms of availability and the added advantage of escaping the credit crunch relatively unscathed.

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