It believes that a lack of innovative products is contributing to the stifling of the mortgage market and many lenders have not adequately reacted to Government calls for increased lending.
The brokerage points to a particular product, the "Secure Step Mortgage" offered by Ulster Bank but only to Republic of Ireland customers. The product is available to both first-time buyers and "Trader Uppers" and allows borrowing up to 95% LTV. The product is provided in conjunction with a number of property developers and is unique in that it protects the customer should the value of the house fall by up to 15% after five years. If the property does decrease in value by this amount, the developer will refund the amount of the fall, up to 15% of the original purchase price – any refund due will be used to reduce the mortgage.
Ulster Bank is owned by the Royal Bank of Scotland (RBS), of which 68% is now owned by the taxpayer after being provided with £20billion of State support. The Government has been urging those lenders it has a stake in to increase their lending activity to individuals and businesses.
Michael White, Chief Executive of Email Mortgages, said: "Not only is there significant concern about so-called 'phantom mortgages', where lenders seemingly have higher LTV products available but are turning down the majority of applicants, but it is now obvious that many institutions are also not willing to throw their more innovative products into the marketplace.
"First-time buyers in particular would see great benefit in a product such as Ulster Bank’s 'Secure Step Mortgage' however it is not available to British customers at all. It seems particularly rich given the huge amount of State support its parent company RBS has received from the British taxpayer that only Republic of Ireland customers are benefiting from this type of product. One must wonder if they believe the product can work there, why can’t it be introduced here?
"Government calls for increased lending to individuals and businesses seem to have gone unheeded and the dearth of new mortgage products which are specifically aimed at the first-time buyer is proof that many lenders have no intention of increasing their levels of lending.
"This is despite the fact that the State now owns substantial holdings in many of these institutions. Now is the time for lenders to turn their 'phantom deals' into real offerings which can be access by consumers, plus we are calling for products such as the 'Secure Step Mortgage' to be made more widely available. First-time buyer demand is slowly picking up as house prices become more affordable however it is clear that securing the finance to get on the property ladder is even more difficult than previously. This situation needs to be rectified and we believe those banks who have taken taxpayers’ money should be leading the charge in delivering greater access to mortgage finance.”
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