The mortgage market is enjoying a whiff of spring, following a raft of new measures designed to make home ownership easier and safer. A growing list of lenders will now advance mortgages to "high risk" borrowers, while some types of mortgage insurances, which died out completely during the recession, are making a comeback.
Northern Rock has become the latest lender to launch a loan aimed at borrowers with only a 10pc deposit. Classed as "high risk", these customers were all but abandoned during the credit crunch.
The Rock's move has set property pulses racing, even if the deals are hardly adrenalin-pumpers. It marks a significant mortgage market milestone, if the bank, pilloried for being the most reckless lender, has repaired its reputation and regained confidence sufficiently to grant larger loans again.
Elsewhere, the reappearance of companies prepared to underwrite redundancy insurance is a further welcome sign that confidence is returning and that the worst could be behind us. Indeed, so good has been the claims experience at Yorkshire Building Society over the last year, that it has reduced its premiums across the board.
Redundancy insurance is also pricey and will not pay out if you are already at risk of losing your job. So will these green shoots be nipped in the bud, or blossom into a mortgage market recovery?
To meet this appetite, lenders have been quietly re-entering the market, so that there are now more than 200 such mortgages available. This still represents a fall from the more than 1,000 during the last property boom, but leaves Barclays now the only big beast out of the game. Unlike Nationwide, Royal Bank of Scotland Group, Lloyds and HSBC, it continues to restrict loans to borrowers with at least 15pc to put down.
Halifax economist Martin Ellis said: "Most people who bought three or four years ago will not have seen much, if any, improvement in their property price. But some will want to move, because their family has grown, or their job is moving, or for a whole range of changing personal circumstances.
"Moving costs money, so as well as a deposit, they will need spare cash to meet the costs. It is not surprising that demand for 90pc loans is growing."
Furthermore, fears of imminent rate rises are stimulating remortgage inquiries from worried home owners. According to Moneyfacts, mortgage searches are now higher than at any time since 2007, and many of those looking for a good deal do not have large amounts of equity.
Moneyfacts' spokesman Darren Cook warned: "When rates do begin to rise, sitting on a standard variable rate may not be the comfortable ride it has been for the past few years. We expect lenders to exploit base rate rises to widen their margins, so home loan rates could climb faster than the underlying cost of borrowing."
But brokers are warning borrowers not to get their hopes up. David Hollingworth of London & Country said: "Sure, these 90pc loans exist. And the more the merrier. Every new development helps the market. But getting one will not be easy. Credit scoring will be even tighter, and they will cost more."
This is true. However, borrowers with small deposits have always had to pay more. Traditionally, they were charged a "mortgage indemnity premium", which could add another one or two percentage points to the early cost of borrowing. These have now largely disappeared. Instead, lenders charge a risk premium via a higher rate.
This means that the best 90pc, five-year fixed deal will cost someone borrowing £150,000 £6,000 more than the most competitive rates for better-cushioned borrowers.
For example, the Nottingham Building Society has the best 90pc five-year deal, charging 5.69pc with a £195 fee. Over five years, this would cost £56,488 for a £150,000 loan.
By comparison, if the same borrower had a 40pc deposit, he could fix at 4.39pc with HSBC and pay only £50,463, over five years.
But the HSBC deal is not an option for borrowers without a big deposit to put down. They face the more difficult question of whether to stick with their lender's standard variable rate (SVR), or attempt to head off future interest rate rises by fixing.
An average SVR is currently 4.79pc, although some lenders, charge significantly more. Nottingham Building Society's SVR, for example, stands at 5.99pc, with the Chelsea's at 5.79pc.
John Charcol's Ray Boulger said: "With standard variable rates where they are, I can't see why anyone would want to switch to a two-year fix, because they are more expensive. But for longer-term security, it may be worth considering a swap."
After Nottingham, the best five-year deal's include Britannia Building Society, charging 5.89pc with a £999 fee, (total five-year cost £58,382), the Post Office at 5.99pc with a £995 fee (total cost £58,927) and NatWest 6.39pc with a £999 fee (total five-year cost £61,150).
Above 90pc, options are few and far between. Clydesdale and sister bank Yorkshire will offer 95pc mortgages at 6.99pc fixed to 2014, with a £599 arrangement fee, but only to first-time buyers.
Unemployment, sickness and accident insurance is usually available when you buy a home. Lenders often allow those who do not opt to buy at this point, to purchase a policy later. This latter option was removed during the recession, which also saw the disappearance of stand-alone redundancy cover.
Last week, the Yorkshire Building Society announced that its claims experience has been so good that it can now cut premiums for all new and existing customers. The cost of protecting each £100 of monthly mortgage payment will fall from £6.06 to £5.56, thereby cutting the cost of insuring a £1,000 monthly bill from £60.60 to £55.60.
Furthermore, existing borrowers can now buy cover. Steve Brownett-Gale, Yorkshire's mortgage insurance manager, said: "There was a period when our underwriters would not accept customers buying this insurance unless they were actually purchasing a property. But the option of buying at a later stage is now reinstated."
Stand-alone redundancy insurance, which had completely disappeared during the worst days of the recession, is also making a comeback.
Companies such as British Insurance, Columbus, iprotect and helpucover offer cover which kicks in 30, 60 or 90 days after you lose your job. With Columbus Direct you pay £31.50 to insure a £1,000 monthly mortgage payment, or £44.30 with iprotect.
All this helps gives home buyers confidence, they are making a smart move. However, Emma Walker, head of protection at Moneysupermarket, advised public sector workers, in particular, to be cautious about signing up.
She said: "Policies do not pay out when you know you are at risk of redundancy. This does not mean they will not cover any public sector workers. But if you work for a local authority, for example, which has announced a big reorganisation and you know your job is at risk, then taking out a policy will not cover you.
"If in doubt the best thing is to call the company before buying insurance and ask them to confirm that you will be covered."
A number of insurers believe the jobs situation has stabilised and are looking at ways of improving home buyers' security. Aviva is working on a new income protection policy, which it plans to launch later in the year.
HOW BIG LOANS COMPARE
Property values have fallen by 16pc since 2007 on average, and by considerably more in some areas, leaving millions trapped by unsuitable homes or mortgages. This is fuelling a surge in demand for 90pc loans.To meet this appetite, lenders have been quietly re-entering the market, so that there are now more than 200 such mortgages available. This still represents a fall from the more than 1,000 during the last property boom, but leaves Barclays now the only big beast out of the game. Unlike Nationwide, Royal Bank of Scotland Group, Lloyds and HSBC, it continues to restrict loans to borrowers with at least 15pc to put down.
Halifax economist Martin Ellis said: "Most people who bought three or four years ago will not have seen much, if any, improvement in their property price. But some will want to move, because their family has grown, or their job is moving, or for a whole range of changing personal circumstances.
"Moving costs money, so as well as a deposit, they will need spare cash to meet the costs. It is not surprising that demand for 90pc loans is growing."
Furthermore, fears of imminent rate rises are stimulating remortgage inquiries from worried home owners. According to Moneyfacts, mortgage searches are now higher than at any time since 2007, and many of those looking for a good deal do not have large amounts of equity.
Moneyfacts' spokesman Darren Cook warned: "When rates do begin to rise, sitting on a standard variable rate may not be the comfortable ride it has been for the past few years. We expect lenders to exploit base rate rises to widen their margins, so home loan rates could climb faster than the underlying cost of borrowing."
But brokers are warning borrowers not to get their hopes up. David Hollingworth of London & Country said: "Sure, these 90pc loans exist. And the more the merrier. Every new development helps the market. But getting one will not be easy. Credit scoring will be even tighter, and they will cost more."
This is true. However, borrowers with small deposits have always had to pay more. Traditionally, they were charged a "mortgage indemnity premium", which could add another one or two percentage points to the early cost of borrowing. These have now largely disappeared. Instead, lenders charge a risk premium via a higher rate.
This means that the best 90pc, five-year fixed deal will cost someone borrowing £150,000 £6,000 more than the most competitive rates for better-cushioned borrowers.
For example, the Nottingham Building Society has the best 90pc five-year deal, charging 5.69pc with a £195 fee. Over five years, this would cost £56,488 for a £150,000 loan.
By comparison, if the same borrower had a 40pc deposit, he could fix at 4.39pc with HSBC and pay only £50,463, over five years.
But the HSBC deal is not an option for borrowers without a big deposit to put down. They face the more difficult question of whether to stick with their lender's standard variable rate (SVR), or attempt to head off future interest rate rises by fixing.
An average SVR is currently 4.79pc, although some lenders, charge significantly more. Nottingham Building Society's SVR, for example, stands at 5.99pc, with the Chelsea's at 5.79pc.
John Charcol's Ray Boulger said: "With standard variable rates where they are, I can't see why anyone would want to switch to a two-year fix, because they are more expensive. But for longer-term security, it may be worth considering a swap."
After Nottingham, the best five-year deal's include Britannia Building Society, charging 5.89pc with a £999 fee, (total five-year cost £58,382), the Post Office at 5.99pc with a £995 fee (total cost £58,927) and NatWest 6.39pc with a £999 fee (total five-year cost £61,150).
Above 90pc, options are few and far between. Clydesdale and sister bank Yorkshire will offer 95pc mortgages at 6.99pc fixed to 2014, with a £599 arrangement fee, but only to first-time buyers.
NEW OPPORTUNITIES TO INSURE YOUR MORTGAGE
Protection against redundancy became almost impossible to buy other than with a property purchase at the depth of the recession. However, insurers have begun returning to the market, after lower-than-expected claims last year, even though jobless numbers are expected to keep rising.Unemployment, sickness and accident insurance is usually available when you buy a home. Lenders often allow those who do not opt to buy at this point, to purchase a policy later. This latter option was removed during the recession, which also saw the disappearance of stand-alone redundancy cover.
Last week, the Yorkshire Building Society announced that its claims experience has been so good that it can now cut premiums for all new and existing customers. The cost of protecting each £100 of monthly mortgage payment will fall from £6.06 to £5.56, thereby cutting the cost of insuring a £1,000 monthly bill from £60.60 to £55.60.
Furthermore, existing borrowers can now buy cover. Steve Brownett-Gale, Yorkshire's mortgage insurance manager, said: "There was a period when our underwriters would not accept customers buying this insurance unless they were actually purchasing a property. But the option of buying at a later stage is now reinstated."
Stand-alone redundancy insurance, which had completely disappeared during the worst days of the recession, is also making a comeback.
Companies such as British Insurance, Columbus, iprotect and helpucover offer cover which kicks in 30, 60 or 90 days after you lose your job. With Columbus Direct you pay £31.50 to insure a £1,000 monthly mortgage payment, or £44.30 with iprotect.
All this helps gives home buyers confidence, they are making a smart move. However, Emma Walker, head of protection at Moneysupermarket, advised public sector workers, in particular, to be cautious about signing up.
She said: "Policies do not pay out when you know you are at risk of redundancy. This does not mean they will not cover any public sector workers. But if you work for a local authority, for example, which has announced a big reorganisation and you know your job is at risk, then taking out a policy will not cover you.
"If in doubt the best thing is to call the company before buying insurance and ask them to confirm that you will be covered."
A number of insurers believe the jobs situation has stabilised and are looking at ways of improving home buyers' security. Aviva is working on a new income protection policy, which it plans to launch later in the year.
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