Mortgage Firms' Snub for Darling; PRESSURE: Lee Tibbenham and Melissa Smith, with Son Joseph, Pay a 9.7 per Cent Mortgage Interest Rate
Byline: RICHARD DYSON
NOT long ago banks offered reasonably priced mortgages to almost everyone, even those borrowers whose credit records were imperfect. Not any more. The stubborn refusal of lenders to turn on the mortgage tap means hundreds of thousands of borrowers are stuck on unaffordably high rates. And nothing Alistair Darling said last week will make any difference.
Until May, Lee Tibbenham and his partner Melissa Smith, who have a one-year-old son Joseph, were on a fixed- rate mortgage of 5.85 per a fixed-rate mortgage of 5.85 per cent and paying [pounds sterling]480 a month on their Norwich flat. Now they are paying a crippling 9.7 per cent standard variable rate - [pounds sterling]690 a month - and struggling to get by. But no other lender will offer a better rate.
Electrician Lee, 31, and Melissa, 25, are responsible borrowers, though they have had difficulties with credit in the past. Lee ran up card debts and loans he could not afford, but he recently cleared all his outstanding debts, leaving the mortgage as his only commitment.
Melissa has [pounds sterling]20,000 card debts and loans that she is paying off at [pounds sterling]200 a month through a separate debtmanagement programme.
In the past this did not matter much to mortgage lenders, which would have been satisfied that Lee's earnings adequately covered the repayments and that the [pounds sterling]88,000 mortgage was comfortably less than the value of their property, put at [pounds sterling]120,000 in March. But because their property has fallen in value to the point where the mortgage accounts for more than 75 per cent of the property, they are locked out of the mortgage market.
Loan expert Les Jacobs of east London-based broker Mortgage Monitor says: 'Lee and Melissa's case sums up what's wrong in the mortgage market.
Lenders are seeking any reason not to lend. This couple's credit history is not really the problem, it's because they want to borrow more than 75 per cent.
'Here is a couple who can and will pay their mortgage and the industry is refusing them a reasonably priced loan. It's extortion. If anything is going to drive up the number of repossessions, it's lenders behaving like this.' Lee and Melissa's loan is with Oakwood, since taken over by Swiss bank Credit Suisse, which refused to comment. …