This Is Guernsey

HOMEBUYERS can still get 90% loan-to-value mortgages despite a drop in property prices, two brokers have said.

There had been fears that if property prices in Guernsey fell, mortgage lenders would be less willing to continue such deals.

Pierre Blampied, director at Savills Private Finance, said 90% deals were still available up to £500,000.

‘The rates available for this level of loan to value are generally higher, but with Bank of England base rate currently at such a low level these rates are not that high to make it unaffordable to borrowers to purchase property,’ he said.

‘However, what is holding back the market is the 10% deposit needed and the associated costs such as bond and document fees, which in total amount to a further 4.25%.

‘Despite the press releases we are seeing from the high street banks, it is very apparent to the mortgage industry that they are not keen to lend.’

Mr Blampied said the drop in property prices reported by the Policy Council was caused by a lack of sales in the middle to upper end of the market.

‘The announcement from the States in isolation is not particularly great news for the market, but I would hope that lenders will be well aware that these figures are not wholly reflective of the market,’ he said.

‘One would hope that local boards/senior lending personnel would be well aware of this and therefore no change in credit policy would be required.

‘The experience from chartered surveyors I have spoken to is that the sale price achieved for most local market properties is remaining stable.’

The UK has reported a sharp rise in the number of mortgages handed out during the last month and Caroline Hards, mortgage manager at Cherry Godfrey, said she had noticed an increase locally too.

‘Cherry Godfrey has seen a rise in the number of people looking for mortgages in the last few months and hopefully this will continue,’ she said.

‘90% mortgages are still available, although not all lenders are providing them at present.’

Mrs Hards said the recent dip in property prices did not necessarily mean mortgage lenders would be looking to tighten criteria.

‘I think lenders may be more cautious on certain types of properties towards the lower end of the market,’ she said.

Article posted on 15th May, 2009 - 1.00pm