Irresponsible Lending In The UK Could Lead To Return Of ‘Negative Equity’

TSB has reduced mortgage lending to first-time buyers, especially in London, amid growing concerns that many homeowners without significant equity in their homes could soon find themselves in ‘negative equity’ as a result of falling house prices, particularly in the capital. In what may be an eerie echo of the start of the financial crisis, TSB’s chief executive Paul Pester has warned that many lenders in the UK are being reckless by providing property buyers with cheap loans that they may not be able to afford, especially when interest rates eventually rise, at a time when home prices are starting to look increasingly vulnerable. UK house prices fell for the second month in a row during April, according to the Nationwide. Read more on Property Investor Today.

Council to Help Buyers Purchase Home With 5% Deposit

Hastings Borough Council is the latest local authority to team up with bank Lloyds TSB to help first-time buyers purchase a home with just a 5% deposit. The initiative, announced in March last year, was initially being piloted by four other local authorities. Hastings said the The 'Local Lend a Hand' product will be available in local branches of Lloyds TSB from 10 January 2012. The normal deposit required by most lenders is around 10%. Under the deal - and subject to Lloyds TSB's usual lending criteria - borrowers are able to select a property within the local area, up to a maximum loan size of £150,000. First time buyers will put down 5% of the property price, and the council will provide a cash backed indemnity of up to 20% as additional security. The local authority then earns interest on this amount. Read more on the Hastings Borough Council website.