Doing some research today on mortgages. Overall there are some signs of improvement however the common theme amongst most lenders is that the lowest interest rates were for mortgages with low LTVs (loan to valuation). For example the Woolwich at time of writing was offering a mortgage at just 3.24% but the LTV was 60%, in other words you need to find a 40% deposit to buy your house.
Of course this is not of much help if your equity in a property has fallen to say 20% or so and you want to re-mortgage, in fact in the current market for many this is not an option. Worse still for those in arrears who are either trying to re-mortgage (today its almost impossible) or taking a desperate action for a quick house sale rather than wait for repossession.
Overall it appears that with the shortage of credit the banks are building loan books (mortgages to the likes of you and me) with very low risk ratings, e.g. with a 60% LTV it is very very unlikely the bank will ever lose money should the property get repossessed. This helps the banks improve their own risk ratings, and in the longer term it will help them improve overall availability of mortgages and place these within the reach of first time buyers. Time will tell.
