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The approval rates for poor credit mortgages continued their downward spiral this month. Banks are refusing to offer many poor credit mortgages as they look to lower their risks. In addition, those that need to get a refinance for a poor credit mortgage are seeing that this may be nearly impossible.

Katie Tucker of John Charcol stated, “Whilst buy-to-let remortgaging remains at previous strong levels, less than 3% of mortgages taken out in March were people taking the plunge into purchasing. The high cost of the mortgages has had an immediate effect, as has the lack of confidence that property value will increase in the next few years. This should change if improving rental yields tip the balance as the rental market soaks up the displaced first-time buyers, however this could take six months to a year.”

“Far fewer people are arranging their mortgages on an interest only basis now. Property value is not expected to increase in the next few years, so most borrowers have realised that equity won’t be naturally home-grown, and they must repay some capital monthly. In addition, many of the borrowers who would have needed to go interest-only because their affordability was stretched, have been forced out of the buying pool following the recent advent of tightened lender criteria.”

Related reading: Poor Credit Mortgage