CML: House prices not affected by mortgage shortage

The reduction in the availability of mortgage products is unlikely to affect house prices.

According to the Council of Mortgage Lenders (CML), the sub-prime sector is most likely to be affected and this would have only a minimal impact on the housing market in the UK.

Bernard Clarke, a spokesperson for the CML, explained: “The housing market continues to be underpinned by consumer demand for owner occupation, strong aspirations for owner occupation and there’s a shortage of supply.

“Those fundamentals will continue to underpin the market to a much greater extent than any shortage of mortgage products to customers.”

He added that despite fluctuations, uncertainty and speculations over a possible collapse, there remains confidence in the market.

Moneyfacts has recently revealed that the availability of buy-to-let and residential mortgage products has reduced by 40 per cent in the last few months.

Furthermore, 72 per cent of bad buy-to-let mortgage products were taken off the market as well as 54 per cent of bad credit residential mortgage products.

Tags: housing market, sub-prime sector, shortage, supply, confidence, economics, uk

Financial fraud sees continued upwards trend

Recent data for the end of the third quarter shows that fraud is still on the increase.

According to CIFAS fraud prevention service, there has been a rise in the majority of the different areas of financial fraud.

Cases of application fraud for the aquiring of credit, insurance or other products, was up by 23 per cent with a total of 57,321 cases uncovered members of CIFAS.

Asset conversion and facility takeover cases showed sharp increases in the first three quarters of this year compared to the same period in 2006, at 24 per cent and 34 per cent.

Meanwhile, false insurance claims rose by nearly nine per cent in the same period.

Chief executive of CIFAS, Peter Hurst, commented on the findings: “Our statistics for the first three quarters of the year show a clear and worrying trend. Fraudulent activity is at an all-time high.

“Fraudsters are becoming more sophisticated and fraud departments are working harder than ever to protect their organisations from the onslaught.”

CIFAS members prevented financial losses valued at £1,900 per minute this year, compared with £1,400 per minute last year in the same period.

Tags: chief executive, finance, false insurance claims, insurance claims, rise, prevention service, identity theft

Effects of credit squeeze ‘hard to predict’

How long the impact of the global credit squeeze on the mortgage markets will last is not easy to forecast.

According to the Council of Mortgage Lenders (CML), it is not yet clear how long the credit problems will continue to affect the number of mortgage products on the market.

Bernard Clarke, a spokesperson for the CML that there is uncertainty over when the credit market will return to “normality” and if that “normality” will be the same as before credit crunch.

“There are implications within that for lenders operating in wholesale funding markets. The problems persist for now, and in the longer term we expect the wholesale funding market to improve and become more liquid, but perhaps it will not be as liquid as it was before,” he said.

Commenting on whether the credit squeeze will affect the types of products on the market, Mr Clarke added that time will tell how the government will set out to promote people taking on fixed-rate, long-term mortgages.

Tags: term, market, market.bernard clarke, Mortgage loan, Subprime mortgage crisis, credit crunch, Super jumbo mortgage

BIBA: Christmas holidaymakers should insure valuables and gifts

People planning to travel during the festive season have been urged to be extra careful to insure all of their valuables, including Christmas gifts.

According to the British Insurance Brokers’ Association (BIBA), holidaymakers should ensure they have adequate cover, especially as doing so is unlikely to break the bank.

However, Graeme Trudgill, technical and corporate affairs executive for BIBA, expanded on the point saying: “What you might have already is, under your home insurance, a personal possessions extension.

“In which case, you’re going to get a much higher limit under your home insurance than you are on any travel product, but also you don’t have to then have that section of the travel insurance policy.”

Research carried out on behalf of Halifax Travel Insurance last year showed that a staggering 2.5 million people leave Britain at Christmas taking with them £727 million worth of presents.

Furthermore, it found, average personal baggage claims go up by an impressive 48 per cent from its annual average of between £560 and £830.

Tags: holidaymakers, point, baggage, personal possessions, personal baggage, insurance policy

Mortgage borrowers advised to plan ahead

People considering taking out a mortgage are advised to allow plenty of time for the application process, said John Charcol.

The industry experts have said that there are some attractive fixed rates on offer but that their popularity means that lenders are struggling with applications and so it is advisable to apply in good time.

“Swap rates, the rates that fixed rate mortgages are priced on, have moved favourably in the last few weeks, and two-year Swaps are now at 5.74 per cent.

“The drop reflects the City’s revised view that Bank Rate will be cut soon, especially with inflation now at 1.8%, which is most likely to be in the first quarter of 2008,” the firm commented.

Furthermore, it said that applicants should talk to a broker about how long the application process might take in order to be able to figure in any delays.

It said that variable rate mortgages can be “withdrawn at a moment’s notice” but that the same was not so true of fixed rates.

Abbey was found to have the best offer, with a two year fixed rate of 5.58 per cent with a fee under £1,000. Meanwhile Brittania is “leading the way” for five year fixed rate offers with a rate of 5.39 per cent.

Tags: leading the way, Bank Rate, drop, first quarter, Mortgage loan

BBA: Mortgage outlook weaker

New mortgage lending is down indicating a weaker outlook for the mortgage market.

According to the BBA, house purchase approvals last month were down 27 per cent on last year’s figure for September and were also down 21 per cent in value.

The gross mortgage lending value for September this year was at £18.5 billion, just three per cent up on the same time in 2006.

Also, last month 160,879 mortgages were approved which was down 12.1 per cent on the previous year.

David Dooks, BBA director of statistics, commented: “Lower amounts of new mortgage lending and fewer loans approved for house purchase signal a weaker outlook for the mortgage market, particularly if loan supply reduces in the aftermath of the recent financial markets difficulties and borrowing costs remain at current levels.”

He added that card spending was down in September as were repayment rates and this resulted in a rise in net borrowing although in all, demand for unsecured borrowing was low.

The BBA is a trade association for UK financial and banking services and has members in 60 different countries.

Tags: house purchase signal, dooks, purchase approvals, financial and banking services, fewer loans, Fixed income securities, Bachelor of Business Administration, new mortgage lending

Bright Grey: Life insurance top priority

In principle life insurance is top of people’s insurance priorities but many do not put this into practise.

Recent research by Bright Grey protection specialists shows that 40 per cent of people felt that life insurance was most important, however when it comes to spending, Brits are putting there money towards home contents and holiday insurance over life insurance.

While 53 per cent insured their life, 74 per cent insured home contents and 61 per cent insured travel.

Roger Edwards, product director at Bright Grey, commented: “For most, life insurance is key when it comes to planning properly for the future. It protects your dependents if you die and they lose your income.

“And if you don’t have dependents, and really don’t need life cover, then what about critical illness cover or income protection – if you value yourself, you should be protecting yourself.”

He added that people should seek guidance on different forms of cover and how important they are, while also finding a deal that suits them.

Tags: cent, protection, dependents, holiday, edwards, Bright Grey protection

Interest payments on current accounts to be abolished by First Direct

The Internet banking arm of the HSBC, First Direct, has announced that it will be cutting interest charges on current accounts for customers.

According to officials from the bank the money that is saved from not having to pay interest on current accounts will be used to increase interest rates paid on savings accounts. However, following the mass exodus of customers earlier this year, after the bank announced that some customers would be charged monthly fees of £10, this could be a bad move for the online bank.

First Direct currently has two current accounts in place, and although these accounts do not enjoy the greatest interest rates there is still interest paid on deposits. The cheque account offers an interest rate of just 0.1% on credit balances, whilst the bank account offers 2%. However, in November the two accounts will be merged to create just one standard account known as the 1st Account, and this will pay no interest at all on credit balances.

Officials from First Direct state that customers will be compensated by way of better deals on their savings. An instant access account paying 5.5% will be available, although this is still far lower than the best buy savings accounts offered by other financial institutions, with the highest currently standing at 6.3%. An interest free overdraft facility of £250 will also be available to customers, along with free text banking that could help customers to avoid penalty charges applied when the account goes over its limit.

An official from the bank stated: “A staggering 96 per cent of our customers told us credit interest wasn’t an important factor in choosing to bank with us. We figured it made far more sense to use every single penny we now pay in credit interest to give customers the chance to earn serious interest on higher-interest savings accounts.”

Tom Smith
26th October 2007

Tags: savings, direct, interest, high, financial, accounts, Banking

Borrowers reassured by mortgage advisers

Mortgage advisers in the UK are reassuring borrowers following major concerns over rising interest rates.

Many consumers are panicking over how they will be able to get a mortgage when interest rates are so high, particularly in the light of the recent credit crunch, which has resulted in a number of lenders hiking up interest rates even further, exceeding the Bank of England base rate by a considerable amount in some cases.

The worry over mortgage interest rates is being further fuelled by the fact that there are thousands of homeowners that are due to come out of fixed rate deals over the next couple of months, and they will be hit hard by the higher interest rates and rise in repayments, with many paying hundreds of pounds extra a month if they stick with their lender’s standard variable rate. Many will be looking to remortgage and go into another fixed rate deal in light of the current economic climate, but they are worried that they will not be able to find a competitive fixed rate mortgage deal to switch to.

Many mortgage advisers, however, have been reassuring consumers and have stated that there are still mortgages available at rates of 6% or under. Although this is much higher than the interest rate that many people that took out fixed rate deals in 2005 are currently on, it is still preferable compared to the standard variable rates of 8% and beyond that some lenders are charging.

The Britannia Building Society currently offers a fixed rate deal of 5.49% for a two year period, which one broker at John Charcol recommends. There are also other fixed rate deals that consumers can choosing from state mortgage advisers.

Tom Smith
26th October 2007

Tags: Loans, Mortgages, rate, fixed, interest, offers, bank, deals

Icesave launches new fixed rate accounts for savers

Icesave, which is currently celebrating its first birthday, has announced the launch of a number of fixed rate savings accounts for customers wishing to save between £1000 and £2 million.

These accounts allow customers to choose from one, two, or three year terms, also enabling them to choose between having their interest paid on a monthly basis or an annual basis. By choosing one of these accounts savers can lock in the interest at a fixed rate for the set term, which means that the interest rate on the savings account will not fall even if the base rate set by the Bank of England does.

Experts state that the two and three year fixed rate deals from Icesave are impressive. The three year account enables savers to enjoy interest rates of 6.31% if paid monthly and 6.5% if paid annually. With the two year account savers can enjoy 6.41% if paid monthly and 6.6% if paid annually. The one year account enables savers to enjoy 6.5% if paid monthly and 6.7% if paid annually. However, a number of industry professionals have stated that there are better one year accounts out there, and savers should shop around.

One industry professional stated: ‘The fixed-rate market is not like the variable market where you have a whole load of other factors and restrictions to consider, so the rate itself is key. On that basis, the Icesave two- and three-year accounts are the best at the moment, but you should probably look elsewhere for a one-year rate.’

Another industry official said: ‘In the fixed-rate market, if you are not being offered the best rate then it is so-so. However rates in this market are not good at the moment: they are so close to variable rates, you have to question whether it is worth locking in your money for the given period. The one-year market is very competitive at the moment. Nottingham’s 6.83% offers a good margin over variable rates, so if you are looking for a one-year bond at the moment, that’s the one you should go with.’

Tom Smith
26th October 2007

Tags: bank, savers, fixed, high, savings, interest, market, accounts, earn

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