Reduction in approvals ‘less dramatic than expected’

There has been a less substantial tightening in the mortgage market than was previously thought, according to the Council of Mortgage Lenders (CML).

In the Bank of England’s report today, the number of approved mortgages was shown to be steady, despite predictions that there would be a significant tightening of the market.

While there has been a slowdown, it is not unusual for the time of year and also reflects a slowdown in funding, explained Sue Anderson, head of member and external relations at the CML.

“To that extent this is pretty good news. It shows that the level of lending is looking as if it is holding up to a greater degree than some of the pessimists have been expecting,” she said.

The Bank of England report showed that net consumer credit in October this year was up on September as well as the average for the preceding six months.

Meanwhile, net credit card lending was up by £0.2 billion, which fell short of the net increase for September.

Tags: increase, Offset mortgage, Real estate, number, significant tightening, bank, reduction, lending

HIPs rolled out to all homes from December

The controversial Home Information Packs that are currently required for homes of three bedrooms or more that are being marketed for sale in England and Wales will not be rolled out to all other properties, according to reports.

When Home Information Packs or HIPs were brought in earlier this year they were applied to homes of four bedrooms or more. This was then switched to homes of three bedrooms or more several months ago. And now, according to the report, the government has announced that HIPs will be required for all properties being marketed for sale in England and Wales.

The HIPs will come into force for all properties going up for sale from December 14th, which means that any residential property in England or Wales that goes up for sale from this date will need to have a Home Information Pack. However, various statistics have revealed that HIPs may not be having the impact that the government had hoped, and for the first time since they were introduced the government has admitted that these packs may have adversely affected the housing market.

According to a report released by the Housing Minister Yvette Cooper HIPs had impacted on people putting their properties up for sale, causing delays in people deciding to sell their homes. Another report from Europe Economics showed that HIPs had not sped up home purchase transactions by providing more required information to buyers, which is something that ministers had claimed that HIPs would do.

A statement following this study read: ‘Hips may have had an additional modest-but-material effect on listings activity but no discernable impact on transactions, mortgages or prices.’ Surveyors now state that the introduction of HIPs for all properties may results in a drop in the number of starter homes coming onto the market for sale.

Tom Smith
30th November 2007

Tags: packs, uk, information, sell, home, property, december

Darling accused of incompetence over Northern Rock loan

Chancellor, Alistair Darling, found himself the recipient of a vicious verbal attack by the shadow chancellor George Osborne earlier this week, when he was challenged in the Commons over the loan that was granted to Northern Rock by the Bank of England.

The chancellor has been accused of exercising secrecy in authorising the loan to ailing bank Northern Rock, and the attack came on a day that saw the Rock’s shares plummet again, falling by over 20% in the light of no successful sale to rescue the bank.

Osborne accused Darling of misleading the public by not making the loan public, but Darling stated that the way the Northern Rock loan was handled was normal operating procedure for the Bank of England, and that making the public aware of every move could have adverse effects, which indeed it did when the public did finally learn about the loan. He added that the loan was secured against Northern Rock’s assets after being accused of putting taxpayers’ money at risk.

Mr Osborne stated: ‘Can the Chancellor tell us that all the money lent by the taxpayer will be repaid? Yes or no.’

He also said: ‘This is a tale of incompetence and weak leadership from a government that now reels from one disaster to another. We have a Chancellor who made loans he kept secret from Parliament. We have a Chancellor who has made guarantees to the taxpayer he cannot be sure of honouring. And we have a Chancellor whose weakness is contributing to the instability of the financial system. That is why we have a Chancellor whose job is on the line.’

Darling has been accused by the shadow chancellor of withholding information from the public as well as from parliament, but Darling insists that he did the right thing in authorising the loan for Northern Rock, and said that there was no secrecy involved.

Tom Smith
30th November 2007

Tags: bank, Loans, rock, darling, northern, chancellor, england

Uncapped mortgage charges ’skyrocketing’

The number of mortgages with uncapped upfront fees has risen dramatically in the past 12 months, it has emerged.

Now at 506, the number is five times what it was a year ago, with application fees rising as high as 3.25 per cent of the loan value, according to MoneyExpert.

Sean Gardner, chief executive of the website, commented: “Borrowers need to look carefully at mortgage deals and not just focus on the interest rate. What might look like a good deal will soon become a bad deal once fees are taken into account.

“Mortgage application fees are nothing new but lenders often won’t publicise a change to their fee structures, meaning some homeowners could be unaware of this huge shift to uncapped charges.”

Capped upfront fees have also gone up in the past year by an astonishing 63 per cent, with the average fee growing to £834 from £509 in November last year.

Mr Gardner concluded that those confused about fees should work out how much they are able to afford and then seek advice about whether the fees can be added onto the loan.

Tags: borrowers, chief executive, fee, mortgage, advice, business

Millions wasted on credit card debt payments

Brits are squandering millions every year on unnecessary interest payments on their credit cards, despite also saving money for the future.

Recent research by Fool.co.uk has found that around one in every six people with an average of £450 pounds worth of credit card debt are simultaneously saving £3,000 for a “rainy day”.

British cardholders pay an average of £165 annually on interest, with an outstanding balance of £1,100 at 15 per cent. Meanwhile they are earning just £66 interest on savings accounts at six per cent.

David Kuo, head of personal finance at Fool.co.uk, commented: “We are often told to put aside money for a rainy day because having a ready source of funds for emergencies is a sensible thing to do – and it is.

“[However], saving money before you have paid off your debts is like trying to fill a bath without putting the plug in first. It’s a pointless exercise that results in a waste of water, an empty bath and hefty water bills.”

Those aged between 34 and 41 are the most likely to be saving at the same time as paying hefty interest on credit card debts.

Tags: fool, home, emergencies, interest payments, saving money, credit card debt, future.Recent research, pointless exercise

Forgotten about money ‘can be reclaimed’

People who with lost or forgotten about funds should reclaim them by contacting their bank, an industry expert has said.

According to Jason Clarke, a spokesperson for Halifax, many people have money they have forgotten about or lost the details of when changing address, for example.

However, he advised that reclaiming the money is simple, as account holders can simply notify their bank of any changes to their personal details and they will be giving help in locating their money.

“Loss happens for a lot of different reasons. The majority of these accounts will have very little money in them – the overwhelming majority will have small amounts, £100 or less,” said Mr Clarke.

He added that occasionally the amount of lost money is “sizeable”, but that there is usually a “good reason” for this such as the death of someone with no will, or in some cases no surviving family.

The British Bankers’ Association states that, this year, the number of people looking on their dormant account search pages has risen to around a quarter of a million, with 20,000 consumers having made claims.

Tags: Forgotten, address, account holders, Banks and Institutions, family, money loss, personal details, surviving family

Brits choose ’stability’ when renewing mortgages

Millions of Brits would opt to fix their mortgage rate for five or more years if they needed to renew it, it has emerged.

Recent research by Abbey Mortgages has revealed that one in three (5.1 million) homeowners would choose a fixed rate of interest, with the need to know monthly outgoings the main reason for doing so.

The number of people wanting to opt for a five year fixed rate was greater even that the once favourite two-year fixes.

Head of mortgages at Abbey, Nici Audhlam-Gardiner, commented: “You never know what’s going to happen in the future, but at least if you’ve committed to a long term fixed deal, you know where you are going to stand with your repayments.

“Borrowers need to be sure however that the deal they take out is right for them and that they understand the different types of mortgages available before signing up to anything.”

Meanwhile, the number of homeowners choosing tracker mortgages was up to 12 per cent, although around eight per cent of respondents said they prefer to fix as they do not fully understand how tracker mortgages work.

Tags: emerged.Recent research, Gardiner, deal, borrowers, 1 million, Business Finance, need

Consumers unsure of rate change impact

The majority of Brits are unclear on the value of a one per cent mortgage rate difference, it has emerged.

Research by Nationwide Building Society has found that 75 per cent of people in the UK do not know how much real difference this would make to their mortgage, which could be up to £4,000 on a five year fixed rate mortgage deal.

Meanwhile, when told to compare two five year mortgage deals to compare, the largest proportion of respondents (28 per cent) said there would be a difference of £500 to £2,000 between a £120,000 mortgage with interest of 5.6 per cent and one with interest of 6.6 per cent.

In fact the difference would be £4,000, which was correctly identified by just 23 per cent of respondents.

“People’s lives are busier than ever in the run up to the festive season and, as a result, they may be less inclined to shop around for the best deal. The temptation may be to take a slightly higher rate as an easier, less hassle option,” said Matthew Carter, divisional director for mortgages at Nationwide Building Society.

Tags: mortgage, mortgage rate, research, best deal, Real estate, run

Brits turning on into small hours

A large proportion of the UK population are banking online late into the night, according to recent research.

With 17 per cent of respondents to a survey by Abbey putting banking off until bedtime, millions of Brits are literally losing sleep over their finances.

Meanwhile, it was found that over half of online bankers log on every other day or more to keep their finances in check, with 38 per cent believing they save more now that they can bank online.

Reza Attar-Zadeh, head of savings at Abbey, commented: “For a long time we’ve observed a growing preference for the online channel but for the first time we are seeing evidence that people really are enjoying the online banking experience and claiming that it makes them better with managing and saving money.

“There is real satisfaction in watching savings grow and the Internet enables us to do this with real ease.”

Furthermore, there has been a 39 per cent decrease in the number and frequency of people visiting their bank’s branches.

Tags: bedtime, number, losing sleep, saving money, online bankers, Financial services, Abbey putting banking, Reza Attar-Zadeh

Debt becomes ‘norm’ for Brits

Getting into debt is now accepted as normal and in many cases necessary, an industry expert has said.

Alastair Mathews, director of policy educational charity pfeg, explained that if people wish to go to university or buy a house, most will rely on loans to do so and will thus not be able to avoid getting into debt.

With credit easily available to those needing it over the past few years, it has been easier than ever to build up considerable debt.

“We have almost officially built debt in to the system now,” said Mr Mathews.

He continued: “We have a changing culture from the traditional British attitude of wanting something and saving for it – where maybe you waited for half a lifetime for it – to now, where the feeling is ‘if I want something, I’ll have it’.”

According to statistics from Credit Action published this month, total personal debt in Britain stands at £1,380 billion. This figure has gone up by an impressive £120 billion (10 per cent) in the past twelve months.

Tags: figure, debt, director, business, cent, attitude, industry expert, Britain

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