Buyers of new builds in UK paying for rabbit hutches

It has been reported that new build properties in the UK have the smallest rooms in all of Europe, and industry officials have said that consumers who are shelling out huge sums of money for these newer homes are basically paying for rabbit hutches. Read more

Tags: Biology, buyers, study, new builds, percent, small houses, Commission for Architecture and the Built Environment

Buyers attracted to property market due to low interest rates

A recent report has shown that a rising number of potential property buyers are being attracted to the property market recently as a result of the historically low interest rates. Read more

Tags: Banking, Mortgages, Royal Institute of Chartered Surveyors, latest cut, government, low interest rates, survey, buyers

Abbey slated over 125% mortgage

Amidst the turmoil and chaos that has hit the financial and mortgage markets over the past month, high street bank the Abbey has announced the launch of a 125% mortgage deal for first time buyers and other property purchasers, and this move has been strongly criticized by many financial professionals.

The mortgage allows consumers to borrow over and above the value of the property, but experts state that many consumers could find themselves left in negative equity as a result of taking on these loans.

Experts state that if consumers default on the 125% mortgage they could quickly find themselves locked into negative equity, and this could be further fuelled if, as expected by many analysts, property values in the UK tumble over the coming months. The government has been urging financial institutions to be more responsible with lending in light of the current financial situation, and Abbey is now being accused of ignoring this advice.

The Abbey is offering consumers the opportunity to borrow 100% of the property value, and an additional £25,000 on top. The recent chaos with Northern Rock has increased concerns over irresponsible lending by financial institutions, and many experts are now accusing the Abbey of further fuelling the debt crisis in the UK by offering this type of mortgage in the current economic climate.

Officials from the debt charity Credit Action have commented on the availability of this 125% mortgage loan, and one official stated that the loan posed ‘real dangers’ to borrowers, adding that anyone that decided to take on this type of loan would have to be ‘incredibly bold or incredibly stupid’.

Tom Smith
24th October 2007

Tags: 125%, mortgage, cost, buyers, first, time, debt

Government wants longer term fixed rate mortgages to be available

The government, under new prime minister Gordon Brown, has announced that it wants more longer term fixed rate mortgages to be made available in light of the five recent interest rate hikes that have left homeowners struggling to keep up with rising repayments and have made the prospect of purchasing a home even more difficult for first time buyers on a limited budget.

Alistair Darling, the new Chancellor of the Exchequer, has stated that longer term fixed rate mortgages are more important than ever in light of the current state of the economy, as these will enable property purchasers and homeowners to benefit from stable repayments that will make financial management easier and reduced the risk of crippling repayments stemming from further interest rate rises.

Earlier in the week Alistair Darling stated: ‘When you look around the rest of Europe, it is more common to have longer-term fixed rates. We need to look at that. We need to reduce the volatility.’ He also spoke of the profits that some brokers and lenders are making by offering shorter time fixed rates that have to be renewed every few years, netting them thousands of pounds in profit: ‘Brokers want you to come back every two years, rather than every ten or 20. The Financial Services Authority has identified this as a problem.’

In light of the announcement made by government officials the Nationwide Building Society has just announced the launch of a 25 year fixed rate mortgage. However, there are concerns over how many people will want to take on a fixed rate over such a long period in case interest rates start to fall.

Tom Smith
31st July 2007

Tags: fixed, increase, time, nationwide, first, building, interest, rate, Loans

Some people may never own their own home

According to recent reports future homebuyers could face house prices that are up to ten times the amount of their salaries, which means that many of today’s younger people could face the prospect of never being able to purchase their own home.

The research from the government backed National Housing and Planning Advice Unit (NHPAU) indicates that in order to avoid this situation many more homes will have to be build, otherwise millions of people will be left out in the cold when it comes to home ownership in the UK.

According to the research over a third of those that do not own their own home at the moment are doubtful that they will ever be able to afford to buy their own home. Another 20% of non-homeowners believe that they will have to wait a minimum of five years before they can afford to consider getting onto the property ladder. The purpose of the government run National Housing and Planning Advice Unit is to offer advice on improving affordability in the housing market.

The figures indicate that just seven years ago the average house prices was around four times the average salary of the consumers. However, with prices set to rise to ten times the average salary future generations face a very bleak future when it comes to the possibility of home ownership.

According to the chairman of the NHPAU: ‘First-time buyers have seen a big rise in the deposit needed to buy a home and the amount of their income spent on mortgages. Demand for housing is growing and unless action is taken, pressure on the market will only get worse.’

Tom Smith
4th July 2007

Tags: housing, price, wages, buyers, demand, houses, cost, young

Nationwide puts an end to ’same mortgage’ deal promise to its existing customers

Despite the fact that the UK’s fourth largest mortgage lender has run a very public and prolonged promotional campaign based around its promise of giving exactly the same deal to its existing mortgage customers as it does to first-time buyers, come 1 December the Nationwide’s existing 1.2 million mortgage customers will no longer be given such treatment.

In what many are seeing as incredible marketing blunder, the Nationwide has announced that with effect from the 1 December it will no longer continue to treat its existing UK mortgage customers the same as it does new ones.  Henceforth, existing mortgage customers who want to re-mortgage, switch to a better deal, or borrow against the equity in their homes will be faced with higher interest rates than customers looking to buy new homes.

Unlike its main rivals, the Nationwide has long prided itself on the fact that it will not discriminate against existing customers, but with the new rates coming into effect from 1 December, Nationwide customers wishing to re-mortgage, switch to better deals, or simply borrow more on their equity will now face the prospect of two-tier interest rates that range from 4.73% for house purchases to 5.88% for re-mortgages.

In its defence, the Nationwide are claiming that the change to their policy is in-line with the UK home lending market’s trend of offering “slightly better rates” for home-movers.  This may be so, but for a UK home mortgage lender that has built such a public image around its promise of offering the same service to both existing customers and new customers, Ray Boulger, senior technical manager at Charcol, the mortgage broker, says, “There’s no way you can legitimately claim you’re offering the same deals for everybody if your existing customers don’t have access to the cheaper purchase rates.”

If it is any consolation, existing Nationwide customers will be entitled to receive a £100 discount off the reservation fee if the decide to switch from one Nationwide home mortgage product to another, or if they elect to increase the amount of their UK mortgage loan.  Nationwide also agreed to waive its re-mortgage administration fee of £99 for existing customers who re-mortgage.

Nonetheless, as Melaine Bien, associate director of Savills Private Finance comments, although the changes allow Nationwide to “become more competitive with its pricing when attracting first-time buyers,” the promise that no-one would receive preferential treatment at the Nationwide “no loner stands”.

Tags: paymenst, forst, interest, buyers, offers, time, nationwide, Mortgages, cost, deal