Improvement in mortgage lending continues

For the past couple of years many people have found it increasingly difficult to get a mortgage loan, with many unable to get the finance that they need from the lenders in the UK, who have been exercising more caution when it comes to lending money.

However, over recent months the end of the recession has marked an easing in the financial markets, and lenders have become more relaxed about handing out finance to consumers. This could help people to obtain mortgage loans more easily, and could enable those struggling to get onto the property ladder to finally get the loan that will enable them to live their dream.

The Council of Mortgage Lenders has recently confirmed that mortgage lending levels have already increased, with the level of mortgage lending having increased by around 7 percent last month. However, the CML has said that whilst the level of mortgage lending has increased it is still far lower than the level of lending that was seen last year.

The CML has said that mortgage lending is still subdued in the UK, and despite the fact that the recession is over and financial markets are meant to have improved the market remains difficult and challenging. In fact, the CML believes that the total level of lending for this year could fall short of the forecast total of £150 billion.

The CML also said that a number of factors would affect the housing and mortgage markets such as consumer confidence levels in the mortgage and financial markets, and also household finances. Credit conditions are still said to be tight when it comes to getting a mortgage loan, and it is thought that many consumers, especially first time buyers, will continue to experience difficulties.

Tags: council of mortgage lenders, Mortgage loan, business, mortgage, interest rates, Council

Should you pay your rent upfront to save money?

Over the past year renting has become increasingly popular, as many people have struggled to get a mortgage and buy a home, making the option of renting far more appealing. Also, difficulties that sellers have had in selling their properties in the current financial climate has resulted in an increase in the number of properties coming up for rent, which has resulted in increased choice and better value for money for many consumers. Read more

Tags: tenants, advance, Council, rent payments, Real property law

Government takes steps to help homeowners

The government has recently taken steps to try and help homeowners by changing court protocols in order to make it more difficult for lenders to take court action without taking other steps first in cases where homeowners have fallen behind with mortgage repayments.

It is hoped that this will help to reduce repossession levels, and lenders will be expected to follow guidelines and take a number of other steps before taking court action. The lenders will need to demonstrate that they have taken the necessary steps if the case does end up in the courts. Read more

Tags: case, climate, housing minister, government help, value, mortgage help, number

Chancellor to press lenders to pass on interest rate cuts to borrowers

Chancellor Alistair Darling is expected to tell mortgage lenders to pass on interest rate cuts to borrowers during a meeting with representatives from the Council of Mortgage Lenders next Tuesday (April 22nd), according to Bloomberg.

The Bank of England cut its base rate by 0.25 per cent last week and by three-quarters of a point since December, however many lenders failed to drop their mortgage rates.

Rates on the most popular mortgages rose to the highest level in eight years last month.

“We do need to make sure that people with mortgages see the benefits,” Mr Darling said in an interview in China today.

Following a meeting with banks on Tuesday, the government was warned that under the current credit crunch many smaller lenders could be forced to stop offering new mortgages, forcing consumers to turn to large providers.

The Bank is reportedly working on a plan to intervene in the UK mortgage market, according to The Financial Times.

Tags: finance, Council, financial, Mortgage loan, china today, interview, rate, Alistair Darling

Bridging finance has an ‘important role’ when credit is hard to get

Bridging loans can play an “important role” during tough financial times, one financial expert has claimed.

Business Moneyfacts said that bridging finance is “ideal” for any situation where funds are required quickly and for short periods.

Bridging loans can benefit property professionals looking to acquire property quickly at a time when the number of repossessions is increasing due to the amount of properties going to auction, claims the firm.

Lee Tillcock, editor of Business Moneyfacts said: “Investors buying at auction have often used bridging because they are required to complete within a few weeks of a successful bid when conventional mortgages are sometimes unworkable.”

He added that in a financial environment where credit is difficult to secure, the bridging option can provide a short term solution while that “ever-more-elusive long-term mortgage” is finalised.

Meanwhile, figures recently released by the Council of Mortgage Lenders show that in 27,100 homes were repossessed last year.

This is the highest figure since 1999 and a 21 per cent increase on the number in 2006.

Tags: cent, loan, figure, Council, term mortgage

Mortgage lending ‘drops to lowest levels for 2 years’

Mortgage lending dropped to its lowest level for over two years last month, according to figures from the Council of Mortgage Lenders (CML).

The statistics show a 25 per cent drop on gross mortgage lending compared with November and 21 per cent fall from the same figure recorded for the month last year.

Gross lending only reached £22.5 billion, the lowest amount since May 2005 and down from the £29.9 billion recorded in November.

Simon Rubinsohn, senior economist at the Royal Institution of Chartered Surveyors, said: “2007 may have been a banner year for the mortgage market as the CML data suggests, but the most timely indicators point to a sharp slowdown in demand for property-related loans.”

However, despite the effects of the credit crunch gross mortgage lending during 2007 reached an estimated £362 billion, an increase of five per cent from the £345 billion in 2006.

Meanwhile, mortgage lenders are putting increasing pressure on the Bank of England to help them raise funds to provide potential homeowners with loans reports the Financial Times.

Tags: demand, Chartered, crunch, data, Council, gross mortgage lending, mortgage market, bank of england

Independent school loss of earnings cover ‘not comprehensive’

Loss of earnings cover provided by independent schools may prove to be “value for money”, but they are often “very basic”, an industry expert has said.

According to Steve Danson, a chartered financial planner at Elementum, the insurance would not cover sickness absence or death in some cases.

“People should definitely get a plan for their particular circumstances, and quite often the plans we would recommend would be the same types of plans we would recommend to anyone with a big commitment,” he said.

He added that many companies will sell school fees insurance as a specialist product, when in fact it is a combination of normal insurance covers.

The Independent Schools Council (ISC) recently claimed that 620,000 children are educated in around 2,500 independent schools, which represents an estimated seven per cent of the total number of British schoolchildren.

Of the ISC’s member schools, 31.43 per cent of pupils received financial support with their fees this year, valued at a total of £300 million.

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Figures show drop in mortgage lending

There was less mortgage lending last month than in August, according research by the Council of Mortgage Lenders (CML).

Figures revealed a fall of almost 12 per cent in gross mortgage lending in September with the new figure at around £30 billion.

Although a decline is not uncommon for the August to September, this year’s fall is significantly greater than the average of five per cent for the same period.

Michael Coogan, director general at CML, commented: “We have been expecting a slowdown in monthly lending levels in line with interest rate rises.

“In the coming months, we expect to see monthly lending levels dip below their 2006 levels for the first time this year as rate effects are exacerbated by the recent liquidity problems in the mortgage market.”

Despite an annual increase in mortgage lending from September 2006, at 2.5 per cent it is the smallest percentage rise in two years.

The gross lending estimates obtained by CML were taken from its survey of a selection of lenders representative of over 70 per cent of the total mortgage market.

Tags: business, interest rate, director general, percentage, August, Council, Michael Coogan, cent

Bank holds interest rates

The Bank of England’s monetary policy committee (MPC) has decided to keep interest rates at 5.75 per cent for at least the next month.

Although rates have not risen since July, that was the fifth rise within 12 months and there were concerns earlier in the year that rates would hit six per cent before the end of 2007.

However the inflation rate currently sits at 1.9 per cent, below its target level of two per cent and the current problems in the financial markets are making further rises less likely.

In a statement that accompanied the decision, the MPC said that it had considered carefully the effects that recent credit market problems, brought about by the collapse of the US sub-prime borrowing market, could have on the inflation rate.

Responding to the news, the Council of Mortgage Lenders (CML) welcomed the bank’s decision to hold rates steady at 5.75 per cent.

Micheal Coogan, director general of the CML, said: “Credit conditions have tightened since the rate went up in July, and a further increase would have added to the liquidity problems we are already seeing in some sections of the market.

“At the same time, there is now much clearer evidence that the cumulative effect of five rate rises since last August is slowing activity in the housing market.”

Tags: Council, time, interest, US, bank's decision, bank, evidence, cml

Interest-only mortgages ‘can help lower costs’

Interest-only mortgages can be beneficial to people looking to lower the overall cost of borrowing to buy property.

That’s according to Bernard Clarke, spokesperson for the Council of Mortgage Lenders, who said that certain buyers can find this type of loan a good option.

“It’s a clearly an option for buy-to-let investors who usually want to minimise their borrowing costs and are not interested in acquiring ownership of the property outright,” he said.

But for homeowners who would like to start repaying the bulk of their loan, an interest-only mortgage should be reviewed somewhere down the line.

“If they take an interest-only option to reduce their initial costs but do want to eventually own the property outright then they do need to think about transferring to an interest and capital repayment mortgage,” said Mr Clarke.

Alternatively, buyers can utilise separate savings or investment plans in order to save up the money to repay the capital.

“People are free – if they are taking out an interest-only mortgage – to choose alternative repayments vehicles,” Mr Clarke explained.

Tags: investors, capital repayment mortgage, option, order, interest-only option, Council, money, interest

Savings gulf opens up in UK

New research from Alliance & Leicester, released today, shows that Britons hold six times more in savings and investments than they do in debt.

Property was totted up as being worth £4.3 trillion, savings at £820 billion, with other assets including pensions totalling £1.8 trillion. Total borrowings came to £1.3 trillion.

This impressive ratio – gleaned from figures from the Bank of England, the Council of Mortgage Lenders and the government by the pollster YouGov – hides a financial gulf splitting the populace.

While richer households enjoy the property boom and the strong economy, lower income households are saving less as belts are tightened.

Evidence for this is found in savings figures: while the national average comes to £31,300, almost one third of households have no savings at all – pointing to a big split between the “haves” and the “have nots”.

Alliance and Leicester pointed out a general decrease in savings, with the bank’s head of savings and investments Ewan Edwards pointing out that on average just 2.1 per cent of disposable income is currently saved by Britons, when the figure averages out at 6 per cent over the last decade.

“Britons are increasingly losing the savings habit”, he concluded.

Tags: income, council of mortgage lenders, split, Council, bank of england, splitting, britons

Stamp duty ‘puts off’ first time buyers

Bradford & Bingley says that stamp duty, a charge which many buyers must pay on top of the fee for their new home, is putting off first time buyers (FTBs).

Terming stamp duty a ’stealth tax’ and ‘wholly unfair’, the mortgage lender points out that 68 per cent of FTBs currently either have paid or will pay the duty.

Using the monthly figures from the Council of Mortgage Lenders also released today, Bradford & Bingley’s report highlighted the finding that 11 per cent of FTBs had to reduce their deposit in order to cover stamp duty.

Andy Wiggans, director of mortgages for Bradford & Bingley, said that the tax “is seriously hampering [FTBs'] ability to get a foothold on the property ladder.

“The average first time buyer now has to find over £1,000 to pay this tax, at a time when most are struggling to even fund a deposit.”

He also drew attention to the finding that 11 per cent of FTBs had their stamp duty paid for by their parents.

Tags: Council, parents, GBP, tax, percentage, charge, ability, buyer

New buyers need parents’ help

It is becoming so difficult for first-time buyers to get onto the property ladder that 31 per cent anticipate getting help from their parents to do so.

A further 35 per cent are so daunted by the housing market that they feel they need financial help in order to get their first mortgage,

Research from the Council of Mortgage Lenders (CML) shows that younger people are genuinely struggling to get onto the property market without some kind of financial help.

Figures show that 23 per cent of all homeowners had help from their parents to get where they are today, while that number soars for younger owners.

Of those aged under 29 or younger, 39 per cent had help from their parents and it seems as though this trend is set to continue.

“We were intrigued last year to find that, while around eight out of ten people believed it had never been harder for first-time buyers to enter the market and that action was needed, only eight per cent of them felt that parents should do more to help,” said Bob Pannell, head of research at CML. “Our new research helps to explain why.

“Over the past few years, parents have already been providing significant help to younger home-buyers and there is uncertainty about whether they can do even more.”

Of those who said they think they will need financial help to get onto the property ladder, only 62 per cent expect to get it.

Tags: kind, housing market, Council, mortgage, Banking, order, younger owners.Of

Cost of running home increases

The average UK homeowner has to fork out around £11,035 each year just to maintain their property.

According to Sainsbury’s Bank Home Insurance, that is how much it costs to run a home in 2006.

It signals a big increase in costs when compared to the same figure for 2004/2005 which was £1,199 less – that is 12 per cent lower than today.

The biggest financial increases have been seen in utilities, with gas having risen in cost by 27 per cent, electricity by 19 per cent and water and sewage by 14 per cent.

Council tax is also on the rise, with the average homeowner in 2006 paying 14 per cent more than they were in 2004/2005, while mortgage costs have also increased by an average of 12 per cent.

“It’s becoming more expensive to run a home, which makes it all the more important for homeowners to shop around to make sure they are getting the very best deals available,” commented Robert O’May, home insurance manager at Sainsbury’s Bank.

“This is not only for their mortgages and utility supplies but also their home insurance.”

In response to the figures, Sainsbury’s Bank has produced a free guide for homeowners which aims to help them reduce their costs.

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CML: Fixed-rate mortgages ‘most popular’ with FTBs

The number of people looking to take out fixed-rate loans has soared following fears that interest rates could rise next year, according to the Council of Mortgage Lenders (CML).

First-time buyers (FTBs) have been plumping for fixed-rate loans in February, with figures showing 87 per cent of those looking for a mortgage for the first time opting for this method of borrowing.

This figure is up from the previous record of 84 per cent in January and up from 82 per cent at the same point last year.

Excluding mortgages, home loans totalled some £10.7 billion – the lowest for 12 months – with February typically being one of the quietest months of the year in the property market.

Commenting on the latest figures, CML director general Michael Coogan said: “With the chance of at least one more interest rate rise this year, first-time buyers are taking the sensible option of taking out fixed-rate deals, and locking into the payment security they provide.”

He added that the figures reveal that first-time buyers are showing the ability and desire to plan ahead, based on the fact that they are “the most financially stretched group”, and are having to take careful steps to avoid any interest rate increases in future.

Tags: mortgage lenders, Michael Coogan, finance, previous record, home loans

Council Tax rebates

Millions of people may have been paying too much council tax due to rushed housing valuations which were carried out in 1993.

Many households are in line to receive thousands of pounds, with hundreds of people having already been given their windfall.

The news could go a long way to helping many homeowners who are struggling to keep up mortgage repayments as a result of rising interest rates.

Some homeowners have received thousands of pounds in back payments and campaigners are urging more people to see if they too are entitled to have their council tax cut.

It is possible to find out if you are paying too much council tax by making a simple online check.

Campaigners say that the problems arose when the Conservative government worked to quickly replace the hugely unpopular poll tax.

As many as 60 per cent of council tax valuations were carried out by estate agents, with a large number being labelled ’second gear valuations’, because agents would simply drive past a house and allocate it a band.

As a result, many people are now paying too much or too little council tax, with large discrepancies between homes on the same street.

Homeowners are being warned that their council tax could just as easily rise as a result of a revaluation.

Tags: rise, england, gear, gear valuations, finance, Valuation Office Agency

2006 lending hit record levels

Lending in the UK reached record levels during 2006, with the Council of Mortgage Lenders (CML) saying there was a 20 per cent rise on 2005.

In total, £346 billion was lent, with November proving to be the year’s most popular month for borrowing.

In fact, November was a record-breaker itself, recording the highest lending figures ever at £33.1 billion.

The huge lending figures have been attributed to a number of factors, including annual house price growth (around seven per cent) and increased house sales (14 per cent).

“The commentators who thought the housing market would crash in 2006 were wrong,” said Michael Coogan, director general of the CML.

“Last year the market proved itself to be in robust shape and we expect it to remain so during 2007.

“Going forward, many of the key drivers of the market remain positive. The economy is healthy, demand for housing is strong, and house prices continue to rise. As a result, mortgage lending this year is expected to be even higher than in 2006.”

Despite Mr Coogan’s positive outlook for the housing market during 2007, he does have a word of warning in light of the recent interest rate rises.

“The recent increases in interest rates might make many aspiring home-owners think twice about getting on to the property ladder, and we expect to see levels of activity dampen as the year progresses,” he added.

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