Huge mortgage gap between those with big deposits and those with small ones

A recent report has highlighted the ever growing gap between mortgage borrowers that have a large deposit to put down compared to those that have only a 10 percent deposit. Read more

Tags: Mortgages, number, eighteen, housing, debt, competitive rates, mortgage deposits, interest rate

Report claims lenders being less stringent over home loans

Whilst lenders have been exercising increased stringency when it comes to home loans and other types of finance since the onset of the global credit crunch a recent report has suggested that some lenders may be easing up on their lending criteria now. Read more

Tags: stringency, Mortgages, Real estate, industry officials, home loans, 100 percent mortgages, Credit (finance), housing

Building society admits to mistake over mortgage email

The Skipton Building Society has recently admitted that it made a mistake after sending out an email relating to mortgage lending. The lender described the email as a ‘mistaken communication’. Read more

Tags: skipton building society, loan, bed, housing, Mortgages, Business Finance, society, American Home Mortgage

Rising mortgage arrears in Scotland

Recently released figures have shown that the level of mortgage arrears amongst homeowners in Scotland has been rising. An increasing number of homeowners are struggling to keep on top of their mortgage repayments. Read more

Tags: mortgage arrears, housing, scotland mortgages, homeowners, Mortgages

Were we already spending less on luxuries before the credit crunch?

Every week there seems to be some report or another stating how spending levels on luxuries such as holidays has plummeted since the onset of the global credit crunch, and indeed the financial situation and turmoil over the past year has made things very difficult for many households and has severely restricted spending levels, leading to a downturn in the economy. However, one recent report has suggested that families in the UK had already started spending less on things like holidays and clothes before the effects of the global credit crunch took full effect. Read more

Tags: housing, Northern Ireland, fuel, credit crunch, cinema, time

Curb to charges could mean increase in bank fees

Britain could see an end to free banking in the near future depending on what happens with the banks charges case, and whether the fees that banks are allowed to charge for overdraft fees and charges can be curbed. If the charges are cut then banks and other financial institutions may decide that they are going to try and recoup the costs by imposing hefty service fees and charges elsewhere. Read more

Tags: savings, Banking, housing, twenty years, unjust charges, increase, british bankers association, road

Many people could find it even more difficult to sell their homes

A recent report has shown that many homeowners in the London area could find it increasingly difficult to sell their homes in the near future, as a result of new plans that may be introduced to force homeowners to inform potential buyers about the risk of flooding. It is already very difficult for many homeowners to sell their properties due to problems in the mortgage and housing markets, and this could matters even worse for many more. Read more

Tags: United Kingdom, housing, mortgage, flooding, housing markets, danger, risk, interest

Insurance firms could face huge losses

According to a recent report the insurance industry could be facing huge losses as a result of the global credit crunch, with tighter household finances forcing many consumers to either downgrade or cancel their insurance cover in order to make ends meet each month. A survey was carried out by officials at Deloitte, and showed that around one if every four consumers were planning to either cut or cancel insurance cover in order to save money at what has become a very financially turbulent time. Read more

Tags: party, housing, savings insurance, global credit crunch, level, Insurance, poll, payment

Housing boom an ‘unmitigated disaster’

The housing boom has been an “unmitigated disaster” for the UK’s economy and society, Firstrung has said. Read more

Tags: home, month, housing boom, society, Mortgages, first time buyers, housing, UK's economy

Housing slide gives hope to first time buyers

New data from the Royal Institution of Chartered Surveyors (RICS) claims that house prices are falling at their fastest rate since 1978.

For the seventh consecutive month, a majority of surveyors reported that sale prices are falling – and that is being felt in every part of the UK.

The negative trend is also being reported by ever-more surveyors – 64.1 per cent confirming falling prices in February compared to just 54.7 per cent in January.

RICS spokesman Ian Perry warned: “While there is very little new supply coming onto the market, it is unlikely there will be significant price drops in the short term but the build up of unsold stocks will encourage buyers to negotiate lower asking prices.”

Nevertheless, this could be a positive development for first time buyers, who have seen the price of even the most modest home soar far beyond their reach in recent years.

Ulster Bank head of mortgages Derek Wilson told the Belfast Telegraph: “The expectation is that transaction numbers will now increase and that first time buyers will become increasingly active with asking prices considered to be more realistic.”

Tags: Derek Wilson, reach, the Belfast Telegraph, housing, sale, little new supply, property

Professional mortgage market could avoid credit crunch effects

Consumers looking for a professional mortgage are “best placed” to escape the effects of the credit crunch unscathed, claims one housing market expert.

Scottish Widows said that the recent economic turmoil had caused a reduction in the number of 100 per cent mortgage products available.

It could also lead to the remaining products becoming more expensive.

However, Richard Clark, head of product development and marketing for Scottish Widows, said: “The impact on this area of the market has been very much less than everywhere else because there are lenders who haven’t changed any of their criteria for professionals at all.”

Those customers who are looking for a professional mortgage are the “best placed” to get an expanded loan to valuations or income multiples on their salary, he added.

Mr Clark concluded that it could be that the only lenders who are prepared to offer 100 per cent mortgages could be those who specialise in the area.

At the end of January 2008, the BBC reported that the number of new mortgage approvals had fallen for the seventh consecutive month in December last year.

Tags: december, cent mortgage products, Mortgage loan, income multiples, expert, housing, head, bbc

British property market is in “danger”

The British property market is in danger zone which is set to continue beyond 2008 and into subsequent years, claims the Daily Telegraph.

Findings from the Daily Telegraph and Lombard Street Research Housing Affordability Index has revealed that house prices can no longer be classed as affordable, due to the combination of inflation and increasing debt costs.

Speaking to the Daily Telegraph, Diana Choyleva, the director at Lombard Street Research, said: “I would say that around about now house prices are in unaffordable territory – this is the danger zone for the market.

“It is still too early to say yet whether what happens next will be as bad, or perhaps even worse, than the early 1990s crisis,” she continued.

The index suggests that house prices are currently at their most overvalued since 1991 when many homes were repossessed.

Meanwhile, new research from Your Mortgage magazine has revealed that house price growth in inner London should hit 4.6 per cent with Greater London seeing 4.3 per cent growth.

Tags: crisis, growth, Economic history, housing, Housing Affordability Index, Affordability, the Daily Telegraph, cent

Economists give views on where interest rates will go next

There was a sigh of relief across the UK earlier this week when the Bank of England announced that interest rates had been cut by 0.25% from 5.75% to 5.5%.

There are now mixed predictions with regards to what will happen with the interest rate next, with some predicting that 2008 will see another one or two interest rate cuts and others believing that the interest rate could fall as low as 4% in 2008. Financial experts from This is Money interviewed some economists to get their views.

An official from Investec stated: ‘Evidently the MPC is taking much more note of recent signs of a slowdown in the economy and its fears over the possible effects of the credit squeeze have begun to crystallize. The question obviously now is whether rates come down again and if so how quickly. The outlook is very uncertain. We are pencilling two further 25 basis-point cuts over the first half of next year.’

Roger Bootle from Deloitte and Touche stated: ‘Today’s decision by the MPC to cut interest rates from 5.75% to 5.5% is the first step in a prolonged period of monetary easing that could see rates fall very sharply. I previously thought that rates would drop to 5%, but I now think that they could eventually be cut all the way to 4%. Inflation is likely to rise further in the coming months. However, the rise in interbank interest rates means that the risk of a very sharp and prolonged economic downturn is growing by the day.’

A spokesman from Bear Stearns said: ‘We expect another cut in January, with rates to target 5% by the second quarter. UK rates should be at 4.5% by the end of 2008, possibly even lower if the downturn is more severe. This has been a cut to alleviate the credit crunch and provide a rescue remedy for growth. Lower rates should help to put a prop under the UK housing market.’

Tom Smith
10t December 2007

Tags: bank, england, crunch, rates, propert, housing

Signs of housing market cool down

Predictions from many economists and analysts that the housing market in the UK is cooling down have been proven following figures relating to house prices for September.

According to figures house prices in September fell for the first time since December, and to many this reflects the start of the cooling down period for the UK housing market. The figures come from the HBOS house price survey. According to the figures there was a 0.6% drop in house prices, which was a far cry from the predicted 0.4% increase.

The average house prices has now fallen to just below the £200,000 mark, taking the annual three month rate of house price inflation to 10.7% compared to the expected 11.1% rise that had been forecast. Halifax officials state that although the economy remains strong it is likely that house price inflation will fall further in the coming months, as the housing market in the UK continues to cool.

Martin Ellis from the Halifax stated: “September’s price fall is consistent with the normal behaviour of the market during a slowdown. A mixed pattern of monthly price rises and falls is a typical feature of a more subdued housing market.”

This could mean good news for first time buyers that are looking to get onto the property ladder, but could result in problems for those that have recently taken out large mortgage, many of whom could find themselves falling into negative equity.

The likelihood of an impact on consumer spending has also increased as a result of the slowdown in the housing market.

One economist stated: “Since house prices gains have stalled, we believe it is highly likely that spending growth will also hit the wall in the months ahead.”

Tom Smith
4th November 2007

Tags: property, housing, decrease, prices, fall, equity, market, mortgage

Buy-for-uni mortgage has its benefits

Taking out a mortgage for a university residence can be beneficial for students and their parents.

According to Moneyfacts, a so-called buy-for-uni mortgage allows students a mortgage of up to 100 per cent on their property with no deposit.

This can act as a “medium term investment”, according to Darren Cook, head of mortgages, that gives students “independence” and “their own home” while at university.

Mr Cook said: “Obviously it’s going to be seen as a good investment from the parents’ side of things. If you’ve taken a student’s property [for] three or four years or whatever, they can convert it to a … student buy to let scenario and rent out rooms.

“[They can] change the actual funding of that asset or get rid of it a later stage. So it could be a short [to] medium-term investment.”

He added that some parents might not want their children going into communal housing, so aside from an investment another reason for buying might be the social aspect.

Currently, Bath Building Society is the only lender offering a specific buy-for-uni mortgage. It was introduced last April and is given only on properties with four bedrooms or less.

Tags: buy-for-uni mortgage, Mortgage loan, Darren, buy, university, Mr Cook, housing, specific buy-for-uni mortgage

BIBA: Students should take out contents insurance

Students are advised that they should get their valuables covered while living away from home.

The British Insurance Brokers’ Association (BIBA) said that many students are not covered by their parents’ household insurance.

It warned that this leaves their valuables at risk, and while most students do not prioritise getting insurance, it is a sensible thing to do.

Graeme Trudgill, technical services manager for BIBA, said that a quarter of all parents do not have home contents cover at all, meaning that many students could find themselves spending a lot on replacing lost items.

He added: “A lot of students these days have laptops, iPods, digital cameras, DVDs, mobiles, stereos… and that can add up to a lot of money.”

Recent Home Office figures show that people under the age of 24 are more likely to be burgled and that as many as one in three students becomes a victim of crime.

Furthermore, the London Student Housing Guide found that the average cost of a burglary to a student is £900.

Tags: housing, laptops, household insurance, Association, GBP, Fashion, Household, BIBA

Inflation Report Signals Further Rate Rise

The Bank of England has given clear signals that interest rates may have to rise yet again to make sure that it keeps inflation under control. Homeowners will be dreading the possibility of yet another rate rise as they have seen five quarter point rises already ion the past 12 months.

Experts now believe that the rise will come sooner rather than later after the Governor of the Bank, Mervyn King, said that he believed the turmoil in credit markets – set off by the sub-prime crisis in the US – was far from being an international financial crisis. Given that comment, experts think that he will not be afraid of recommending a further rate rise in the UK in the near future. Indeed, there are some doom-mongers who suggest that an interest rate of 6.5% – or even higher – could be reached.

A quarter point rise on a mortgage of £110,000 would mean an increase in monthly repayments of over £16, and on a mortgage of £200,000 the increase would be £30 a month.

A further quarter point rise now looks likely in September. Mr King said: “[We] cannot be sure if what we’re seeing so far foreshadows a more disruptive move on the markets or whether there’s a more gradual easing of pressure that allows credit spreads to widen to more sensible levels. So it’s impossible at this stage to judge how large and how persistent the tightening of credit conditions is likely to be.”

Adding that he did not see the recent events, which have seen some US investment banks in trouble because of defaults on loans and some big takeovers postponed, as an international financial crisis, he went on: “We are seeing signs of bad loans arising clearly in the US, but I don’t think we are seeing signs of these bad loans in other markets. The developments in [the widening of] spreads is a more realistic pricing of risks which we welcome.”

Mr King said that it was not the duty of central banks to give protection to any financial institutions if they get in trouble for poor lending practices.

The Bank’s quarterly inflation report said that inflation would come back down to 2% if interest rates rose according to market expectations, and that would be one more quarter point rise before the end of the year. It is difficult to see the Monetary Policy Committee waiting too long before implementing the rise. The report said that risks to inflation remained on the upside but not as much as a few months ago. It now expects economic growth to dip to 2.5% in the next two years from about 3% now.

Mr King was concerned that official figures did not accurately measure the strength of the economy, and may be revised upwards. The near term outlook for inflation had the bad news of higher food prices from flooding influencing it.

Inflation was also under threat from rising oil prices and potentially increasing wages demands, but Mr King did note that consumer spending was cooling. However, there has been surprise at the resilience of consumer and housing markets despite the five rises since last August.

Mr King insisted that 6% was not yet a done deal.

Tom Smith
1st October 2007

Tags: interest, spending, housing, costs, increase, rates, inflation

Has the housing market peaked?

According to recent figures the housing market in the UK may have peaked, as July’s figures show that the number of people looking to purchase their first home fell at the fastest rate in a period of three years.

Inquiries from first time buyers fell at the fastest pace since August 2004 according to the Royal Institute of Chartered Surveyors, with number of unsold properties rising to its highest in the past eight months, all of which points towards the housing market in the UK having peaked.

According to officials the reason for the slump in inquiries from first time buyers is due to the series of interest rate rises, and more importantly due to the added threat of further interest rate rises. The Bank of England has already hiked rates up five times by 0.25% each time since last August, and many predict a further interest rate rise of 0.25% in the coming months, which would take the base rate up to 6%. The interest rate is already at its highest in the past six years.

Officials state that many first time buyers are taking a ‘wait and see’ stance, and are continuing to rent for a while whilst they assess the market and see what happens with the interest rates in the coming months. However, although demand seems to have fallen according to these figures, house prices in the UK rose yet again for the 21st consecutive month.

An official from the Royal Institute of Chartered Surveyors stated: ‘The combination of softening demand and supply is causing market conditions to weaken further. Buyer activity has pulled back a little over fears that we may have seen the top of the market. With interest rates perched at 5.75% and a jump to 6% a strong possibility, aspiring first-time-buyers are continuing to rent until the market trend becomes clearer.’

Tom Smith
27th September 2007

Tags: surveyors, cost, market, home, mortgage, housing, prices

Average house prices approach £200,000

The average price of a house has almost reached the £200,000 mark, according to new figures, but the rate of growth has shown further signs of slowing.

According to the Halifax House Price Index, house prices increase by 0.4 per cent during the month of August, with the average cost now £199,770.

This is the third month out of four that house price inflation has dropped below 0.5 per cent and the Halifax report claims this is indicative of a slowdown in the market.

In addition, the three-monthly rate of growth fell from 4.5 per cent in March to 1.6 per cent in August.

“The downward trend in house price growth is expected to continue over the remainder of 2007 as the five interest rate rises since last summer have an increasing impact on household spending and housing demand,” said chief economist Martin Ellis.

“Sound economic fundamentals, high levels of employment and a shortage in the number of properties available for sale will, however, continue to support house prices.”

The figures also showed that mortgage approvals in the three months to July of this year were nine per cent lower than those recorded during the peak September to November 2006 period.

Oliver Gilmartin, senior economist at the Royal Institution of Chartered Surveyors, said the figures meant speculation of an imminent interest rate cut was “premature”.

Tags: Real estate economics, institution of chartered surveyors, house price, housing, United States Department of Housing and Urban Development, month, cent

Housing Market Cools

It seems that the UK property market may be cooling at last, as estate agents are reporting that there has been an increase in properties coming up for sale. In the last few months that number of sellers has increased, but interest from buyers has taken a downward turn.

One online agency reported that the number of properties for sale has risen by over 13% in April, far above expectations. Another internet agency said that it had seen an increase in properties on the market by nearly 20% compared with the same time a year before. The trend appears to be the same across the market.

Although the time of year does see an increase in properties on the market, this time the numbers seem higher than usual. The shortage of housing stock that has had an influence on the way the market has risen seems to be reducing. The sellers’ market looks as though it is coming to an end, and the market may be close to its peak.

It seems that properties in the £150,000-£350,000 price bracket are having the toughest time, where affordability is tight and the slowdown is likely to bite hardest. First-time buyers are finding it extremely difficult to get into the market as property has been pushed further beyond their reach.

Another influence on the number of properties coming to market has been the wish to avoid the need for Home Information Packs (HIPs) in the lead up to their planned introduction of 1 June, and again in the lead up to the new date of 1 August.

Bank of England mortgage figure approval figures reached a twelve-month low in April at 107,000.

The Royal Institution of Chartered Surveyors believed that the HIPS, the continued increase in house prices and the increase in interest rates have combined to lead bring about a cooling of the market.

Estate agents believe that HIPs are single biggest reason for the increase in properties coming to market. These look to be extremely unpopular with sellers who will have to go to more trouble than before and, of course, pay for the packs.

Buyers, however, will see benefits with all the information they need in a single accessible pack. The uncertainty surrounding the introduction of HIPs has led to confusion, especially with the change in emphasis by the government, who said that the Packs would only be applicable to homes with four or bedrooms when the new date was announced.

Since then there has been even more confusion with a recent comment that there will be enough trained energy assessors by 1 August to encompass three bedroom houses. The government maintain that they announced that houses of smaller size will be included in the scheme as soon as enough assessors are available. If that happens by 1 August then three-bedrooms homes are likely to be included.

The general economy remains strong and interest in property is liable to remain so too. When confusion over HIPs dies down in the coming months, we are likely to see a return to normal trends.

Tom Smith
8th July 2007

Tags: Mortgages, rise, hips, house, england, increase, bank, decrease, rates

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: wages, buyers, Mortgages, housing, demand, increase

Buy-to-let buyers not causing price rises

A leading property expert says the popular belief that buy-to-let investors are pricing first-time buyers out of the housing market is unfounded.

Michael Ball, professor of urban and property economics at the University of Reading Business School, said investors are not to blame.

He was speaking at the annual conference of the Association of Residential Letting Agents (Arla) and said that there is only one way in which to bring house prices down to a more attainable level.

“It is to build more houses that people actually want to live in and in places where they want to live,” he told the conference.

Mr Ball was keen to emphasise that he feels those considering getting a buy-to-let mortgage are benefiting the market, and society as a whole, and should be encouraged to go through with their plans.

“Without buy-to-let, the private rented sector would probably be much smaller. The quitters would have exceeded new entrants,” he said.

“It enables households to build up their own equity and, although tenants do not share in capital gains directly, they do so through lower rents and lower risk.

“They can do this while living in good standard accommodation, as competition in the rental market is now greater,” added the professor.

Buy-to-let properties account for between five and six per cent of housing in the UK and is a bigger industry than all of the country’s pubs, hotels and restaurants combined.

Tags: annual conference, house, while, Letting agent, buy-to-let, lower rents

Debt problems to continue in 2007?

The Citizens Advice Bureau has voiced concerns that 2007 will lead to more debt for consumers.

The warning comes on the back of figures released by the British Bankers’ Association which show that mortgage lending rose during December 2006.

Statistics show that there was a £5.8 billion increase during December, slightly down on the record £6.7 billion growth seen in November, but still very high.

Citizens Advice says that during 2006, housing debt was one of the fastest growing problem areas and the figures from the BBA mean that this trend may well continue.

“The increase in loans and overdraft borrowing reflects the evidence from Citizens Advice bureaux that debt enquiries continue to rise in 2007 and will exceed the 1.4 million debt enquires we dealt with in the last financial year,” said Sue Edwards, senior policy officer at Citizens Advice.

BBA’s data also shows that credit card lending fell in 2006, in stark contrast to the huge growth seen in 2005. However, Ms Edwards does not believe that this is anything to get too excited about.

“The decrease in credit card borrowing simply indicates that people are borrowing in different ways,” she stated.

Consumer debt, which includes credit cards and other unsecured personal loans, was the biggest problem area for people seeking help from Citizens Advice.

Tags: senior policy officer, policy, consumers, Sue Edwards, housing, consumer, year