More compensation payouts to be issued by Halifax

High Street banking giant, Halifax, has recently admitted that it may have to pay out more compensation to customers over a mix up with its mortgage rates. Earlier this year the lender identified around 600,000 customers who may be eligible for compensation over confusion about mortgage rates, about half of whom ended up receiving compensation payouts. The lender has now stated that there could be another 250,000 people who may be eligible with around half of them expected to actually receive compensation.

The compensation that the lender pays out could be up to £4500 per person based on a mortgage of £150,000 where the borrower has been affected for three years. The payouts will equate to either 1 percent of the mortgage interest for each year that the borrower has been affected or will be a fixed compensation payout. With tens of thousands of borrowers potentially set to receive compensation, Halifax could have another huge bill on its hands.

The confusion has arisen over Halifax increased the cap on its standard variable rate mortgages from 2 percent above the Bank of England base rate to 3 percent above. The UK’s financial regulator, the Financial Services Authority, expressed concern that wording on documentation may have led borrowers to believe that they would receive advance warning of any such changes. Halifax subsequently came to an agreement with the FSA over paying compensation to customers who were affected.

A Halifax official said: “In February 2011, we agreed a voluntary agreement with the FSA in relation to a customer contact and goodwill payment programme with specific Halifax mortgage customers. We have subsequently identified a further group of customers that are eligible for inclusion within the programme. We are now in the process of writing to these borrowers explaining what this means for them.”

Tags: concern, standard, uk, year, payout, Mortgages

House prices still set to fall in 2011

According to recent figures the property market in the UK did edge up a little over the course of 2010, and the average property price in December was up by around 0.4 percent compared to the same month a year earlier. The figures were released by High Street lender, Nationwide, with officials from the building society stating that despite this year’s slight increase property prices were still set to drop in the first half of next year.

Nationwide said that property prices in 2010 had declined in the second half of the year compared to the first half, and that in the first half of 2011 prices would continue to fall. Nationwide said that demand for property remained weak, which would contribute to the slump in property prices. One economist from the building society said that there were two few buyers interested in property and too many properties available.

The lender also said that although property prices had edged up in December, prices had fallen in four of the last six months and were likely to continue doing so. Property prices have been falling as a result of lack of mortgage availability, increased caution from potential buyers who are steering clear of the market at present, and an over-supply of properties for sale.

An official from Nationwide said: ‘At the moment, there are probably still too few buyers chasing too many properties. As a result, the slow drift down in house prices is likely to persist in 2011, at least for the first half of the year. Whether it continues into the second half will depend on the flow of new property on to the market.’

He added: ‘Despite December’s increase, house prices have fallen in four out of the last six months and it would be premature to suggest that the recent downward trend has been broken on the basis of one month’s figures.’

Tags: Business and Economy, slump, mortgage, Irish property bubble, economics, building society, Mortgage loan

Mortgage affordability in UK level with other countries

According to industry officials affordability on mortgages in the UK is pretty much on level with that in other countries. A study was carried out by Capital Economics, and suggested that when it came to mortgage affordability the UK was no worse off than other countries.

The company conducted research which looked at mortgage affordability in nine major Western economies, and this included Australia, Denmark, France, Ireland, Netherlands, Spain, Sweden, the USA and the UK. The average amount of take home pay that was used for mortgage repayments on a repayment mortgages in these countries came to 48 percent.

Over the past forty years the level of take home pay going on mortgage repayments in the UK has been around 50 percent. The highest level of take home pay going on mortgage repayments was found to be in Sweden, where 56 percent of pay went on mortgage repayments. The cheapest was in Spain, where 39 percent of take home pay went on mortgage repayments.

One economist involved in the research said that many may have expected the level of take home pay that was being spent on mortgage repayments in the UK to be higher due to high population density and undersupply of housing, but he stated that this was not the case.

He stated: “Our analysis shows that over the past 40 years, long-run average UK mortgage affordability is unremarkable in an international context. To our minds, this casts doubt on the popular view that a chronic undersupply of homes in the UK supports high prices.”

At present the actual level of take home pay going on mortgage repayments in the UK is 44 percent, and this comes from the record low base rate of 0.5 percent, which has reduced mortgage repayments considerably for those on variable rate mortgages.

Tags: mortgage, past 40 years, Mortgage loan, variable rate mortgages, Major, Repayment mortgage, pay, record

Mortgage rates cut by HSBC to help consumers

Officials from the High Street banking giant HSBC have said that the lender has cut some of its mortgage interest rates in a bid to help struggling consumers in the current financial climate. One official from the firm said that it had cut rates in order to try and help those that were struggling with their finances.

The claim was made by Martijn van der Heijden, head of lending at the company, and came after the banking giant decided to cut the interest rates on all of its 80 percent loan to value mortgages, with cuts of up to 0.4 percent on these mortgage loans. This includes a number of two and five year fixed rate mortgages, a discount mortgage that comes with a £99 fee, and two tracker mortgages.

Hejden said that many people were facing difficulties in the current financial climate, and these mortgages were aimed at helping such people. He said that because the bank had cut rates in this way it would allow more people that had a limited budget to apply for a mortgage loan with HSBC.

At present many consumers have little choice when it come to finding the best lender, and this is due to the many restrictions that lenders have in place as well as the higher rates that are charges on some mortgages, making it difficult for some to afford a mortgage loan.

Hejden said: “Our 2.79 per cent discount mortgage is designed to help homeowners, many of which are facing a tough time.” He added: “As research shows more and more lenders are now reserving their lowest rates for either existing customers or those happy to deal with them directly.”

Tags: Hejden, hsbc, giant, finance, bank, Mortgage loan, mortgage, consumers

Mortgage drought could affect many people

Industry experts have said that under current plans that have been proposed by the UK’s financial regulator, the Financial Services Authority, many people could be facing a mortgage drought that could leave them unable to get the mortgage finance that they need in order to get onto the property ladder.

The mortgage market is already very restricted, as it has been since the onset of the global financial crisis several years ago which almost brought the banking and financial systems to their knees. However, experts from the Council of Mortgage Lenders have said that things could get even worse under new rules from the FSA.

The Council of Mortgage Lenders has said that if these regulations had been in place over the past four years over 50 percent of mortgages that were granted over this period would have been refused, causing huge problems for those that were looking to buy a property and get onto the property ladder.

The CML claims that this would have equated to around four millions additional mortgage loan rejections if the FSA had its regulations in place in 2005. The group said that this shows just what a negative impact the rules could have in the current financial climate. A review by the CML suggests that under the new proposed regime millions more people a year could be turned down for a mortgage loan.

Figures show that the number of mortgage approvals in the UK have already plunged, with numbers having fallen to around 50,000 per month compared to 135,000 a months before the credit crisis hit. This has been made worse due to the strict restrictions that banks have put in place when it comes to lending, as well as the higher deposit levels being demanded.

Tags: Financial Services Authority, financial, UK's financial regulator, market, property ladder

Mortgage lending hits ten year low for August

Recent figures released by the Council of Mortgage Lenders has shown that mortgage lending levels for August fell to the lowest levels in ten years for the month. The CML said that activity in the housing market remained ‘exceptionally’ low for the month, with lending levels for the month making for gloomy reading.

The CML has now stated that the second half of the year is likely to be a difficult one, with lending levels expected to be below the level seen during the final months of last year. This is partly due to the fact that activity was more buoyant in the final months of last year due to the fact that the stamp duty holiday provided by the former Labour government was coming to an end at the end of the year.

The group did state that there was a slight drop in average mortgage rates for the month of August, as competition in the mortgage market increased, driving interest rates down slightly. However, restrictions still remained tough amongst the various lenders who were being cautious about lending.

Banks and financial institutions have also continued to demand high deposit levels from groups such as first time buyers, which is still having an effect on lending levels, as it means that many are unable to apply for a mortgage because they do not have the necessary deposit to back it up.

Net6 lending for the month of September is set to remain subdued, as lenders have reported a slight fall in the number of mortgages that have been approved for property purchases for the month of August.

In the meantime the Bank of England has stated in its most recent quarterly bulletin report that lenders have been failing to pass on base rate cuts to consumers, partly due to the fact that they faced higher borrowing costs themselves.

Tags: mortgage market, council of mortgage lenders, Mortgage loan, finance, mortgage, borrowing, gloomy reading, group did state

Homeowners being moved from interest only mortgages to repayment mortgages

The fears over a double dip recession in the UK are causing havoc for many homeowners who are finding themselves being shifted from interest only mortgages with smaller monthly repayments to capital and interest mortgages that require them to make much higher monthly repayments on their mortgages. For many this will cause serious financial problems, as it will really impact on their outgoings and ability to make repayments.

A number of lenders are said to have brought in new rules and regulations with regards to this issue, and this includes the Spanish owned Santander and the banking giant Halifax. Many borrowers who do not have enough equity in their homes and are coming to the end of an interest only special deal are being shifted onto the more costly repayment mortgage by these lenders.

The move comes following concerns that the UK could be heading for a double dip recession, and a number of industry experts have said that homeowners could lose the equivalent of the average salary from the value of their homes, which will see equity levels plunge further for many homeowners. Santander has revealed that anyone that has less than 25 percent equity in their homes will be moved from their interest only mortgage onto a repayment one.

One mortgage expert said: “For home owners with interest-only mortgages, a forced switch onto a repayment deal by their lender at the end of their fixed or discounted period would lead to a significant rise in their monthly payments. For those saddled with big mortgages, it may well be an unaffordable increase, making it difficult for them to make ends meet. Lenders are worried about a further downturn in prices and are introducing these changes to protect themselves, as well as borrowers. But hard-pressed homeowners may find it’s an extra cost too far.”

Tags: Interest-only loan, mortgage, fears, Repayment mortgage, Many borrowers, santander, Mortgage loan

Is a ‘friends’ mortgage’ a good idea?

In the past most people that were buying a home either did so alone or with a partner/husband, which was the traditional way of getting a first home. However, things have really changed over recent years, and these days many people cannot afford to buy a home on their own.

This means that many have had to look at alternatives when it comes to moving out from their parents or from rented accommodation and trying to get their foot onto the property ladder, and things aren’t always easy, particularly given the difficulties that many face when it comes to raising a deposit and getting a mortgage in the current financial climate.

One of the solutions that some people have considered is to get a mortgage out with a friend, whereby both friends – or a group – are all in on the mortgage and they buy the property between them. This can certainly solve a few problems, such as being able to raise the amount needed for the deposit and being able to borrow the amount required for the property.

However, this can cause issues in the event that one of the friends involved wants to sell up and move on, as it means that they would have to get rid of their share of the mortgage. Another problem is if there is a falling out, and whilst most friends hope that they will never come to blows to a degree where things cannot be resolved this can happen.

Whilst a friends’ mortgage can be a good way of getting onto the property ladder in the current financial climate it is important for anyone getting involved to ensure that they consider both the pros and cons before making any firm decision or commitment, as things otherwise turn very sour very quickly – and it could end up being a costly mistake.

For those that do not really want to get involved in a mortgage with someone else but do want to get onto the property ladder another solution is to look at shared ownership, where only part of the property is purchased and the remainder is rented through a housing association and can be purchased in stages at a later date as and when the buyer is in a financial position to buy further shares in the home. The buyer then has the choice of buying the remainder of the home until it has all been purchased or remaining a part owner and selling their share when they decide to move on.

Tags: share, friends, property, Mortgage loan, mortgage

Mortgage market in Scotland sees improvement

Recently released data has shown that the property and mortgage markets in Scotland have shown surprising improvement in the second quarter of this year, with officials expressing surprise over the figures that have been released by industry groups.

Figures were released by the Council of Mortgage Lenders, and it appears that things have improved with both first time buyers and home movers in Scotland. Officials have said that they will be keeping a close eye on the property and mortgage markets in Scotland for the remainder of the year, and could find that the markets outperform those in the rest of the UK if the performance continues as it has done so far.

The Council of Mortgage Lenders said that in the second quarter of this year the number of mortgage agreements for first time buyers increased by an impressive 18 percent, bringing the total for the second quarter to 4700. The total value of these mortgages came to £419 million, and this reflected an increase in total value of 27 percent compared to the first quarter of the year.

The figures from the Council of Mortgage Lenders also showed great improvements in the mortgage and property markets for those that were moving house. Over the course of the second quarter of the year 8000 loans were taken out, and this reflected an increase of 36 percent, which has surprised many experts.

It is thought that part of the reason behind the improvements in these markets is that lenders in Scotland appear to be getting more relaxed when it comes to granting and approving mortgage loans. The average deposit requirement for first time buyers has fallen from 23 percent to 21 percent, and some think that this may have helped to renew hope and confidence amongst buyers.

Tags: time buyers, value, confidence, mortgage, scotland, mortgage markets, council of mortgage lenders, Mortgage loan

Lloyds Banking Group retains position in UK mortgage lending market

Figures that have recently been released have shown that banking giant Lloyds Banking Group has managed to retain its position in the UK market when it comes to mortgage lending levels. This comes despite the problems that the mortgage markets have experienced since the onset of the global financial crisis and the recession.

The figures show that Lloyds Banking Group managed to retain a 23 percent share of the gross mortgage market in the UK, despite the fact that the markets have remained subdued. The large market share of the mortgage market that has been taken by the group means that it remains as one of the leading mortgage lenders in the UK.

Lloyds Banking Group has also enjoyed success when it comes to profits, having announced profits of £1.6 billion for the first six months of this year. For the same period a year ago the bank reported losses of £4 billion, which means that the banking group’s fortunes have really turned around, as have those of a number of other banks in the UK. The money that Lloyds Banking Group has set aside to cover bad debt is also said to have fallen, and has gone from £13.4 billion to £6.5 billion.

Despite the profits that Lloyds and other banks have reported industry groups have expressed concern that mortgage lending is still restricted, as banks are still being cautious and many are still demanding high deposit from those looking to take out a mortgage.

Mortgage brokers have a more optimistic view, and many have predicted that they will be doing increased levels of business as the year goes on, as more and more mortgage products become available on the market.

Tags: Mortgage loan, mortgage, bank, Lloyds Banking Group, Mortgage broker, uk, percent

Mortgage default levels falling

Over the past few years problems with finances, higher mortgage rates, and the global financial crisis has plunged many people into severe financial difficulties, and as a result of this many homeowners have been unable to keep on top of their mortgage repayments.

The high level of mortgage defaults over recent years has resulted in many people having their homes repossessed, which naturally caused a great deal of concern amongst consumers and officials. The recession also took its toll on the ability of homeowners to make repayments on their mortgages, with many people losing their jobs as a result of the recession.

However, with the recession now over and the financial markets easing up the level of mortgage repayment defaults has been falling recently. The Bank of England has issued figures showing the fall in the level of mortgage repayment defaults in the UK, which will come as good news for banks and industry groups.

The fall in mortgage defaults has been occurring for a while now, and industry experts have said that in the latter part of 2010 it will remain largely flat. Some have even predicted that in the short to medium term mortgage repayment defaults could actually start to increase again as a result in an economic slowdown caused by changes made in the recent emergency budget by the new Chancellor of the Exchequer, George Osborne.

Further job losses are also expected to occur as a result of the budget changes, and this could affect the ability of more people to make their mortgage repayments. Officials advise those that feel that they are in danger of falling behind with mortgage repayment to contact their lender or a debt advice group as early as possible so that the problem can be sorted out before banks have to resort to repossession action.

Tags: mortgage, loan, homeowners, default, Mortgage loan, chancellor of the exchequer, crisis, mortgage rates

Lack of awareness about mortgage rates amongst UK consumers

It has been claimed in a recent report that there is a severe lack of awareness amongst UK consumers when it comes to their mortgage interest rates. The data comes from a study that was carried out for the Consumer Financial Education Body, and involved polling over two thousand consumers about their mortgage interest rates.

The results of the study indicated that a massive three quarters of mortgage holders in the UK had no idea how an interest rate rise of 1 percent would affect their mortgage repayments and their budgets. The poll also found that many mortgage holders did not know what type of mortgage they had, and many also had no idea when their mortgage would expire.

The survey looked into a number of different mortgage related issues. The base interest rate has been kept on hold at its lowest level on record for sixteen months now, standing at just 0.5 percent. However, the survey results showed that over 50 percent of consumers thought that in the next nine months the base interest rate would increase.

Around 15 percent of those polled did not know what sort of mortgage product they had, such as a fixed, tracker, discounted, or standard variable rate mortgage. Around 8.6 million people out of 14.6 million had mortgages that formed part of a time limited deal. However, 15 percent of these mortgage holders did not know when their deals came to an end.

One industry official said: “Interest rates have been at record lows for some while now. Although there is uncertainty about when this will change, it is clear from our research that many people with mortgages have not thought about what it would mean for their monthly payments, or where they would find the extra money in their household budget if their mortgage rate was to go up. Lack of time means many of us often put off reviewing our finances.”

Tags: Mortgage loan, deal, mortgage, finance, interest

Mortgage market could suffer over next quarter

Over the past couple of years things in the mortgage market have been tough, and availability of mortgages has become very restrained as a result of the global credit crisis and the recession. This has left many people unable to get their hands on a mortgage loan, and has had a serious impact on the property market.

The Bank of England has now issued a warning stating that there could be fresh restrictions in the mortgage market over the next few months, blaming the tightening of wholesale funding for the expected squeeze on mortgages. This will create additional difficulties for those that are looking to get a mortgage, and will reverse the recent trend of increased availability of mortgages.

The data comes from the Bank of England’s Credit Conditions Survey, and a number of economists have also agreed that the availability and affordability of mortgages could fall over the next few months as banks struggle with tightened wholesale funding.

Over the past quarter the availability of mortgages has actually increase after a couple of years of serious difficulties, but this is something that is set to go into reverse according to the Bank of England. Figures have also shown that over the past quarter demand for mortgages has fallen even though mortgage availability has been increasing.

Dougald Middleton, head of capital and debt advisory at Ernst and Young, said: “While the survey shows that costs of borrowing have eased over the last quarter, we think credit conditions have turned over the last three or four weeks.”

The good news from the Bank of England report was that the rate at which mortgage borrowers and businesses were defaulting on loan took an unexpected fall, which will come as good news for banks.

Tags: bank of england, availability, mortgage, finance, demand, Impact, Mortgage loan, market

Spring bounce continues for mortgage lending

Recently released figures have suggested that the spring bounce seen in mortgage lending has continued, with the increase in mortgage lending continuing in May. According to the figures mortgage lending for the month of May was at its highest level so far this year.

The figures have been released by the British Banker’s Association, with the data showing that 36,709 mortgage loans were approved by major banks during the month of May for those that were buying a property. However, despite this encouraging data HM Revenue and Customs has released figures showing that for the past three months the number of completed property sales has remained flat.

The number of sales for May came in at 73,000, and this equates to around 1000 more than the numbers seen in March and April. These figures are higher than those seen a year ago, but are still far lower than figures from 2006, 2007, and 2008.

With regards to the increase in mortgage approvals members of the BBA have said that this is the third month in a row that mortgage approvals have increased, indicating that the spring bounce in mortgage lending is set to continue.

The BBA also said that in the current climate, with the base rate still at its record low of just 0.5 percent, many people were still focussing on paying off their debts rather than trying to save money, as they were able to save more on borrowing interest than they were able to earn on savings interest, making this a more favourable option.

David Dooks, Director of Statistics at the BBA, said: “The low interest rate environment is resulting in customers choosing to reduce or pay off borrowing, particularly personal loans, rather than saving.”

Tags: borrowing, Director of Statistics, mortgage, data, british bankers association, Mortgage loan, debts, finance

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: interest rates, forecast total, Council, business, Mortgage loan, council of mortgage lenders, finance

Long term fixed rate mortgage option from Yorkshire Building Society

With the base interest rate in the UK still at its lowest level in the history of the Bank of England, at just 0.5 percent, many are now wondering when the base rate will start to increase again, and this is causing many people to wonder whether they should fix their rate over a period of time when taking out a mortgage.

There are different options available for those that want to fix their mortgages, and whilst the choice is not as great as it was prior to the financial crisis more and more lenders are becoming more lenient when it comes to offering a good choice of mortgages, although these are often to those that have a higher deposit level.

It has now been announced that the Yorkshire Building Society is offering a long terms fixed rate mortgage, with those considering buying a home or remortgaging now able to benefit from a ten year fixed rate mortgage. The deposit required on the mortgage is 25 percent, and borrowers will benefit from a rate of 4.99 percent.

The mortgage also has an arrangement fee that borrowers will have to pay, and this comes to £995. Whilst a ten year fix will provide many people with increased stability and peace of mind there are also some that may feel that this is too long a period to fix for.

An official from the building society said: “This product presents a fantastic opportunity for borrowers looking for long-term value, protection from future interest rate rises and piece of mind when it comes to their mortgage payments. Over the last ten years the average mortgage standard variable rate across the market has been 6.2%* so our new range of ten-year products offer great value.”

Tags: Yorkshire Building Society, finance, mortgage, fixed rate mortgage, Mortgage loan

Using a financial advisor to get a mortgage

There is little doubt that getting a mortgage these days has become increasingly difficult, and with this in mind many people may end up making the wrong choice when it comes to determining which is the right mortgage product for them. First time buyers in particular could experience difficulties when it comes to getting a mortgage, and in many cases could really do with some professional and independent assistance from an expert in the field.

Most estate agents will have someone at the branch that can offer assistance with getting a mortgage, and this is something that many people looking for help with finding a mortgage opt for. However, it is important to remember that the selection of lenders that these advisors have on their books will be limited, which means that you could effectively miss out on a better offer.

There are also many independent financial advisors in operation that offer advice and assistance on finding mortgages without charging any upfront fee to the buyer, as these advisors get their payments from the mortgage lender that they refer the borrower to. However, whilst the choice of lenders that these independent financial advisors have is generally quite good there is always a danger that you could be hooked up with a mortgage based on the amount of commission that the lender is going to pay the advisor.

With advisors that are being paid by the lender rather than by the borrower it can be difficult to determine whether the advisor truly has the best interests of the borrower at heart. This is why more and more people that want help with getting a mortgage are opting for an independent financial advisor that they pay themselves rather than one that is paid by the lender.

The benefit to choosing a paid independent financial advisor is that this means that the advisor will truly have your best interests at heart, as he or she will not be working on the basis of how much any particular lender will pay them in commission. This gives buyers the peace of mind that they need, as they know that the advisor will be looking for the best deal possible for them having no financial reason to do anything other than this.

There are a number of different financial advisors available that offer assistance with mortgages and other financial products. It is a good idea to check on the fees charged by each of these advisors and also check on their experience and testimonials wherever possible.

Tags: financial advisors, mortgage, Mortgage loan, advisor, finance

Boost your chances of getting a mortgage as a first time buyer

As many people are already aware getting a mortgage can be difficult for anyone these days, with the banks exercising extreme caution over who they lend to and putting a range of restrictions in place with regards to mortgage loans. However, one of the groups most likely to experience difficulties when it comes to mortgage loans is first time buyers.

There are many first time buyers that are desperate to get onto the property ladder, and have been for some time. However, for many years these potential buyers have faced difficulties when it comes to getting a property. Until the global credit crisis swept the nation first time buyers could get mortgages without even having to put down a deposit in most cases, but many could not afford the extortionate house prices that resulted from the many years of house price inflation.

Once the credit crunch hit property prices began to tumble, which is what many first time buyers may have been waiting for. However, at the same time as this the banks started to really rein in their lending, wiping out the 0 percent deposit that so many first time buyers had come to rely on and demanding huge sums up money upfront before even considering granting a mortgage loan. This has left first time buyers out in the cold once again, albeit for different reasons.

Whilst there is no doubt that first time buyers still face many challenges when it comes to getting a property there are some steps that they can take to try and improve the chances of getting onto the property ladder. One important thing to remember is that lenders are being very cautious over who they lend to, so it is advisable for first time buyers to be prepared and be aware of their credit rating. Before applying for a mortgage buyers are advised to order a copy of their credit report and check how good the rating is, as this will provide an idea of how likely it is that a mortgage will be granted.

Another think to consider is the level of deposit that the lender will want. Before wasting time looking at properties and applying for mortgages first time buyers should plan their budgets and spend time saving as much as possible, as the higher the deposit the more likely it is that an affordable mortgage will be granted by lenders.

Finally, more and more first time buyers are now turning to shared equity schemes, where they get a mortgage out to purchase a percentage of a property and rent the remainder from a housing association until they can also afford to buy the remaining share, which can be done in stages. This is a more effective and affordable way for first time buyers to get onto the property ladder these days, and it is possible to get a brand new house without having to take out a huge mortgage by using this option.

Tags: mortgage, money, potential buyers, Mortgage loan, ladder, first time buyer, finance

April sees drop in mortgage lending

The mortgage lending figures for April in the UK have suffered a fall according to recently released figures. The figures were released by the Council of Mortgage Lenders earlier this week, and showed that in April gross mortgage lending fell by 12 percent.

The figures from the Council of Mortgage Lenders showed that the level of mortgage lending for the month reached a value of £10.2 billion. This marks the lowest level of mortgage lending in the UK during April for ten years according to reports. The figure reflected a £1.4 billion drop compared to the previous month, with mortgage lending levels for the month of March coming in at £11.6 billion.

The level of mortgage lending this April was also down by 1 percent compared to April of last year, when the mortgage and property markets were still severely depressed. Officials from the Council of Mortgage Lenders said that there were expectations of a slight decline in mortgage lending for the month of April due to a number of factors, including when the Easter holiday fell this year.

However, despite the discouraging figures the Council of Mortgage Lenders has said that the mortgage market is still on target at present to reach its aim of lending £150 billion in mortgage loans over the course of the year.

Whilst the mortgage market has seen some level of recovery over recent months there are still a number of problems facing groups such as first time buyers. Many are still being expected to raise a fairly sizeable deposit by lenders, which is hampering their efforts to get onto the property ladder, and these demands are being made due to the financial difficulties that are still affecting some of the banks themselves as they try to recover from the financial crisis.

Tags: gross mortgage lending, Mortgage loan, finance, mortgage, financial crisis

Lloyds cracks down on interest only mortgages

Over the years interest only mortgages have become popular amongst certain property purchasers, such as first time buyers that want to keep repayments down and those on lower incomes. With interest only mortgages the borrower repays only the interest on the loan over the specified term, which means that at the end of the term the actual loan itself still needs to be repaid.

The idea is that when these mortgages are taken out the borrower also sets up another investment so that over the years they can raise the money to pay the loan off in full at the end of the term. However, officials believe that many people that took these mortgages out had no plans in place to save for repayments of the loan at the end of the term, and many were simply relying on the value of their property increasing sufficiently to sort out the loan.

Lenders have become far more cautious about taking risks over the past couple of years, since the onset of the global credit crisis, and according to recent reports have now started to crack down on risky interest only mortgages. Many lenders have been reluctant to deal with interest only mortgages for some time, but more and more are now set to become wary of these deals according to reports.

One banking giant, Lloyds TSB, is said to have already started its crackdown on interest only mortgages, and has placed a cap on the amount that customers can borrow without repaying the capital. It is now thought that other lenders will quickly follow suit in terms of clamping down on these mortgages.

An official from Savills Private Finance commented on these interest only mortgages, stating: ‘Lenders see them as being extremely risky, and they would much prefer everybody to have a repayment deal. There will be fewer and fewer of them, and they could eventually disappear.’

Tags: Mortgage loan, lloyds, loan, finance, risky, Interest-only loan, mortgage, tsb

Have things improved for first time buyers?

Over recent years things have gone from bad to worse for many non-homeowners that may have been hoping to get onto the property ladder. After years of soaring property prices many would be first time buyers will have been pleased to learn that prices starting plummeting following the onset of the global credit crunch in the latter part of 2007.

However, just as things looked as though they were on the up first time buyers were hit with a plethora of new problems, with the global financial meltdown resulting in severe restrictions on mortgages. This also led to banks increasing the level of deposit that they wanted from first time buyers, making it impossible for many people within this group to scrape together the minimum deposit that lenders were demanding to get an affordable mortgage.

The global credit crunch and he recession left many first time buyers hoping that their luck had changed and that things would ease off. For many this marked the chance of being able to get a property at last. However, this is not what has happened according to recent reports. Despite the recession being over and reports that banks were being more relaxed over lending first time buyers are still in for a bad time.

A number of reports have claimed that the banks are being increasingly cautious about mortgage lending and are still only offering their best deals to those that have a fairly sizeable deposit. This means that first time buyers need to be able to stump up a fair amount of cash towards a property if they want to get a mortgage that is affordable.

A number of things are thought to be affecting the decision of banks to continue their caution when it comes to mortgage lending. One has been the uncertainty over the running of the country resulting from the hung parliament following the general election recently. Whilst this is some way to being sorted, with leader of the Conservative party, David Cameron, now named as Prime Minister the country still finds itself in a situation that it has not seen for decades in the form of a coalition government formed with the Liberal Democrats.

Another of the factors thought to be affecting mortgage lending is continued uncertainty over jobs, with banks loathe to take the risk of lending in a climate where the risk of job losses is high.

Tags: time buyers, last, first time buyer, loan, mortgage, finance

Trends in Lending report claims house prices and mortgage lending will remain steady

The Bank of England has recently released its Trends in Lending report, which has shown that mortgage lending levels have remained steady over the first quarter of this year, and that whilst there may be a slight increase in mortgage lending over the course of the year lending levels will remain pretty steady overall.

The Bank of England report also indicated that property prices would remain flat over the course of this year, having increased slightly over recent months. Mortgage availability is expected to increase but only by a slight amount, and Loan to Value ratios are also expected to increase slightly over the course of this year.

Whilst the data from the report reflects improvement compared to last year, when the recession and the financial crisis were still taking their toll heavily on the property and mortgage markets, the climate is still expected to remain challenging for many people that are looking to get onto the property ladder or take out a mortgage for a new property.

Lenders are still likely to be looking for higher deposits, although there has been an increase in the number of lenders that are offering 10 percent deposit mortgages, which has provided some degree of relief for cash strapped first time buyers who have suffered hugely over the past couple of years since the onset of the global credit crisis.

One first time buyer said: “I hope to see the amount of deposit that lenders are looking for to come down over this year, although I’m not sure that it will. I would love to be able to get a mortgage and buy a property but until the deposit level comes down I’m stuck with renting, which is just money down the drain.”

Tags: time buyer, Mortgage loan, house prices, percent deposit mortgages, mortgage, deposit

First time buyers fail to budget effectively

A recent report has indicated that many first time buyers fail to budget properly before they make the move into their new home, and often receive a shock when they realise that they outgoings are going to be far higher than they initially anticipated.

Many first time buyers are budgeting for things such as deposits, mortgage repayments, and shopping, but are failing to get prices for essentials such as utilities, insurance cover, and the like. In addition, many fail to account for costs such as petrol and general spending money when they are working out affordability, and this can come as a shock when they actually move in to the property and start paying out.

Buyers that are moving into a property for the first time and are therefore unaccustomed to the services they will need and the cost of these services are advised to seek advice prior to accepting any mortgage offer, otherwise they could find themselves in a property with a mortgage but may not be able to afford to live there.

Common things such as monthly or weekly shopping, home insurance cover, television licence, utilities, broadband or Internet costs, mobile phone usage costs, and general day to day spending money are amongst the things that many first time buyers fail to budget for when working out whether they can actually afford to buy and live in their own property.

One first time buyer who purchased a property last year said that it was a shock over the first month or so as she realised how many things she hadn’t budgeted for before moving in.

She said: “I’ve had to change my lifestyle completely because of the amount that I am actually paying out compared to the amount I had budgeted for. I wish I’d spent more time working out my budget rather than rushing to buy a property.”

Tags: budget, Mortgage loan, costs, first time buyer, mortgage, finance

Increase in mortgage availability could spell good news for consumers

A recent report has indicated that the number of mortgages on offer to consumers could be on the increase, and access to these mortgage deals may be getting easier, even for first time buyers in some cases. Read more

Tags: Subprime lending, access, Mortgage loan, lenders, Mortgage broker, deal, mortgage

Are you hoping to get onto the property ladder this year?

Over the past couple of years first time buyers have been hit with a whole new problem. Following years of lack of affordability because of the sky high value of properties many first time buyers probably thought that their time had finally come when property prices started to plummet. Read more

Tags: first time buyer, Subprime crisis impact timeline, Mortgage loan, Real estate, mortgage

Recreated paperwork could cause problems for borrowers

According to a recent report many lenders tend to misplace or lose loan and credit agreements, and in some cases this paperwork is even disposed of, which means that if and when the banks need to refer to the agreement for any reason they are having to recreate the agreement. Whilst this is not frowned upon there is one problem that has been highlighted, and this is the fact that the recreated document often has discrepancies that leave the consumer even worse off. Read more

Tags: office of fair trading, credit, High Court, consumer credit lawyer, personal finance, Mortgage loan

Lenders consider lower deposits from borrowers

A number of recent reports have suggested that some lenders in the UK are now considering lower deposits from first time buyers. This comes after a particularly difficult couple of years where many first time buyers and low income families have been unable to get a mortgage because of the extortionate deposits that lenders have been demanding from customers. Read more

Tags: traditional mortgage, Mortgage loan, Consumer fraud, mortgage, United Kingdom, Mortgages

Mortgage arrears up by 30 percent

Over the past year the level of mortgage arrears amongst homeowners in the UK has increased by around 30 percent according to recent reports, and this is despite the fact that the UK base interest rate has been at its lowest level in the history of the Bank of England since April of this year. Read more

Tags: average, current climate, mortgage repayments, place, variety, situation, mortgage arrears, Mortgage loan

Which Age Group Has Been Most Affected by the Recession?

Although everyone has been affected by the recession in some way, recent research points to the fact that those between the ages of 45 and 60 have been hardest hit.

Read more

Tags: age groups, PricewaterhouseCoopers, Mortgage loan, mercy, younger ages, age group, market, recession

Watch for Rising Fixed Rates on Mortgages

Leading mortgage brokers are warning that as the recession comes to a close, fixed rates for mortgages are going to rise. With the current low rates, there has never been a better time to lock in for a fixed term and save money in the coming years with low monthly payments. Ray Boulger, the senior technical manager at broker John Charcol, says borrowers should act now because rate hikes are imminent. Read more

Tags: senior technical manager, better time, outstanding balance, fixed rate mortgages, high price tag, Mortgage loan, Mortgages, Ray Boulger

Homeowners struggle to get better mortgage deals

It has been revealed in a recent report that many homeowners across the UK are struggling to get new and more affordable mortgage deals, as the recession and the difficult financial climate results in lenders still being very careful about their lending criteria. Read more

Tags: Mortgage loan, struggle, Mortgages, cheaper finance, attitude, better mortgages

Over one and a half million live rent free with parents and friends

According to the results of recent research carried out by Abbey there are over one and a half million people aged between eighteen and thirty four that are still living rent free with the friends or parents in the UK. Read more

Tags: rent free, Mortgages, kidults, abbey mortgages, adult living, current climate, Mortgage loan, week

First time buyers still having to put up with renting

For many years many non-homeowners that simply couldn’t afford to buy a home due to ten years of rocketing property values have been waiting in the wings for property prices to start coming down again, over in the latter part of 2007 many were delighted to find that this was indeed happening at last. Read more

Tags: Mortgages, Mortgage loan, first time buyers, first time buyer, large number, year, housing market, bank of england

Savings rates continue to tumble

The base interest cuts that have been applied by the Bank of England over the past few months have been welcomed by many borrowers and industries, and for many homeowners and borrowers the base rate cuts have left them with far more money in their pocket each month as a result in a drop in repayments. Read more

Tags: bank of england, Mortgage loan, savings rates, industry, building society, account, action, ISA

With rents falling is this the time to rent your home?

Over the past year a large number of people have been pushed into renting a home rather than buying one, and this is largely because lenders have become far more stringent over giving out mortgage loans, which has made it difficult for many people to get the finance that they need to purchase a home. Read more

Tags: rents, right time, negative equity, stabilise, chelsea, Mortgage loan, family, order

Consumers still having to pay high deposits for affordable mortgages

Over recent months getting a mortgage has become increasingly difficult and expensive, with many lenders reserving their best deals and lowest interest rates for those that are able to put down a sizeable deposit as opposed to the traditional 5% deposit. The changes in mortgage lending and costs have come about as a result of the global credit crunch, which swept across the nation last summer. Read more

Tags: Mortgages, lending, Mortgage loan, arrangement fees, equity, england and wales

Savings accounts suffering due to high inflation

Soaring inflation levels, high food prices, rocketing energy bills, high petrol costs, and increased borrowing costs have been impacting on household finances in the UK for some months now, and a recent report has shown that many people are now having to raid their savings in order to try and keep afloat financially. Officials have stated that with the economy heading downwards and inflation spiralling upwards Brits are left with little choice but to raid their savings. Read more

Tags: savings accounts, quarter, Brits, savings, money, Mortgage loan, consumers took money

Fewer mortgage lenders willing to offer £1m deals, says expert

Homebuyers looking to spend in excess of £1 million on a property may have difficulty finding a large mortgage to fund their purchase, according to Bestinvest. Read more

Tags: loan, Mortgage loan, expert, downturn, economic downturn, Mortgages, mortgage lenders, Financial services

It’s ‘always worth’ comparing mortgages, says expert

Independent website Your Mortgage has told consumers not to be content with their current mortgages deals because it is “always worth” comparing mortgages from different lenders to try to get a better one. Read more

Tags: Mortgages, compare mortgages, Super jumbo mortgage, Association, council of mortgage lenders, different lenders, finance, Mortgage loan

Building society lending down

The number of loans being handed out by building societies has fallen, according to the Building Societies Association (BSA).

Adrian Coles, director-general of the BSA, said: “Lending at building societies was down year on year. This is partly due to building societies withdrawing products and increasing rates on new lending so that they do not become overly competitive.”

He added that some building societies have found themselves “inundated with applications” and were forced to limit their lending to preserve “high levels of service” as other lenders withdrew from the market.

Mr Coles also believes that the situation may be a product of the “greater level of uncertainty in the housing market” causing prospective buyers to wait.

The announcement comes as the Council of Mortgage Lenders (CML) praised HSBC’s recent offer to match the interest rate of any borrower coming to the end of a fixed rate deal as “a good example of market innovation”.

A spokesperson for the CML said that the offer highlighted that “there is still competition in the market despite obvious pressures”.

Tags: Mortgage loan, market innovation, market, building societies association, new lending, innovation

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

Having mortgage protection insurance puts homeowners in an “ideal situation”

Homeowners should subscribe to mortgage protection insurance, particularly if they have a family to look after, according to Legal & General.

Mortgage protection insurance is often not a priority, with the insurance provider estimating that more people have mobile phone insurance.

In 2006, around 20 per cent of households had Mortgage Payment Protection Insurance (MPPI), according to research by the Association of British Insurers.

However, PR manager for protection at Legal & General Joe Wiggins advised that anyone with a mortgage should consider MPPI, which provides a monthly payment if people are unable to work due to an accident, unemployment or illness.

“Most people don’t fully appreciate that sick pay from an employer does not last that long,” Mr Wiggins said, adding that people could soon find themselves struggling to meet mortgage payments in the event of illness or unemployment.

Last week moneysupermarket.com advised homeowners to protect themselves against the effects of the credit crunch by taking out mortgage insurance.

Tags: family, MPPI, general mortgage, Joe, Association, Mortgage loan, moneysupermarket, mortgage payment protection insurance

Demand for five-year mortgages expected to grow

The number of homeowners looking for longer-term fixed mortgage deals is set to rocket, a leading bank has reported.

Research by Abbey Mortgage Index has shown that buyers seeking a fixed deal lasting five years have doubled in a month to 24 per cent.

The popularity of two-year fixed-term deals rose by just three per cent to 10 per cent.

This is in contrast to tracker mortgages which only five per cent of borrowers said they would opt for.

Nici Audhlam-Gardiner, director of Abbey Mortgages, said: “Recent reports about the shrinking mortgage market seem to have had a profound effect on borrowers.”

Abbey advised mortgage providers to prepare for a rush on longer term deals as borrowers seek stability amid the credit crunch.

The decrease in the availability of mortgage deals is guiding homeowners towards more lengthy mortgages suggests Ms Audhlam-Gardiner.

“Homeowners faced with a dwindling number of mortgage deals seem keener than ever to lock themselves into a deal for longer than two years such as a five-year fix,” she added.

Statistics by Moneysupermarket.com revealed that mortgage deals have decreased by 60 per cent compared to before the economic slowdown

Tags: Nici Audhlam Gardiner, moneysupermarket, Mortgage loan, Nici, mortgage index, slowdown, rush, Business Finance

Up to half of under-30s ‘aim to buy homes’

Around 50 per cent of young people in the UK regard buying a home as a realistic goal for them before they reach 30, new research has shown.

Findings from Alliance & Leicester reveal that the timing of achieving this milestone is pertinent with the average age of a first-time buyer being 29, a figure which has risen from 28 in the early 1990s.

Richard Taylor, head of mortgage products at Alliance & Leicester, said that reaching 30 is milestone for many as it is a deadline for certain ‘achievements’ such as owning a property, getting married or starting a family.

“Even in an uncertain housing market we’re seeing those under the age of 30 feeling confident and optimistic about the prospect of getting onto the property ladder before they say goodbye to their twenties,” he continued.

Renting is the option for those living away from home before attempting to climb the property ladder says the research.

Meanwhile, young people are being urged to should begin their savings “in the cradle” by savings experts with the Scottish Widows.

Tags: option, first time buyer, mortgage products, leicester, Mortgage loan, property ladder, Renting

Consumers should “research the market” when looking for a mortgage

It is important for consumers to shop around when looking for a mortgage, one property expert has claimed.

According to the Council of Mortgage Lenders (CML), buyers should do all the “obvious things” when looking for a mortgage with researching the market being one of them.

Sue Anderson, a spokesperson for CML, said: “Knowing the product range that is out there is obviously important for borrowers so that they can assess whether the person who is advising them is pushing them towards a product that looks suitable for them.”

Ms Anderson added that there are a number of ways that allow you to do this, such as checking the Financial Service Authority’s comparative tables, and the range of published sources on the web from various commercial providers”

In February 2008, the CML reported that there had been a move-away from fixed-rate products as consumers became increasingly attracted to tracker products.

Meanwhile, the mortgage market has been badly affected by the credit squeeze. In October last year, Moneyfacts reported that 40 per cent of mortgage products had “disappeared”.

Tags: finance, credit squeeze, mortgage, credit, fixed rate, year, October

Housing market ‘in worst slump since 1992′

The housing market in the UK has fallen to its worst economic slump since 1992 when it last came out of a financial recession, according to the Royal Institute of Chartered Surveyors (RICS).

With the balance dropping for the sixth month in succession, 54.7 per cent more chartered surveyors reported a fall rather than a rise in house prices, the highest number for 15 years.

Jeremy Leaf, a spokesman for the RICS, said: “A lack of demand and confidence in the housing market is clearly behind the recent price slowdown.”

He added that tightening mortgage lending criteria is a block to many who are keen to take the “housing market plunge” while sellers are struggling to market properties to consumers content to “watch the current economic theatre from the wings”.

According to surveyors, the only part of the UK where prices continue to rise is Scotland with the net balance of surveyors in that country reporting price rises edging up from three per cent to seven per cent.

Meanwhile, a man who did not make any mortgage repayments for 15 years has had his debt erased by judge in an appeal court.

Tags: demand, consumers, market, Real estate, Surveying

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

Bridging loans “should not be employed”

Bridging loans should not be employed “unless absolutely unavoidable” claim a legal body.

AA Legal Services said that although broken property chains remain, they should never be considered a routine factor and if one is obtained as a last resort, it should only be used where the period is limited.

James Molloy, product manager for AA Legal Services, said that the market will never be rid of aborted transactions and broken chains.

“Certainly not without reform around making the commitment to proceed legally binding earlier in the process – as in the Scottish process,” he added.

However, in all cases, and with all financial products appropriate advice in individual circumstances is essential.”

Research from the Times estimated that one in three property chains is broken.

According to new research from Hometrack, house prices dipped for the fourth month running while the average time it takes to sell a property is on the rise.

Tags: Mortgage loan, rise, month, research, Anthropology, manager for AA Legal Services, chains, house prices

Increasing numbers of students preferring to save over travel

Increasing numbers of students are foregoing a gap year to go travelling, preferring to put money away for property, according to new statistics.

Findings from Abbey revealed that 42 per cent of respondents are opting to save towards a deposit on a first home.

This is twice the number of students saving up to go travelling or for a new car after they have graduated.

Nici Audhlam-Gardiner, head of Abbey Mortgages said: “House prices have brought in a harsh new reality for students.”

“They now need to weigh up the benefits of travelling against jumping straight into a career and being able to afford to get onto the property ladder,” he added.

A further 21 per cent of past graduates thought they could definitely have saved more money while at university, while 2.9 million (17 per cent) wished that they had worked harder and played less, according to the figures.

Recent research from Abbey showed that up to 15 million Brits suffered financially as a result of being unprepared for big life changes.

Tags: Nici, life changes, property ladder, Gap, result, Nici Audhlam Gardiner, gap year, Mortgage loan

Careful product choice can save money

Making shrewd financial decisions can still save people money, even in times of tightening credit markets, according to Moneyextra.

The company has revealed that consumers can save a total of £4,225.46 every year by replacing near-worst with near-best financial product, representing a £250 increase in savings available from last year.

Mortgages were among the areas where savings could be made, despite seeing a decrease after global credit crunch, with potential annual savings at £2,586.

Robert Amlot at Moneyextra, commented: “Choosing the right mortgage can help keep your wallet healthy and make the difference between running up other debts and remaining solvent.

“The potential savings on your mortgage account for more than 61 per cent of the total savings to be made.”

He added that while personal loan rates are competitive, lenders are increasingly strict and good deals are generally only available to people with excellent credit history.

“Shopping around for the right savings products can pay dividends,” he said.

Tags: Mortgage loan, money, Robert Amlot, debts, near-best financial product, potential savings, product

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

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: Mortgage loan, market.bernard clarke, credit crunch, cml, Subprime mortgage crisis

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: Bank Rate, Mortgage loan, drop, first quarter, variable rate mortgages, Swaps, leading the way

First-time buyers must look at mortgage ‘options’

People buying a property for the first time are urged to look at the options available to them, said FirstRungNow today.

The property advisors said that, while fixed rate mortgages provide a risk free service, first-time buyers have a range of possibilities available to consider.

Helen Adams, managing director of FirstRungNow, said: “I’m not a great fan of interest only mortgages, myself, because it doesn’t actually help you invest towards your own home – you just pay off a loan.

“But certainly there are some other shared equity or shared appreciation mortgages which offer a solution.”

She added that “long term payback periods” were beneficial because they allow repayment to take place over an extended length of time, taking pressure away.

However, she said, some people only look to the short term and want to be financially “mobile” adding that 100 per cent mortgages a good for people who are not able to provide a deposit or pay stamp duty.

Chancellor Alistair Darling recently announced proposals to assist lenders in providing more ten-year fixed rate mortgages.

Tags: rate mortgages, Mortgage loan, property, stamp, today.The property advisors, Chancellor Alistair Darling, cent mortgages, fixed rate 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: specific buy-for-uni mortgage, housing, Mr Cook, Mortgage loan, buy-for-uni mortgage, Darren

Fool.co.uk: House price standstill could ‘imprison’ first-time buyers

Many first-time buyers may fail to sell their home at a price high enough to cover their mortgages if house prices begin to fall.

Fool.co.uk states that people who have recently bought homes on 100 per cent mortgages could suffer from the evening out of house prices and that they have cause to be “concerned”.

Although 100 per cent mortgages are not a significant part of the market, the Council of Mortgage Lenders estimates that they are taken out by one in every 20 first-time buyers.

The website warned that these homeowners would suffer from even a small downturn in prices, leading them into negative equity.

However, David Kuo, head of finances at Fool.co.uk, advised: “They can tip the scale in their favour by ensuring that they choose repayment mortgages rather than the cheaper interest-only options. They should also overpay their mortgage as often as they can afford.”

Mr Kuo added that doing this would help them to chip away at their debt and give them more equity in their homes allowing them an improved choice of mortgage provider.

In the UK, house prices have seen a slowdown in recent weeks with borrowing costs still high and the Bank of England’s decision to hold interest rates at 5.75 per cent meaning the pressure on people repaying mortgages remains high

Tags: David Kuo, market, chip, borrowing, people repaying mortgages

Mortgage slow-down expected as prices rise

A slow down in the market is forecast as a result of rising mortgage prices, according to Andy Hornby, head of HBOS mortgage lender.

He warned that property owners were at risk from the fluctuations to the mortgage market and predicted that concerns regarding these changes could end in homeowners having to spend more on mortgage repayments.

Speaking to a Merrill Lynch banking conference in London yesterday, he said: “I suspect that the mortgage market is about to undergo a fundamental shift. Over the past three years we’ve seen a major decline in mortgage margins.”

He added that mortgage cost adjustment would continue on the back of “wholesale funding costs”.

Lenders’ rate increases have been widespread in the UK following the sub-prime mortgage crisis, causing anxiety for those considering taking out a loan on a house, many of whom decided not to, according to National Homebuyers.

HBOS is a retail, business, corporate banking, investment and insurance services company. It is the UK’s biggest mortgage and savings provider.

Tags: retail, Mortgage loan, conference, National, United Kingdom, provider

Moving mortgage could save money

Mortgage-payers are often forking out over the odds for their home loans and should consider re-mortgaging, according to one industry publication.

Moneywise magazine says a general apathy about changing providers, leaves people, in some cases, paying hundreds of pounds more than need be the case.

Rachel Williams, editor of Moneywise, said: “If you are paying your lender’s standard variable rate, you could be paying more than two per cent more than you need to.”

There are fears that, in the light of the recent Northern Rock debacle, homeowners are wary of changing providers, but Ms Williams said that savings could still be had even if they keep the same lender and switch product instead.

“The easiest way is remortgaging with your existing lender, because then it’s just a case of signing a few forms and being transferred,” she said.

Various factors would determine the viability of switching, such as arrangement fees, early redemption charges and tie-in periods, but even so significant savings can be had.

On an interest only £100,000 mortgage, at a rate of 7.75 per cent (SVR) comma you could save £166 per month if you switched to a scheme on 5.75per cent.

Various products are available including standard variable, fixed, and tracker – which typically tracks the Bank of England base rate.

Tags: variable rate mortgage, publication, Mortgage-payers, Mortgage loan, bank of england base rate, easiest way, variable, redemption charges

First-time buyers not alone in mortgage woes

The recent credit crunch will hit first time buyers and other mortgage buyers equally hard, the Council of Mortgage Lenders (CML) has warned.

The trade association for the mortgage lending industry said that the tightened lending criteria being employed by most providers in the wake of the recent credit squeeze would not hit first time buyers any harder than the rest of the mortgage market.

Bernard Clarke, a spokesman for the CML, said: “First-time buyers have had affordability problems for a considerable period of time. Those have been driven by the rise of property prices relative to incomes, and that’s much more significant for affordability.

“I have no reason to suspect that the range available for them will be affected any more than it will for other buyers, but we have already acknowledged there may be some restrictions in the range of products available and some effect on the supply of mortgages in the market place.”

The current credit squeeze has already seen Northern Rock left in hot water, while many other providers have been quick to up their rates as well as tightening their lending criteria.

Most recently, provider Alliance & Leicester upped the rates on all of its two year tracker mortgages by between 0.1 per cent and 0.2 per cent.

Tags: mortgage market, alliance & leicester, hot water, Mortgage loan, recent credit squeeze, mortgage, Bernard Clarke

Excess exit fees scrapped after consumer pressure

Excess exit fees for mortgage holders looking to switch, which had previously been levied by mortgage providers, are to be paid back, after consumer pressure and a ruling by the Financial Standards Authority (FSA).

Providers had presided over big increases in exit fees – with some doubling them in the last three years – for little extra cost incurred. This was seen as unfair by consumer groups.

The FSA, agreeing with customer complaints, had demanded that providers either justify the extra charges or return the difference, and set yesterday as a deadline.

Providers, after strongly resisting the ruling initially, have now decided to pay up on deadline day. Millions of customers will now get their money back.

Melanie Bien, at broker Savills Private Finance, told the Times that “Anyone who has remortgaged in the past few years… will be able to make a claim, depending on their lender’s stance.

“Lenders are concerned about the scale of claims they are likely to see regarding exit fees, which may be why borrowers will have to make a claim themselves, rather than wait to be contacted by their former lender”, she added.

Consumer groups will now look to their next battle, which will concern what are perceived as “excessive” overdraft charges from banks. A judgement from the Office of Fair Trading (OFT) is expected later this year.

Tags: mortgage holders, customer complaints, exit, borrowers, Mortgage loan, battle, Mortgage-backed security, Private Finance

100% plus LTV mortgages set to grow in popularity

The 100 per cent mortgage market is set to grow, according to industry experts.

Brokers were polled by Alliance & Leicester, which reveals today, with 78 per cent predicting that increasing amounts will be taken out in future.

Almost three quarters said that they had already advised clients on the product, which is at present only offered by five lenders.

Mortgages of 100 per cent or more LTV (loan to value), the purchase of which means that no lump sum or deposit need initially be paid, might prove especially popular with first-time buyers.

Jeremy Claridge, head of specialist mortgages at Alliance & Leicester, said: “We are pleased to see that most brokers predict this market will grow within the next two years as these products offer a great opportunity for borrowers who need some additional funding.

“The mortgage market is continually changing and there is an ever-growing need to find more flexible products to allow people to get on the housing ladder or to manage their existing borrowings in a better and more efficient way.”

The rise in popularity could be seen as a consumer response to runaway increases in house prices. The latest government figures, released earlier this week, show that the average house in London was almost 15 per cent more expensive than this time last year.

The data also revealed that the overall year-on-year inflation rate for house prices stood at 10.9 per cent.

Tags: Mortgage loan, LTV, opportunity, housing ladder, london, funding, week

Brits emotionally detached from their homes

The majority of British homeowners are not living in their dream home and remain emotionally detached from their property.

Research by Alliance & Leicester shows that just 2.3 million UK adults have found their dream property, while the rest are simply making do.

Mortgage holders were asked, on a scale of one to ten, how emotionally attached they were to their homes, with the average rating being just 5.83.

This means that most Brits see their current home as a halfway house and most would rather live somewhere else.

Alliance & Leicester suggests that this may be down to the fact that many people are so desperate to get onto the property ladder that they will accept anything.

The firm also points to an increasing number of new-build flats that lack character and are primarily seen as an investment by young buyers.

“It seems people are happy to move into a property that isn’t their ideal, in order to move up the property ladder and reap the benefit of rising house prices,” said Stephen Leonard, director of mortgages at Alliance & Leicester.

“More and more people seem to be looking for property on the basis of an investment, rather than buying their dream home.”

The research also found that location is the most important factor when choosing a home, followed by price.

Tags: property, first time buyer, Mortgage loan, rest, benefit, house prices, basis, Stephen Leonard

Discounted Mortgages – Compare Introductory Discount Mortgage Offers

With so many different types of mortgages available in the UK it can be difficult for homeowners or property purchasers to determine which is the best one for them.

Those looking to remortgage or those taking out a first mortgage can usually select from a range of special deals on mortgages from lenders that want to entice customers. Once of these is the discounted rate mortgage, which enables the borrower to enjoy lower monthly repayments compared to those on the lender’s standard variable interest rate. Read more

Tags: Mortgage loan, Mortgages, remortgage, property, variable interest rate, discounted mortgages

Savers may be missing out

The recent 0.25 per cent interest rate rise was bad news for borrowers but was more warmly received by savers.

The Bank of England’s decision to increase the base rate to 5.5 per cent should mean that savers earn more interest on their money.

However, the Post Office is warning that many people are not benefiting because banks and building societies are failing to pass on the new rates.

“It’s easy to become a base rate loser when account providers fail to pass on interest rate rises in full to their customers, leaving people hugely out of pocket,” revealed Richard Norman, head of savings at the Post Office.

“Interest rates have risen sharply over the last year, and many experts believe there are further hikes to come.

“As people tighten their belts due to rising mortgage payments, they should make sure any money they have in savings is working as hard as it can for them,” he added.

The Post Office claims that many of the largest high street banks and building societies are failing their customers in this way and the financial losses can be huge.

The firm points out that a saver with £5,000 in a typical instant access savings account may have lost out on £145 in interest if their bank has not implemented the one per cent rate rise we have witnessed in the past year.

Tags: GBP, bank, one per cent, finance, percentage, base rate loser

Financial landscape changing for youngsters

Today’s under-25-year-old’s are too saddled with debt to get married or leave their parents’ home but believe that they will be able to get a mortgage soon.

New research by enagage Mutual Assurance shows that this age group is confident of being able to afford a property much earlier than people did in past generations.

The study shows that under-25s are living with their parents three years longer than older generations did and they are also getting married four years later.

However, they anticipate being able to buy their first home one year earlier despite property prices rising.

The reason behind this seemingly skewed view of the future, says engage, is that today’s under-25s are more accustomed to living with debt than previous generations.

“With consumer debt at an all-time high, 125 per cent mortgages readily available and credit at our fingertips, today’s young generation has become more accustomed to living with debt,” said Karl Elliott, engage spokesman. “As a result, attitudes to financial milestones are changing.

“While it is encouraging to see that today’s under-25s are not put off by ever-increasing house prices, it is important that they are as prepared as possible when it comes to savings.

“By putting away a little and often over the long-term, both parents and off-spring can cope better with the financial milestones to come,” he added.

Tags: ever-increasing house prices, debt, United Auto Workers, Mortgage loan, youngsters, generation

Cheapest properties all in the north

A new survey has found that the cheapest homes in England and Wales are available in Middlesbrough.

Website mouseprice.com found that it is possible to afford a home with a mortgage of just £21,290 in Tower Green in the city.

The top 20 streets for cheap houses are all situated in the north, with many areas still home to properties which are selling for less than £30,000.

That figure is in stark contrast to the average house price throughout the whole of England which currently stands at £200,000.

It is believed that some house prices in the north remain so low as a result of demolition plans on a specific street and right to buy sales.

Despite the top 20 being dominated by properties in the north, the survey did find a number of homes which are available for less than £100,000.

Kingsbridge Circus between Brentwood and Romford in east London is the capital’s cheapest street.

If you are considering buying a property it may be worth purchasing in an area which is due to be regenerated as the price is likely to go up in the future.

Tags: Romford, Mortgage loan, demolition plans, mortgage, Tower, GBP, home, Middlesbrough

New buy-to-let trend

A new trend is developing in the buy-to-let market, with people buying homes and renting them out then using the money to pay their own rent.

Many first-time buyers are finding it so difficult to buy a property in the south, and in particular London, that they have to rent, says website SpareRoom.com.

However, they feel as though they are wasting money this way, so they buy a house in a cheaper area and rent it out.

The rent they receive from this property then goes towards paying their mortgage and their own rent but, in the mean time, they are buying a home.

“We’re seeing a definite increase in young first-time buyers taking on a bigger mortgage than they can afford on their own and renting out a second room to pay for it,” said Rupert Hunt, founder of SpareRoom.

“Not everyone wants the risks that come with joint ownership. Until recently it has been tricky for people to get a big enough mortgage to buy somewhere with a second room to rent out, but things are getting easier.”

In response to this growing trend, many mortgage providers are now offering loans which take into account income earned through renting another property.

Tags: young first-time buyers, Renting, trend, Politics, Real estate, way, Equity sharing, Mortgage loan

Mortgages rise above base rate

The Co-operative Bank, Alliance & Leicester and RBS Natwest high street banks have all increased their mortgages rates by more than the 0.25 per cent rise in the base rate introduced by the Bank of England in January.

While the Co-operative standard variable rate (SVR) has risen by 0.35 per cent, reaching 7.24 per cent, Alliance & Leicester raised its SVR by 0.3 per cent to hit 7.39 per cent and RBS Natwest added 0.3 per cent, taking its SVR to 7.44 per cent.

SVR is the standard rate a customer’s mortgage reverts to after the time-limit on a fixed-term mortgage deal such as a tracker expires.

Mortgage SVR rates rose by an average of 0.51 per cent over 2006, Moneyfacts.co.uk recently revealed – and adjustments to SVRs following interest rate hikes can accelerate their growth.

Over the last six months, when the Bank of England has raised the base rate three times, 13 mortgage lenders, including the Bank of Scotland, Britannia and the Co-operative Bank, have put up their SVR by more than the 0.75 per cent total increase in the base rate, Savills Private Finance has shown.

Tags: svr, mortgages rates, mortgage lenders, interest rate hikes, bank of england, Mortgage loan, cent total increase

Banks top mortgage lenders table

Banks remained the cheapest mortgage lenders for existing borrowers in 2006.

That is according to a new study by financial research company Defaqto, which also discovered that there was a huge difference between the cheapest and most expensive.

There was a difference of almost £500 between some mortgages, with HSBC being named the cheapest for standard variable rate mortgages or their equivalent.

HSBC was closely followed by Intelligent Finance, while the next three in the top five were building societies (Skipton, Nationwide and Britannia).

“Despite two Bank of England base rate increases last year, on average they did not change significantly from 2005 so it’s not surprising that it cost virtually the same to service a standard variable rate mortgage in 2006 as it did in 2005,” commented David Black, head of banking at Defaqto.

“While it is recognised that standard variable rate mortgages are only one type of mortgage, they can represent an important benchmark in competitiveness.

“This demonstrates why borrowers must take the time to check that they have the most appropriate mortgage,” he added.

The research was based on the amount of gross interest payable on a £50,000 interest-only mortgage and specialist providers, privilege and loyalty rates were not included.

Tags: interest rates, Mortgage loan, Defaqto, nationwide, mortgage lenders, banks