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

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Stop Overpaying Your Mortgage

In the past year, homeowners have been advised to overpay their mortgage whenever possible. However, this advice has changed in light of the news that banks and buildings societies have increased the interest rates they are paying on savings accounts. Read more

Tags: brokerage firm, savings accounts, mortgage repayments, overpay mortgage, lower mortgage payment, advice

Rate cut could benefit many homeowners

The latest interest rate cut, which was announced after the February 2008 Monetary Policy Committee meeting, could benefit many homeowners according to recent reports. This comes after nine out of the ten top mortgage providers in the UK announced that they would be passing on the full 0.25% rate cut to consumers. Many lenders rushed to announce their intention of passing on the full rate cut following the Bank of England’s announcement. Read more

Tags: finance, variable rate mortgage, recent reports, borrowers, mortgage, mortgage repayments

HSBC: Rate matcher offer extended

HSBC has announced that all UK homeowners who are due to come off their fixed-rate mortgage deals before August 31st will now be able to apply for the bank’s rate matcher mortgage offer. Read more

Tags: head, hsbc ratematcher, fixed rate mortgages, mortgage repayments, finance, lending, Financial services

Brits’ confusion over interest rates ‘worrying’

It is “worrying” how few people in the UK fully comprehend the impact of rising interest on their mortgage repayments, said CreditExpert.

According the credit report monitoring service’s Personal Credit Index survey, as many as 70 per cent of people asked, were not clear of the implications of the effect of interest on an example given to them and gave the wrong answer.

Respondents were asked to estimate the effect of a 0.5 per cent interest rise on monthly repayments for an interest-only mortgage of £100,000. Almost a fifth (19 per cent) guessed at £80 while 17 per cent estimated it at no more than £10. In fact, the correct answer was a £40 increase.

Furthermore, around eight in every ten mortgage holders were unaware of the meaning of annual percentage rate (APR).

Jim Hodgkins, managing director at CreditExpert.co.uk, said: “Although the current Personal Credit Index shows that people generally are more confident than in the last quarter, the lack of understanding of key terms and the effect of interest rate changes is worrying.

“It’s important for people to be familiar with standard financial terms and stay on top of changes that affect their personal finances so they can make the best possible decisions and choices.”

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‘Risk element’ to interest only mortgages

Customers choosing to invest in an interest-only mortgage risk falling into negative equity if housing prices drop after they have secured the loan, a finance expert has warned.

Re – Financial Planning explained that clients taking out insurance-only mortgages, which allow them to just pay back the interest on the sum borrowed and repay the original capital debt upon the sale of a property, would lose less money each month through mortgage repayments but face extra risk.

Not only would they still have the original loan repayment hanging over their heads, but they could be left owing their mortgage provider money after the sale of their property if house prices had fallen instead of climbed, explained David Higgins, director of Re – Financial Plannign.

“Any client taking on an interest only mortgage is adding an extra dimension of risk over and above what they would normally have with a capital repayment mortgage,” he said.

“I think mortgage lenders are more lax than they’ve ever been. The high property prices have lulled them into a false sense of security. They know that even if the person doesn’t have the means to pay off the mortgage that they have adequate security.”

According to MoneyFacts.co.uk, the recent credit crunch is starting to effect the buy-to-let sector, as providers begin to tighten credit criteria, raise fees and a withdraw products from the market.

Tags: mortgage repayments, Interest-only loan, Real estate pricing, security, money