Popularity of equity release in the rise

According to a recent report the popularity of equity release schemes is on the up, and experts state that the quality and service in this area is also improving.

Equity release schemes have gained a bad reputation and have been at the centre of controversy, with one equity release provider recently being fined by the Financial Services Authority for giving inaccurate advice to consumers. However, despite its poor reputation equity release is becoming a hit with older homeowners.

According to Norwich Union these equity release schemes are particularly popular with homeowners that are close to retirement. In a survey of 1600 people between the ages of 50 and 56 one in ten stated that they would consider equity release programmes in the future. These schemes were not as popular with those that had already retired, with survey results showing that only one in twenty retired consumers would look at equity release.

One equity release worker stated that the information provided to consumers these days is far more detailed and comprehensive.

She said: ‘The market today is very different. The paperwork given to customers before they sign goes so much further. It really shows what they’re getting into.’

A Prudential equity release customer also said: ‘I was afraid of the financial bits, but my neighbour sat in on one of the meetings. It told me how much I could draw down and I’ve taken about a third of an agreed maximum.’

She added: ‘The compound interest rate is the nasty bit. The man from the Pru worked out that on average I’m likely to live another 27 years. He then told me how much I’d owe, based on the interest rate, if I borrowed varying amounts over various times.’

Alan Wright
26th November 2007

Tags: equity, mortgage, home, loan, release, property, value

Rate falls ‘will not affect mortgage market’

Any drops in the interest rate over the coming year will have little affect on the mortgage market, an industry expert has said.

According to Firstrung, following the credit squeeze this year the market is “completely detached” from the Bank of England base rate, with the average rate at two per cent higher than that of the base rate.

Paul Holmes, chief executive of the mortgage brokers, commented: “We always used to look at Bank of England decisions to see what our mortgage rate was going to do.

“But all of a sudden the dislocation, the gap, is huge between what the lenders do and what the Bank of England does.”

He added that in excess of 40 per cent of mortgage products have been “stripped” from the market, although there is no shortage of products.

Furthermore, he said, there is a need for a “contraction and consolidation” of the market, rather than increased product innovation.

Tags: mortgage, year, average rate, bank of england, England base rate, base rate.paul holmes

FSA to publish paper on greater transparency

The Financial Services Authority is to publish a paper on greater transparency next year, stating that the aim of the paper is to discuss the “purpose and possible effects of greater transparency”.

The paper is to be published early next year according to officials from the Financial Services Authority. This comes amidst calls from consumer groups for the FSA to name and shame financial companies that do not adhere to its rules.

The FSA has described itself as an “open and transparent regulator”. However, campaign groups state that the regulator must start naming and shaming those that breach its rules and regulations. The Financial Services Authority has come under fire for not naming the companies that fail on mystery shopping exercises or those that are found guilty of mis-leading advertising.

An official from campaign group Which? stated: “We think additional transparency is essential. Keeping things secret doesn’t help the consumer. We need more effective enforcement, the imposition of higher fines and greater use of naming and shaming. If the FSA can hit companies’ reputations as well as their bottom line, it offers a strong incentive to comply with regulation”.

The National Consumer Council agreed, with one official stating: “As a matter of principle, consumers have a right to know whether or not firms comply with the rules and treat customers fairly. Regulators hold much information that would equip people to make better decisions. We hope the FSA’s discussions lead to speedy action – information is a powerful tool in consumers’ hands.”

The Information Commissioner’s Office recently ordered the FSA to name twelve companies that were accused of selling endowment mortgages with inappropriate charges. The FSA is appealing against the Freedom of Information rulings made by the ICO.

Tom Smith
19th November 2007

Tags: fees, fsa, mortgage, charges, deals, clear, transparancy

Mortgage and housing fundamentals ‘broadly positive’

With such variety in predictions about which direction the markets will take, IMLA have said that there is a “broadly positive” outlook for house prices and the mortgage market.

It explains that this trend is unclear due to the disparity between demand for houses and the supply available, as well as the “inadequate” amount of new builds happening over the past years.

Executive director of IMLA, Peter Williams, commented: “Without doubt, there are some clouds on the near horizon but IMLA’s view is that, if the market correction gathers pace in the way some pundits suggest, then we should expect firm action by the Bank of England to support the financial markets, provide liquidity and, if necessary, cut rates to protect confidence and help the markets recover over the medium term.”

He added that, inflation in house prices varies from place to place across the country, saying that, realistically, it will only be those who have bought a property at the market peak who will be effected by the market slowdown.

Tags: bank of england, amount, cut rates, pundits, property, market, market peak, mortgage

Younger couples could be better off renting than buying property

Industry experts have stated that younger couples on average incomes could be far better off financially renting a property in England and Wales rather than purchasing.

Although there is no investment element in renting a property it is estimated that the cost of renting an average two or three bed house in England and Wales is around two thirds the cost of a 100% mortgage, making it the more affordable option for those on average incomes.

In the past the cost of renting a home was more or less the same as taking out a mortgage to buy one, and therefore purchasing was the more sensible option. However, due to the rising value of property in England and Wales, which has rocketed over recent years, coupled with rising interest rates, which have been hiked up five times since August 2006, mortgage costs are sky high at present, and many couples and families are now turning to rental properties.

One industry professional involved in the research stated: “Not too long ago, there was little difference between the costs of buying and renting. But while house prices tripled in the years since 1994, private sector rents only increased in line with earnings, and the costs of renting have as a result fallen relative to the costs of buying.”

Research shows that the amount of money that first time buyers now need o be earning in order to get a mortgage is higher than ever, making it increasingly difficult for younger couples and families to get onto the property ladder even with the availability of increased income multiples now offered by many mortgage lenders.

Tom Smith
5th November 2007

Tags: mortgage, cost, market, lenders, rent, buy, own

Signs of housing market cool down

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

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

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

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

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

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

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

Tom Smith
4th November 2007

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

High-end mortgage industry sees growth

Despite only representing a small amount of mortgage business, demand for high-end products is growing, an industry expert has said.

According to Andrew Arnott, a spokesperson for Investec, larger-scale mortgage growth is hailing particularly from “areas of multi-currency mortgages”.
“Certainly more banks offer larger-size mortgages than in the past,” he said.

“A lot of the products on the market aren’t available if the loan size is over, say, half a million or a million pounds.

“It is more specialist players that deal with those sorts of mortgages, so it’s more difficult for borrowers to find products right for them.”

Recent research by Halifax Estate Agents revealed that the number of house sales for £1 million has tripled in the last five years, with 6,107 homes selling for over a million from June 2006 to June 2007.

Halifax has estimated that there are currently 88,000 houses in Britain worth in excess of £1 million.

Tags: high-end products, Britain, research, house, mortgage, loan size, Real estate

Tracker rate deals gaining popularity

Fear over the fate of the UK property market has led to a significant increase in tracker rate mortgage interest.

According to GE Money, tracker and discount products are set to account for a third of all broker business, representing a 120 per cent increase from the last quarter.

The changes results from the fact that 89 per cent of mortgage brokers believe that interest rates have peaked, with nearly half anticipating a fall in the base rate in the next few months.

Subsequently, brokers are increasingly recommending discount and tracker products over longer fixed rate deals.

Gerry Bell, head of mortgage marketing at GE Money home lending, said: “Consumers and brokers alike have clearly been concerned by the recent stress in the financial sector and our research indicates that the market is now being boosted by a possible decrease in interest rates in the coming months.

“This will also be welcome news to those homeowners currently coming to the end of a fixed rate product who are concerned about re-mortgage products and rates that will be available to them.”

The UK markets have felt the far-reaching impact of the sub-prime mortgage crisis afflicting the US this year that has led to worldwide credit squeeze.

Tags: research, mortgage, welcome news, crisis, credit, cent, interest rates, Mortgage broker

BoE reports increased lending to individuals

The Bank of England (BoE) has reported a rise in lending in its Lending to Individuals figures for September this year.

It showed the increase in total net spending to be higher than August by £11.2 billion (0.8 per cent).

Within this figure, net lending secured on dwellings was up by £9.8 billion, up from an £8.5 billion increase in August

The number of remortgaging loans approved in September was up from August at 101,000, with loans for other purposes also on the rise at 67,000

Meanwhile the annualised growth rate increased by 0.1 per cent, despite the twelve-month growth rate seeing no changes, staying at ten per cent.

In related news, the mortgage market has taken a severe blow from recent credit squeeze, with lending at a seven-year low this month, falling 27 per cent last month from September’s figure for 2006.

Experts suggest that this could mark an eventual end to the housing boom and lead to a cool-down in the market and an easing off of house prices.

Tags: News, bank of england, Individuals figures, Subprime crisis background information, blow, mortgage, bank

Consumers advised to inflate earnings to get mortgage

A recent report has revealed that many consumers in the UK are being advised to lie about their earnings on mortgage applications forms in order to enable them to get a larger loan – one that many cannot realistically afford based on their actual earning as opposed to the inflated amount that they state they earn.

This advice is being given to those that self certify, which means that they state their own income and this is often not checked out or verified by the lender.

A number of industry professionals, such as brokers and advisers, have been found to have been advising consumers to put down that they earn far more than they actually do, and this means that they get a larger mortgage loan. However, it also means that the repayments are far higher, as the lender will have based affordability on the earnings reported on the application form.

One man told investigators that he had managed to get a mortgage for eight times his salary by stating that he earned £50,000 per year as advised to do so by his financial adviser – he was actually earning half of that amount. As a result, stated the consumers, he was left repaying a huge mortgage that takes up the vast majority of his income, and has even had to deal with the threat of repossession through difficulties with affordability.

Campaigners are now urging financial regulators to look into this practice and put a stop to it, as it could add to the problems that have spread from the sub-prime market in the United States, leaving many of those in the sub-prime sector unable to cope with their repayments. The practice came to light following an investigation conducted by the BBC.

Tom Smith
24th October 2007

Tags: earnings, loan, mortgage, increase, salary, huge, income

Abbey slated over 125% mortgage

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

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

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

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

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

Tom Smith
24th October 2007

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

Job cuts at the FOS

In a recent report the Financial Ombudsman Service has announced that around a quarter of its workforce will be losing their jobs, as resources are streamlined to fit in with workloads.

Although the Financial Ombudsman Service has been receiving many complaints about bank charges it had been dealing with a high level of complaints relating to mis-sold endowment policies. The number of complaints relating to this issue reach its peak in 2005 but then began to taper off.

It is thought that the workload of the Financial Ombudsman Service will fall significantly in 2005, particularly if banks continue to reduce their overdraft charges, as many have stated they will be doing. Nearly a million complaints relating to endowment policies have been dealt with by the service of the past few years, with around seventy thousand complaints coming in for 2005. However, although more complaints were expected the issue seems to be cooling down.

One FOS spokesperson stated that staff number were being cut in order to align them with demand and workloads, and that it was hoped many of the job cuts would result from voluntary redundancy. The Financial Ombudsman Service is the main point of contact for complaints relating to financial institutions and services. The aim of the Financial Ombudsman Service is to try and resolve disputes between consumers and financial service providers, and award compensation in cases where this is deemed appropriate.

Bosses at the Financial Ombudsman Service will soon be starting consultations with the staff council in order to finalize the details of the job cuts.

Complaints relating to mis-sold endowments have dropped to under thirty thousand for this year, with one official from the FOS stating: “We are not processing the hundreds of thousands of endowment mortgage disputes since 2005.”

Tom Smith
24th October 2007

Tags: mortgage, ombudsman, vuts, financial, endowments, redundancy, jobs

Benefits for many in ‘innovative’ self-cert mortgage

Those without a fixed income or who are self employed will benefit from the self-certification mortgage option.

According to Alexander Hall independent mortgage advisors, it is a pioneering product in the industry and meets the changing needs of these types of customers.

It allows property buyers to declare income without the need to provide proof and is ideal for those who do not have a way of verifying how much they earn.

Chief operations manager for Alexander Hall, Andy Pratt, said: “Some people have multiple jobs, some people are working on commission, bonuses, that type of thing.

“Without true self-cert products, those people in those types of situations wouldn’t have been able to qualify for a standard product.”

He added that in 2006 the 95 per cent self-cert mortgage was introduced which acknowledge the need for “lower deposits” in these types of clients as much as in any others.

Furthermore, he said, there did not seem to be any tightening up of the self-cert market in wake of recent worldwide financial turmoil.

Tags: financial turmoil, worldwide, proof, thing, Andy Pratt

Rejected mortgage applications rise by 60%

In the past six months the number of mortgage applications being rejected has gone up by a staggering 60 per cent.

According to recent research by MoneyExpert.com, the amount of rejections this year has risen from 463,000 between January and March to 738,000 in the last six months.

The increase reflects interest rate rises and more specific lending criteria, the website explained.

Its chief executive, Sean Gardner, commented: “Life is tough at the moment if you’re applying for a mortgage. The financial environment is far more stringent than in the summer of last year and people need to be prepared for rejection.

“Lenders quite reasonably do not want to take risks when there are pressures on how much people can afford.”

Standard and Poor rating agency told the Financial Times newspaper that the mortgage slowdown is due to a “knock” to buyer confidence after the credit squeeze.

It added that mortgage lenders might look to further tighten underwriting standards and pricing on some types of mortgages.

Tags: Financial Times newspaper, underwriting, slowdown, financial, tighten underwriting standards, poor, mortgage

Has the housing market peaked?

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

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

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

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

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

Tom Smith
27th September 2007

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

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: Association, Mortgage loan, mortgage, recent credit squeeze, hot water

Mortgage lending on the rise

Figures released by the British Banking Association (BBA) show that mortgage lending has reached a total of £21.3 billion in July, an increase of 12 per cent on last years’ figures.

The average mortgage loan rose to £156,900 in July, which is a rise of 13 per cent from July 2006.

Net mortgage lending growth rose to £5.7 billion, with unsecured lending rising to £200 million.

BBA head of statistics, David Dooks, said: “With customers seeking to replace deals or fix their mortgage costs, increased remortgaging activity boosted the banks’ lending in July.

“Lower approvals volumes simply reflected the seasonal pattern, so we expect the stable trend in the banks’ lending to continue over the next couple of months.”

Building society lending is not included in the figures – which reflect higher overall levels of remortgaging activity.

Tags: british, David Dooks, stable trend, cent, mortgage, british bankers association, Banking, statistics

Bank of England makes quarterly report

The Bank of England’s latest Quarterly Inflation Report, published today, seems to hint at future interest rate rises.

Charts in the report seem to suggest that inflation will not drop to the bank’s desired level of 2 per cent if rates stay as they are.

The base interest rate has been increased five times in the last 12 months, and currently remains at 5.75 per cent.

Economist James Knightley at ING said that the report was “mildly on the hawkish side”, and signalled that “interest rates have to rise”.

He predicted a rate of 6.25 per cent by the beginning of 2008.

With interest rates whole percentage points lower two or three years ago, mortgage holders on variable rates are currently being faced with big hikes in their monthly payments – a situation which will get worse still if rates rise yet again.

Analysts Morgan Stanley estimate that 70 per cent of mortgage holders in the UK are now on variable rates, compared with 20 per cent just five years ago.

Tags: Morgan Stanley, base, percentage, interest rate, quarterly inflation, inflation, mortgage

Man steals from boss to pay mortgage

A North West shop worker has admitted to magistrates that he stole money from his boss to make his mortgage payments, the Wirral Globe reports.

John Griffiths, who previously worked for the Carpet Company outlet in Birkenhead, has admitted to stealing £1,821 from the business.

The court heard how the acts were discovered by fellow employees after discrepancies on sales documents were investigated.

It was revealed that, on around fifty occasions, he had made illegal transactions, all in cash.

Mr Griffiths apologised to the court, and said that he felt at the time that he had no choice but to steal, if he was to keep his home. He had been suffering from mortgage problems for some time.

The newspaper added that he had admitted to having “let himself down”.

He has been sentenced to 180 hours community work and is to pay £500 towards compensation.

Tags: compensation, Globe, mortgage payments, discrepancies, mortgage, West shop worker, John Griffiths, fifty

Abbey customers find mortgages been extended

There was a shock in store for many customers with the Abbey bank last week, as an oversight resulted in many customers’ mortgages being extended by years without them even being informed about it.

The blunder meant that thousands of homeowners have seen their mortgage repayment term extended, in some cases by up to fifteen years. This resulted from the bank failing to make changes to customers’ repayments, and meant that the term of the loan was increased by a considerable amount of time.

Rising interest rates in the 1980s and 1990s resulted in the customers’ paying more in interest on their mortgage, which meant that out of each repayment a higher amount was being applied to the interest. However, because the bank failed to increase customers’ repayments less of the capital was being repaid. As a result of years of underpayments, many have now found that they will be lumbered with a mortgage for up to fifteen more years.

Abbey should have contacted mortgage customers to explain that the rise in interest rates meant that their repayments would have to increase to enable them to pay off the loan within the arranged mortgage term.

However, the bank did not do this, and as a result customers continued with the same repayments, oblivious to the fact that they were not paying enough to cover the capital and interest repayments without extending their mortgage term.

Following a flood of complaints from those affected, an official from the Financial Ombudsman Service stated: ‘This is an issue specific to Abbey because it was not explained to the customers and they were surprised to discover they would have to pay over longer terms. Those affected could still be entitled to compensation.’

Tom Smith
15th July 2007

Tags: interest, abbey, rates, customers, mortgage

50% of income going on mortgage

Some Londoners are spending as much as 50 per cent of their take-home income on their mortgages.

New figures from Woolwich highlight the precarious situation that many homeowners find themselves in and things could get worse with the Bank of England widely expected to announce a 0.25 per cent interest rate rise today (July 5th).

The average first-time buyer in the UK is said to be forking out 32.4 per cent of their take-home income on mortgage payments as property prices boom and people become evermore desperate to get onto the housing ladder.

The figures are a concern for many industry figures and Andy Gray, head of mortgages at the Woolwich, said further rate rises are likely to have a massive impact on the housing market.

“We fully expect the average age of first-time buyers to go up until people are well into their 30s,” he revealed.

“For those lucky enough to be on the ladder, the data suggests that in certain areas of London they are already stretched. The last thing any of them need is a further increase in base rates.”

First-time buyers, many of whom are understandably desperate to get onto the property ladder, are advised to carefully calculate their finances before taking out a mortgage to ensure that they are financially prepared for any future rate rises or changes to their circumstances.

Tags: Real estate, United Kingdom, rise, market, housing market, increase, andy gray, mortgage

Buy-to-let looking good

There is a continued high demand for rented properties and this is good news for people with a buy-to-let mortgage.

Figures published by Paragon show that rent has increased consistently over the last six months, as more and more people look to rent a home.

The average annual rent in England and Wales in May sat at £10,702, signalling a ten per cent increase of £1,037 compared to November figures when the average was £9,665.

A recent study shows that 63 per cent of residential property investors have seen tenant demand grow or remain stable and, as a result, they are looking to increase their buy-to-let portfolios.

“The private rented sector is buoyant as demand from tenants continues to be strong,” said Nigel Terrington, Paragon’s chief executive.

“Many parts of the community, such as students, migrants, people on housing benefit and first jobbers, rely on rented accommodation for their housing needs, and the sector is set to continue this growth over the next five to ten years.”

Mr Terrington went on to say that negative reports about the buy-to-let market are unfounded and said that affordability is playing a big part in keeping the market buoyant.

“Commentators forecasting a downturn in the buy-to-let market have overlooked the fundamental dynamic of the UK housing market – people need somewhere to live, and for many, house purchase is simply not an option,” he added.

Tags: United Kingdom, Renting, executive, demand, Private rented sector

Savers missing out on interest

The Bank of England yesterday (June 7th) froze interest rates at 5.5 per cent but many savers would not have seen any benefit if the rate had risen anyway.

Despite there having been four rate rises since August 2006, the Post Office says that many high street savings providers have not been passing on the benefits.

Interest rate rises are generally viewed as having a negative impact on most people, as those with a loan, mortgage or credit card see their repayments increase.

However, people with savings benefit from a rise in the base rate but only if the provider passes on the new rate.

“Banks and building societies are quick to raise mortgage rates in line with base rate increases, but less inclined to pass on the benefits to their savings customers,” said Richard Norman, head of savings at the Post Office.

“There have been four base rate rises in the last year and the majority of savers have missed out on the full benefit of these.

“Although the Bank of England decided to hold rates today, further rate rises are expected. To make the most of their money, savers need to ensure they check which accounts will consistently pass on rate rises and switch,” he added.

Much like a mortgage with a fixed-rate period, many savings providers offer customers a guarantee that the interest they earn will increase in line with inflation for a specified period of time.

Tags: rate period, interest rate, money, Post Office."There, period

Homeowners warned about fixed-rate deadline

Mortgage holders are being encouraged to plan ahead if they are due to reach the end of their fixed-rate deals in the coming months.

The Council of Mortgage Lenders (CML) says that around 1.3 million people took out a fixed-rate deal in 2005, while a further 1.5 million did the same in 2006.

Most would have had just a one or two-year period of paying a fixed rate and the CML is warning that borrowers must be prepared to start paying increased levels of interest.

According to the CML, the average borrower will face a rate increase of between 0.75 per cent and 1.5 per cent.

This could potentially have a devastating effect on many homeowners and, although the Bank of England has chosen to freeze interest rates at 5.5 per cent in June, rates are likely to increase further in the coming months.

“While today’s [June 7th's] decision not to raise rates is welcome, there is no cause for complacency. More than two million borrowers over the next year and a half will reach the end of fixed-rate deals, and will face the prospect of higher mortgage payments,” commented Michael Coogan, director general at the CML.

“For most people, the scale of the increase will be manageable. But it makes sense for borrowers whose fixed-rates will end soon to start planning ahead now and to recognise that their monthly costs will be higher in the future.

“Anyone who thinks they may face financial difficulties should talk to their lender at an early stage to see what steps can be taken to improve their situation,” he added.

Tags: mortgage, financial difficulties, rates, increase, recognise, end, rate deals

What the recent interest rate rise means for your mortgage repayments

On 11th May the Bank of England increased its rates by another 0.25% to 5.5%, meaning that six million homeowners in Britain will face bigger monthly payments for their mortgages. Read more

Tags: surveyors, rates, prices, cost, bank, mortgage, england

New buyers need parents’ help

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

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

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

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

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

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

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

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

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

£54k spent in lifetime of moving home

We each spend £54,400 on moving home in our lifetime, with much of the money going to third parties.

According to Abbey Mortgages, the average Briton will move home between three or four times in their lifetime and will spend around 2.3 years’ worth of the average person’s salary.

The mortgage lender points out that this money could buy you a brand new one bedroom apartment in Bordeaux but what will grate most for consumers is the fact that a lot of the money does not go towards the property.

In fact, Abbey says that most of us will fork out around £16,000 on one move with the cash going to lawyers, estate agents, financial advisers, removal firms and stamp duty, as well as bringing the property up to a “saleable condition”.

“It’s no secret that moving home is an expensive business – in fact, I’m sure it’s one of the reasons why people don’t move that often. But it’s astounding when you consider just how much it amounts to over a lifetime,” said Nici Audhlam-Gardiner, head of mortgages at Abbey.

“With the average Briton expecting to spend over two years’ annual average salary just meeting the costs of professional fees and stamp duty of their three or four moves, homeowners clearly need all the help they can get.”

If you are considering moving home it is worth shopping around for the best mortgage deal that suits your needs.

Tags: grate, average briton, annual average salary, mortgage, person's salary.The mortgage, lot

Rate rise will hurt homeowners

The fallout from yesterday’s (May 10th) interest rate rise is being felt today, with many organisations warning that the increase could leave homeowners in the red.

The Bank of England announced that the base rate would rise by 0.25 per cent, taking it to 5.5 per cent – the highest it has been since April 2001.

Experts are warning that those with a mortgage are likely to suffer the most, especially as more and more people are taking out loans that stretch them to the absolute limit.

As house prices continue to grow and buyers take out mortgages which leave them financially stretched, Citizens Advice is warning that this latest interest rate rise may tip some homeowners over the edge.

“Today’s interest rate rise will put added pressure on some homeowners. Our evidence shows it only takes a very small change in people’s circumstances to tip them from manageable credit commitments into serious debt,” said Peter Tutton from the organisation.

“Citizens Advice is seeing a rapidly growing number of people falling behind with mortgage payments and in some case threatened with repossession.

“Housing debt is one of our fastest growing problems and it increased by 20 per cent in the last year,” he added.

Borrowers are being advised to talk to their lender if they are struggling to make payments, while those considering taking out a mortgage should check thoroughly that they can afford it.

Tags: stretch, red, Citizens Advice, loan, edge, interest rate, interest rate rise

Another interest rate rise

Interest rates are the highest they have been since April 2001 after the bank of England announced yet another rise.

The 0.25 per cent increase is the fourth rise since last August and is bad news for borrowers up and down the country.

Many experts had been predicting the Monetary Policy Committee’s (MPC’s) decision and some had even forecast a bigger increase of 0.5 per cent.

The rate rise was brought in to keep inflation in check and recent figures show that inflation is currently at record levels.

People with a mortgage, credit card or loan will be disappointed with the decision and will need to keep an eye on their finances to ensure that they can keep up repayments.

Someone with an £80,000 mortgage can expect to see their monthly payments increase by around £12, while those with a £200,000 mortgage will see payments rise by £30.

Experts are also warning that this is unlikely to be the last interest rate rise, with economists predicting more to come in the months ahead.

Tags: rate rise, business, Credit card, bank of england, Financial services, mortgage, bigger increase, loan

Just 96 mins to choose a house

Home buyers are being warned to take more time over choosing the home of their dreams.

New research shows that many buyers spend just 96 minutes viewing a property before taking out a mortgage on it.

This period of time is vastly smaller than how long we spend deciding where we will take our annual holiday, with the average person spending 139 minutes choosing a destination.

In light of these figures, Abbey Mortgages is warning buyers that they should take more time when deciding on a new home or they may be stung by unexpected problems in the future.

“It really is crucial that home-buyers do as much research as possible before making an offer on a new property. Moving is stressful enough, without having to worry about nasty surprises when you arrive at your new home,” commented Nici Audhlam-Gardiner, head of mortgages at Abbey.

According to the mortgage lender, many homeowners have looked back at the buying process that they went through and have regrets.

Of those surveyed, 21 per cent said that they found the decor in the house had been fitted poorly, 14 per cent suffered from nasty neighbours and six per cent had difficulty finding a parking space.

Abbey is offering a mortgage which covers all upfront costs, meaning new homeowners do not have to worry about any nasty surprises.

This deal may benefit many buyers but anyone considering purchasing a property should ensure that they shop around to find the best deal for them and must not allow themselves to be rushed into a decision.

Tags: abbey mortgages, upfront costs, destination.In light, Financial Services Authority, choosing, mortgage, house

Mortgage aimed at FTBs

As first-time buyers (FTBs) struggle to get onto the property ladder a number of lenders are now releasing mortgages aimed specifically at them.

Earlier this month Nationwide announced that it had a fixed-rate 25-year mortgage to offer and now the Co-operative Bank is throwing its hat into the ring.

The firm is offering FTBs a mortgage which is designed to make the first steps onto the property ladder a little bit easier.

It comes with one per cent cashback, which will be helpful in covering stamp duty and any other costs that FTBs may incur.

In addition, the mortgage has a fixed rate of 6.29 per cent for five years and a free basic valuation.

Research by Co-operative Bank shows that many FTBs are still finding it extremely difficult to get onto the property ladder with cost being the main factor.

It is in response to this that the bank has chosen to release its latest mortgage.

“As house prices have continued to rise it is important that the lifeblood of the market – first time buyers – are given extra help to gain that all important first footing on the ladder,” said John Barker, head of mortgages at Co-operative Bank.

“At the Co-operative Bank we believe that new innovative mortgage products such as this should be developed to help alleviate some of the extra worry for first time buyers.”

FTBs are urged to make sure that they are completely aware of all costs before they enter into a mortgage agreement.

Tags: co operative bank, Banking, main factor.It, finance, FTBs, worry, mortgage, mortgage agreement

Brown’s budget 2007

Gordon Brown has delivered his 11th and, almost certainly, his final Budget as Chancellor of the Exchequer.

Mr Brown, widely expected to become prime minister when Tony Blair steps down later this year, gave an eventful speech in which he announced that the basic rate of income tax would be brought down from 22p to 20p.

Those of you looking to get a mortgage on an environmentally-friendly home will be delighted to hear that Mr Brown has completely removed stamp duty from carbon neutral properties up to a value of £500,000.

People interested in using an Isa to help them with their banking can now invest £3,600 in an account without paying tax on it.

The biggest announcement was to with income tax and is one that is likely to help millions of people as they struggle with debt from credit cards and loans.

Mr Brown has completely scrapped the 10p band of tax, reduced the basic rate band from 22p to 20p and raised the point at which 40 per cent income tax is paid to £43,000 from 2009.

The Budget was not received well by everyone of course, with Sir Menzies Campbell calling it “a budget of missed opportunities” that is “asking the poor to subsidise the rich”.

Tags: Govan, tax, prime minister, stamp, mortgage, Menzies Campbell

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: mortgage, GBP, demolition plans, home, Romford

Stub out the interest on your mortgage

People who smoke are prolonging how long it will take them to pay off their mortgage.

That is according to mortgage broker John Charcol which says many people could save themselves thousands of pounds by stubbing out.

With No Smoking Day (March 14th) fast approaching, the firm has highlighted the fact that someone who smokes could save £27,000 in interest by quitting.

The idea is that a former smoker uses the money he or she used to spend on tobacco and puts it towards paying their mortgage off early.

On a 25-year mortgage this will lead to savings of over £27,000 and will reduce the term of the loan by eight years.

“When smokers look at what quitting can do to their finances it may provide that added incentive to finally stub out the habit,” remarked Katie Tucker from John Charcol.

“A 20-a-day smoker can save around £1,825 a year by giving up which, in itself, is incentive enough. Yet when you look at what overpaying by this amount can do to a mortgage, it is even more of an enticement.

“Even someone with a relatively small mortgage of £100,000 will pay £27,417 less in interest,” she added.

John Charcol points out that heavier smokers have the potential to save more money, with someone on 40 cigarettes per day saving around £45,000 on a £100,000 mortgage and shaving 14 years off the loan term.

People who give up smoking not only protect their health but also see a wide range of financial benefits.

A recent report by Sainsbury’s Bank found that an ex-smoker can save up to 48 per cent on a life insurance policy.

Tags: small mortgage, mortgage, smoking, Katie Tucker, smoking day, Mortgage acceleration, report, business

Brits happy to leave country to save for house

The British property market is proving to be so inaccessible to first-time buyers that many are considering moving abroad.

According to research carried out by National Savings & Investments (NS&I), one quarter of us are prepared to live in another country while saving for a mortgage on a property back home.

More than 1,000 people were questioned as part of the firm’s Quarterly Savings Survey and it was revealed that 25 per cent would consider moving abroad.

Some are even prepared to go as far as Australia and New Zealand, while Spain appears to be the most popular destination.

The USA and eastern Europe were also named as likely locations, while 24 per cent of Brits said that moving within Britain would also be an attractive option.

“British people clearly have a great appetite for buying a property in this country but find it difficult to save for a deposit while living here,” commented Dax Harkins, senior savings strategist at NS&I.

“It seems many will go to extreme lengths to achieve their goal, even if it means moving to the other side of the world in order to save up for a deposit back home.”

If you are struggling to get onto the property ladder in the UK it may be worth moving to a nation with a cheaper cost of living and giving yourself the choice of moving back or staying abroad in the future.

Tags: National Savings, buying a property, Quarterly Savings Survey, new zealand, mortgage

How to Save Money on Home Insurance

As a homeowner, if you are proactive in your shopping around, you can save on your yearly premium. There is no rule that states as a homeowner that you must wait till the end of your policy year to renew! By shopping around, if a cheaper price is found for the same (if not better) policy coverage, there is always an option to switch insurance companies as long as a claim hasn’t been made. Read more

Tags: home insurance, claim, mortgage, Social Issues, best quote, buildings insurance, home insurance savings, internet brokers

Tenancy deposit shake up

A new scheme is being introduced which could change the face of property renting in England and Wales.

From April 6th many landlords will be required to protect the deposits of tenants by putting the money in one of three schemes.

The move has been made after homeless charity Shelter warned that too many people are not getting their money back with the landlord failing to provide a good reason.

With the average deposit now sitting at around £700, the withholding of the money can cause serious financial hardship for many and can leave people unable to get a mortgage, or forced to get a loan just to pay another deposit on a rented property.

“This money represents a sizeable chunk of cash for many tenants and losing it unfairly not only leaves thousands of people out of pocket but can lead to homelessness,” said Adam Sampson, chief executive of Shelter.

“The tenancy deposit protection schemes provide a vital safety net for both tenants and responsible landlords, making the private rental sector more professional and fairer for everyone.”

One of the available schemes will physically hold the deposits until the tenancy agreement reaches its conclusion, while the other two will provide insurance cover if a landlord does not return the money.

Tags: shake, Leasehold estate, homeless charity, mortgage, Wales

Costs may fall on 100% mortgages

The fact that many first-time buyers are taking out 100 per cent mortgages may be a good thing.

Many commentators and industry experts have warned that the mortgages are dangerous as youngsters are being saddled with large amounts of debt.

However, Ray Boulger, a senior technical manager at John Charcol, says with more people getting them, we will soon start to see 100 per cent mortgages that are value for money.

“Despite the furore surrounding the availability of mortgages reaching as much as 125 or 130 per cent of a property’s value,” he said.

“In actual fact, very few people qualify for that amount of money and the average plus size loan to value is more like 103 per cent.

“The good news for borrowers here is that as competition increases, the premiums usually associated with these kinds of mortgages should be reduced,” added Mr Boulger.

The rise on popularity of 100 per cent mortgages is down to an increased number of people going to universities, according to Mr Boulger, with more people coming away with debt which prevents them from being able to save up for a deposit.

It is predicted by the technical manager that the cost of borrowing on a 100 per cent mortgage will “come down by the year end”.

Tags: popularity, year end, borrowing, actual fact, economics

Post Office wants end to aggressive PPI tactics

The Post Office is calling for aggressive payment protection insurance (PPI) sales tactics to be stamped out.

It follows the news that credit card company Capital One has agreed to pay a fine of £175,000 following an investigation by the Financial Services Authority (FSA).

The firm was lambasted for its poor sales and administration in regards to PPI and the Post Office has welcomed the FSA’s decision to issue a fine.

However, it also calls upon the industry as a whole to improve its standards or risk losing the trust of customers.

“If we want customers to trust our industry, these aggressive sales tactics must cease to allow for a more transparent and fairer marketplace,” said Claire Oldstein, head of communications at the Post Office.

“The Post Office has long been calling for an open market for PPI sales, where providers are honest with customers that other, cheaper standalone products are available.”

Ms Oldstein also pointed out that few customers know a great deal about PPI, with many unaware that they even have it.

In addition, aggressive sales tactics are leading to many people feeling as though they have no choice but to take out a PPI policy when they get a loan or credit card, even though this is most certainly not the case.

PPI is a voluntary insurance which is designed to protect borrowers should they be unable to work and cannot afford the repayments on their loan.

Many borrowers find that it gives them peace of mind, but it is recommended that you shop around for the best deal and do not feel as though you must take the policy offered by your lender.

Tags: credit, capital one, authority, mortgage, fsa, PPI policy, post office

Northern Rock revises Together Mortgage

In response to rate changes at rival BM Solutions, Northern Rock revamped its Together range of mortgages yesterday by cutting rates across the entire range.

In addition, it has increased the help with costs option to £1,000, added two new short-term fixed rate mortgages and cut variable mortgage rates.

The marketing director of Northern Rock, Anth Mooney, said: “Increasing help with costs to £1,000 on our Together range means that customers can now use help with costs to cover their product fee thereby helping them to offset fee costs.

“Alternatively, help with costs could be used to help offset other costs associated with moving home such as stamp duty, legal fees or home improvements.”

BM Solutions altered rates across its Mortgage Plus range on January 31st. The range had been released last year to rival Northern Rock’s popular Together Mortgage.

Both lenders’ products combine a secured mortgage and unsecured loan and are aimed at first-time buyers.

Tags: Anth, Together range, mortgage, Unsecured loan, Solutions altered rates, mooney, GBP

Mates rates for mortgages?

Taking out a mortgage with a group of friends is an increasingly attractive option for people looking to get onto the property ladder, according to Moneyfacts.

Moneyfacts is saying that while there are various concerns and pitfalls to ‘mate rate’ mortgages, this is nevertheless a form of lending that banks will now consider.

Over 60 per cent of mortgage lenders, including HSBC and Britannia will consider mortgages for a group of up to four individual salaries.

As interest rates and property prices both rise, more people may begin to consider this option.

Julia Harris, mortgage analyst at moneyfacts.co.uk, called the ‘mate rate’ mortgage a “relatively new option for first-time buyers which has not been explored”.

A spokesman from the Council of Mortgage Lenders told Moneyfacts: “Buying with friends can be a realistic way to get onto the housing ladder, and can be cheaper than renting.”

However, pitfalls include the possibility that one party might lose their income or decide to desert the house once the mortgage is up and running.

Tags: mortgage analyst, pitfalls, britannia, hsbc, mortgage, option

UK lending figures rise

Lending to individuals in the UK rose again in November, according to the Bank of England.

Figures show that there was an increase in all types of loans of £10.9 billion between October and November.

Credit cards, personal loans and overdrafts increased by £0.2 billion, while mortgages saw the biggest increases.

In total, November saw a £9.8 billion increase in mortgage lending compared to October, signalling a rise of 0.9 per cent.

“This is a very strong set of mortgage data. Mortgage approvals amounted to a near three-year high of 129,000 in November, while lending secured on dwellings amounted to a three-year high of £9.8 billion,” said Howard Archer of financial consultancy Global Insight.

Mr Archer said that unsecured borrowing “eased back” between October and November as consumers become more concerned abut their future financial situation.

“Elevated debt levels, higher interest rates, rising unemployment and increasing pension concerns mean that there is an increased need for many consumers to try and improve their finances,” he added.

He said that more and more people are switching to secured borrowing to finance their spending.

Tags: overdrafts, abut, need, mortgage, mortgage lending, consumers, Credit Cards, november

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