Posts Tagged ‘mortgage’

Rising rents affect non-homeowners

Monday, May 23rd, 2011

As many people will already know getting a mortgage in the current financial climate has become increasingly difficult, with many lenders currently because very cautious about who they lend to and how much they are prepared to lend. As a result of this the demand for rented accommodation from private landlords has been soaring, with many people fighting over each property that comes up for rent.

However, it has now been revealed that the average rents that are being charged on properties have reached record levels, with the amount having reached an average of £692 per month in April. This is 0.8 percent higher than it was for the previous month and around 4.4 percent higher than the same time last year. Landlords are now charging an average of £30 a month extra on rents in the current climate, putting additional financial pressure on tenants who have no choice but to rent because of the mortgage situation.

London and the South East of England saw the biggest increases in rents. Officials have said that the warm weather and bank holidays weekends in April resulted in a rising number of people looking around for rented accommodation, which has been driving prices up further. The cost of renting has now risen to its same record level that was reached in November of last year.

The number of missed and late payments in April also increased, with one official stating: “The final bank holiday of the month delayed many rental payments, but on top of this, thousands of tenants took advantage of the opportunity and booked holidays, which has impacted on the timely payment of rent. Nevertheless, despite the short-term factors, landlords need to remain especially vigilant over the medium-term. We are yet to see the true picture emerge from public sector spending cuts, and changing employment situations will hamper many tenants’ ability to meet their monthly rent cheque on time.”

Tags: Bank, mortgage, landlords, climate, advantage, financial, April

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Are you at risk of defaulting on your mortgage?

Wednesday, April 20th, 2011

A number of reports recently have suggested that there are many homeowners across the UK who are at risk of defaulting on their mortgage repayments. It is already difficult for many homeowners to keep on top of their mortgage repayments namely because of the soaring cost of living coupled with job losses and frozen pay. With the cost of everything from food and petrol to insurance and energy bills having rocketed many have found that they are struggling to keep up with other financial commitments.

There are fears that if the base interest rate increases those that are on the verge of struggling with their finances will be tipped over the financial edge, leaving them without any means to make payments on their mortgage and leading to possible repossession proceedings. Whilst interest rates are currently at an all time low of just 0.5 percent, where they have been for two years, there are concerns that the Monetary Policy Committee will have to increase the base rate soon in order to deal with soaring inflation.

With this in mind it is advisable for those that believe that they will struggle to get advice as soon as they can rather than waiting for something to happen that will tip them over the financial edge. It is always wise to be prepared in terms of finances, especially given that your house could be at risk if you fall behind on mortgage repayments. This means that households who believe that even if they are not struggling now they could be if the base rate increases should start looking at ways to improve their finances in advance.

There is advice available for those that are struggling with their finances or who believe that they could be struggling with the slightest change in payments such as mortgage, rent, bills, etc. Consumers are able to get free advice from debt charities about their finances and can get themselves prepared for any adverse changes to their financial circumstances by talking to an expert before the rates increase.

A spokesperson from the Consumer Credit Counselling Service stated: “So many households are just managing to make ends meet, that even a small increase in the cost of their mortgage may push them over the edge. As far as possible, families need to think how they could pay such increases and seek help at the earliest opportunity if they feel that they cannot cope.”

Tags: expert, mortgage, Monetary Policy Committee, Inflation, Service, UK, homeowners

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Cash squeeze to be felt by many households

Wednesday, March 16th, 2011

It has been claimed recently by a leading debt charity that many households are set to feel the financial squeeze as a result of a range of factors that is affecting affordability for many individuals and households. The warning comes from the Consumer Credit Counselling Service, which has said that middle earning families are likely to be most affected.

Amongst the factors that are thought to come into the equation are rising interest rates, fewer tax credits, and higher tax thresholds. According to the CCCS many vulnerable families would continue to struggle in terms of their finances, and this was especially true of families or households with a lot of children.

Homeowners are said to have a higher level of unsecured debt than those renting a property according the CCCS data. Almost half a million households were assessed as part of the study by the debt charity. The data showed that the typical age of the person seeking help from the charity was now forty two years, and the age of those in the most debt was between fifty and fifty nine years.

The CCCS said that a rise of just 2 percent on the interest rate could result in the average monthly mortgage increasing by £307, which would put additional strain on households.

The charity said: “The picture is undoubtedly bleak and it seems likely that many more families, including better-off ones, will be increasingly prone to over-indebtedness in the months ahead. It is also not a uniform picture across the country: public sector cuts in terms of jobs, spending and benefits will weigh disproportionately on certain groups of people. The incidence of unmanageable debt bears down harder on specific parts of the country, such as London and Yorkshire.”

Tags: rates, percent, Service, higher level, mortgage, middle earning families, cccs

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How old will you be when you buy your own home?

Thursday, March 3rd, 2011

In years gone by many people bought their first home when they were in their early twenties, and were able to choose from a range of mortgage options such as deposit free mortgages and even 125 percent mortgages to help them get their new home furnished and set up. However, these days things are very different, with the global financial crisis and recession having had a serious impact on the mortgage and financial markets.

For the last few years first time buyers have been facing increasing difficulties in getting onto the property ladder. Over the past decade many first time buyers have been locked out of the market because of the soaring value of property in the UK. House prices rocketed in the years leading up to 2007 leaving many would be buyers unable to afford to purchase a home. However, in 2007 the global financial crisis made its way to the UK and coupled with the recession saw the value of properties start to decrease.

Whilst this may have been seen as good news for potential first time buyers there was also another problem that came at the same time in the form or mortgage restrictions. Over the past few years lenders have got rid of their 100 percent and even their 95 percent mortgages and have been demanding high deposits of 20 percent or more. Being able tom secure an affordable mortgage has also become more difficult for first time buyers despite the fact that the base rate has stood at just 0.5 percent for the past twenty two months.

As a result of all this the average age of the first time has increased to around thirty one at present, which is way higher than it has been in previous years. Furthermore it is claimed that the age of the first time buyer could increase to as high as 44 years because of the difficulties that people are experiencing in raising a deposit. Officials believe that many younger people are finding it very difficult to save in the current climate, and if they wait until they are thirty to start saving it could take up to thirteen years to save just the deposit for a new home.

One official said: “It is unsurprising that the financial crisis has impacted upon people’s savings behaviours, but the concern is that this has created a generation of people who simply do not save and cannot get onto the property ladder. It is clear that people who want to get onto the property ladder are not making the commitment to saving at a young enough age. We know it is not practical for people today to put aside huge amounts of money, but even still it is critically important that saving does not become a lost art.”

Tags: lenders, global financial crisis, mortgage, behaviours, value, business, art

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Low mortgage approvals could lead to falling property prices

Wednesday, December 1st, 2010

Industry experts have said that property prices in the UK could be set to fall again amidst low mortgage approvals. The news comes after figures were released showing that October saw the lowest level of mortgage loan approvals since February. The figures were released by the Bank of England, and showed that mortgage approvals had fallen for the sixth month in a row.

During the month the total number of mortgage approvals came to 47,185. In a consistent market the expected level of mortgage approvals for the month would be around 70,000. Industry experts have said that the mortgage market is still ’severely depressed’. They have also warned that property prices do not show any signs of improvement.

One economist said that six months of mortgage approval falls reflected the severe difficulties that the mortgage market was still experiencing, and added that things were unlikely to change for the better over the course of next year. Banks are becoming increasingly strict with regards to mortgage lending in light of fears relating to job losses stemming from public sector cuts.

Further reports have shown that those with smaller deposits are likely to continue facing much higher rates of interest on mortgages even though there are now more mortgage products available that there were when the country was in the midst of the recession.

One economist said: “The sixth consecutive monthly fall in mortgage approvals for house purchase underlines the message that the mortgage market is severely depressed. We expect it to remain that way throughout 2011. The troubles in the mortgage market are still with us. With little chance of a meaningful recovery in mortgage approvals for the foreseeable future, we expect that credit conditions will continue to weigh on house prices for some time to come.”

Tags: time, mortgage, Public sector, light, credit, way, number

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House sales fall again in September

Thursday, October 21st, 2010

It has been reported that property sales for the month of September fell for a second month in a row in September. The figures relating to property sales were released by HM Revenue and Customs, and showed that in September the number of completed sales fell to just 78,000. This compared to 82,000 in August, and was also lower than the figure seen in September of last year.

This is said to be the first year on year drop in sales since the start of the year, and comes following increased difficulties for those that are looking to take out a mortgage, with continued restrictions within the mortgage sector. The Bank of England has said that mortgage lending has become increasingly difficult, and that lending levels are likely to become increasingly subdued over the coming months. The Council of Mortgage Lenders said that total mortgage lending for September this year came to £12 billion, which was the lowest September figure since 2000.

A number of surveys and reports have been released recently, and many have shown that there has been a stop in mortgage lending and a fall in property prices, which have been fuelled by the drop in property purchases. On the other hand rental prices are said to have increased as a result of the high demand for rental properties from the many people that are not able to get a mortgage to buy a place of their own.

One housing industry expert said: “To see the number fall from 12 months ago is a worry. If transaction volumes continue to fall then we will see even greater uncertainty in house prices in the coming months making it harder for those who have to sell to find a willing buyer.”

Tags: mortgage, property, Sales, finance

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Payment shock for borrowers if interest rates rise

Saturday, October 16th, 2010

Officials have expressed concern that many homeowners in the UK could be left facing financial hardship if the base interest rate increases, and some have suggested that those that are in danger of facing higher repayments may want to do some forward thinking and look into safeguarding themselves against higher repayments.

Industry experts have said that interest rates in the UK could start increasing as early as next spring, and for those that are on variable rate mortgages and have been enjoying the rock bottom interest rates there could be a sudden payment shock as they find that their monthly repayments suddenly soar. One official said that homeowners needed to brace themselves for the possibility of an increase of possibly 2 percent over the next year or two.

One expert said that it was worth homeowners on variable rate mortgages considering the low rates of interest now available on fixed loans, and safeguarding themselves by switching to a low rate fixed mortgage for a few years. This would then protect them from unexpected repayment increases if the base rate was to increase over the next year or two, as their rate and repayment would then be fixed for the specified duration such as two or three years.

Andrew Montlake, a mortgage advisor, said: “As rates have fallen to historical lows people should be taking advantage of some of the attractive fixed rates on offer. While it is nice to be on a low tracker rate, this can change quickly and people have to be sure they can afford not just a 1 per cent rise, but possibly a 2 per cent rise in rates over the next year or two.”

Tags: Fixed rate mortgage, mortgage, Interest, finance, Variable-rate mortgage

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Mums return to work to help with debts

Thursday, October 14th, 2010

According to a recent report a rising number if stay at home mums are returning to work by taking on part time jobs in order to assist in paying off debts. Figures were released by the Office for National Statistics recently, which showed that there had been a drop in the number of full time stay at home mothers, which indicates that more and more mums are taking on jobs in order to help with finances and debt repayment in the home.

The number of full time mums is said to have dropped to 2.07 million, and this is said to be the lowest level since records began back in 1994. Officials believe that part of the reason for many mums returning to work is that many breadwinners, which usually indicates their spouses, have lost work or hours in the last year as a result of the recession, making it difficult for some households to make ends meet financially without further work being taken on.

In a recent survey the main reason that mums gave for returning to work was financial restrictions, with many stating that they had felt that they had to return to work in order to pay debts and in particular to help with mortgage repayments. The survey was carried out by price comparison website uswitch.com, and the results show that more than 50 percent of mums that had returned to work despite having a child under the age of three said that they did so in order to help with debt and mortgage repayments.

One mum who has a child aged just two said: “Whilst I would have loved to have stayed at home for a while longer with my daughter it’s been tough over the past few months because my partner had his hours cut a few months ago. It’s put real pressure on us financially, so there wasn’t really much choice other than for me to go back to work.”

Tags: mums, credit, debt, mortgage

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FSA plans could impact on property market

Thursday, September 23rd, 2010

The UK’s financial regulator, the Financial Services Authority, has found itself at the centre of a scathing attack by the Council of Mortgage Lenders recently over its plans to try and restrict mortgage lending in order to cut risks and reduce irresponsible lending.

The FSA has stated that it has plans to bring a number of measures in to restrict mortgage lending in the UK and cut out high risk loans, and this includes scrapping interest only mortgages, capping the amount that consumers can borrow, and slowing down applications.

The Council of Mortgage Lenders has slated the FSA for its plans, stating that these measures could have a serious impact on consumers and house prices. The CML said that many people would lose their dreams of homeownership as a result of the measures, and property prices could be driven down.

The CML said that consumers were right to be concerned about the plans from the FSA, as they could have a serious impact on the housing market as a whole, and could leave many of those hoping to get onto the property ladder out in the cold. The group also said that the FSA had admitted that these plans would probably lead to property values in the UK falling.

Michael Coogan from the Council of Mortgage Lenders said: “This is just one of a number of unintended consequences of the FSA’s well-meaning but misguided proposals that the CML believes the UK’s existing 11 million mortgage borrowers have every right to be concerned about.”

The FSA said: “We are keen to ensure that people who can afford a mortgage can get one, and also to protect vulnerable consumers by making sure that anyone who does take on a mortgage can afford to pay it back.”

Tags: Financial Services Authority, mortgage, council of mortgage lenders, Mortgage loan

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Why are so many people continuing to rent?

Wednesday, September 22nd, 2010

These days there are many people in the UK who are renting a home rather than deciding to buy their own property, and whilst this is damaging for the property market in the UK there are a number of reasons why many non-homeowners are continuing to rent and are not getting onto the property ladder.

The fact that so many people are now deciding to rent has pushed up the average rent in the UK over recent months, and this has been coupled with the fact that a rising number of landlords have been selling up, resulting in lower supply of rental properties and higher demand.

The mortgage market has been difficult for some time, with many people unable to access affordable mortgages, and this is particularly true for first time buyers who may have wanted to get onto the property ladder but have been unable to get the necessary finance from lenders.

Another of the reasons that many people are not buying property at the moment is because they cannot afford the deposit that is needed to get a mortgage from most lenders, as this has soared over the past couple of years with many demanding a minimum deposit of at least 15 to 20 percent of the property value in order to offer a mortgage.

For many the financial climate and economic fragility simply isn’t stable enough for them to make such a huge commitment as purchasing a property, and this is yet another reason behind the rising number of non-homeowners that are deciding to rent rather than try and get onto the property ladder. Whilst the recession may be officially over many are still in fear of losing hours at work or even losing their jobs, with the coalition government’s cutbacks in the public sector likely to produce job losses both in the public and private sectors, and this has made many too wary of committing to something as huge as a mortgage loan.

The good news is that whilst the lack of buyers in the property market may be driving up rental prices due to increased demand the same situation is also helping to drive down the cost of purchasing a property because of the lack of demand amongst buyers coupled with an increase in people trying to sell their homes, and recent reports have indicated that asking prices have now fallen for the third consecutive month, which is good news for those that do decide to buy.

Tags: first time buyer, Renting, mortgage, Mortgage loan, Property ladder

Posted in Featured Articles, Mortgage News | 1 Comment »

Consumer confidence levels in mortgage and property markets still low

Thursday, September 16th, 2010

It has been announced that the level of consumer confidence in the mortgage and property markets is still low, despite claims that lenders may be easing up on mortgage lending to some consumer groups. Although there have been some recent improvements in the mortgage markets in the UK consumer confidence is still suffering, according to a recent report.

New figures have been released by the Building Societies Association, with officials stating that a large number of people in Britain are still not confident when it comes to the mortgage and property markets. The figures were compiled as part of the September 2010 BSA Property Tracker Survey. The figures showed that the number of consumers who lacked confidence in the markets increased from 21 in June to 26 for this month.

A large number of Brits do not believe that now is a good time to invest in property, according to officials involved in the survey, and there were many others who cited a number of factors as barriers to being able to purchase a property. These barriers included lack of job security in the current financial climate and difficulties in raising a deposit given the high level of deposit that some lenders were still demanding. More than 56 percent of respondents to the survey gave these reasons.

The BSA said that whilst access to mortgages was now better than it was earlier in the year many people were still left out in the cold due to factors such as job security, their credit history, and their debt levels.

BSA head of mortgage policy Paul Broadhead said: “It is clear that concerns about future falls in property prices are having a significant impact on consumer confidence.”

Tags: Mortgage loan, Personal finance, mortgage, Consumer confidence

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Mortgage lending to fall before increasing

Thursday, September 16th, 2010

An industry official has recently predicted that mortgage lending levels in the UK will fall before they rebound again in the coming months. The prediction has been made by Andy Pratt, chief operating officer at Alexander Hall, who claims that the August mortgage lending figures will show a decline in lending levels from mortgage companies, and that this will continue before any rebound in lending levels is seen.

His comments come following data that was released by the Council of Mortgage Lenders, which showed that there had been an increase in mortgage lending for the month of July compared to the previous month. July saw 56,000 approved home purchase loans compared to 52,000 approvals in June. However, Pratt believes that this trend will not continue when the August figures are released.

Lenders were thought to be easing up on restrictions relating to mortgage lending levels, but criteria is still very tight for many groups including first time buyers, many of whom cannot afford the repayments despite lower interest rates, and many others who cannot raise the high deposit that lenders are still demanding for their most favourable rates. Lenders are still being very cautious over who they lend to, leaving many first time buyers unable to get onto the property ladder.

Mr Pratt did add that there were signs that lenders may be intending to offer a wider range of mortgage products at higher loan-to-value ratios in the future, and this could help to reverse the trend of falling mortgage lending levels over time. However, he said that the sector would see a fall before any increase was seen.

He stated: “From the feedback that I am getting from everybody in the market, the applications in August were worse than the seasonally adjusted expectations. I think this is probably the lowest point.”

Tags: finance, mortgage products, mortgage, Mortgage loan

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How do shared ownership mortgages work?

Wednesday, September 8th, 2010

Shared ownership is an option that is now being considered by many first time buyers looking to get onto the property ladder. Buying a property outright in the traditional way has become impossible for many first time buyers, and this is due to factors such as mortgage restrictions, high deposit demands, and high house prices, all of which have affected buyers’ ability to get the mortgage that they need.

Shared ownership is a scheme that has given first time buyers a chance to get onto the property ladder gradually, and for many is the ideal solution because there is no huge deposit or mortgage required as there may be when buying 100 percent of a property. With shared ownership buyers only have to take out a mortgage for part of the property value depending on the share that they are buying, which means that the repayments are more affordable, the likelihood of getting the mortgage is higher, and the deposit is not as much as it would be with a fully mortgage.

It is worth bearing in mind that not all lenders offer shared ownership mortgages, so you will need to do a little research to find out which ones are able to help. Shared ownership properties are dealt with by housing associations, so you may be able to get advice from the housing association that you are going through with regards to mortgage lenders that may be able to help.

Over the past few years lenders have placed strict restrictions on their mortgage lending, and whilst prior to the credit crisis lenders were offering multiples of up to five times the borrower’s salary this has all changed now, making it difficult for buyers to get the amount they need to buy a home in the traditional way. In addition lenders want far higher deposits, such as 20 or 25 percent of the property value, and this is something that is impossible for many to raise.

With a shared ownership mortgage buyers may be buying a 25 or 50 percent share of the property for example, which means that they only need a mortgage for the percentage of the property that they are buying. The remainder of the home is rented from the housing association, but as and when the buyer is able to afford to buy more of the property it is possible to staircase and take on a larger share until the buyer has purchased 100 percent of the home.

Tags: first time buyer, mortgage, Mortgage loan, Property ladder

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What will happen with the base rate and mortgage rates?

Tuesday, August 31st, 2010

Since March of last year the base interest rate in the UK has been at an all time low of just 0.5 percent, which is the lowest it has ever been in the history of the Bank of England, which spans over three hundred years. However, with inflation getting out of hand it is highly likely that at some point in the near future the Monetary Policy Committee will have to consider increasing the base borrowing rate.

Whilst nobody has a firm idea of when any base rate increase may take place there has been speculation over how quickly and rapidly the rate may rise. Some believe that the rate will be increased this year in order to keep a lid on inflation, whereas others believe that it is more likely to be early of mid-2011 before any rate rises are implemented due to the continued fragile state of the economy.

One industry official has suggested that the base rate could increase surprisingly rapidly over the next couple of years, going as far as to say that the base rate could leap from its rock bottom level of 0.5 percent to as high as 8 percent within the next couple of years.

For homeowners with mortgages this could spell really bad news, as it could mean mortgage rates rising to 11 or 12 percent, which could add hundreds of pounds a month to the average mortgage. With some people still suffering financial problems because of the recent recession and job losses this could have a really negative impact, and could leave many people unable to afford their repayments, which could lead to rising repossession numbers.

With this in mind it may be worth homeowners looking at their options when it comes to their mortgages. Whilst nobody should rush into taking drastic action as a result of the rumours and speculation it is always advisable to have a good idea of the options available so that you can be prepared for when the base rate does start to increase.

For many the choice of a fixed rate mortgage may be a tempting one to protect them from huge increases in interest rates, but before making any changes or committing to any particular mortgage deal it is well worth seeking advice from a professional and experienced independent financial advisor to ensure that you get the best deal.

Tags: bank of england, Mortgage loan, mortgage, base rate, Interest

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Panic could mean many fix their mortgage rates

Monday, August 30th, 2010

Recent predictions from industry officials have sparked concerns amongst many homeowners over their future repayments, with one official claiming that the base rate could rocket from its current all time low of just 0.5 percent to a shopping 8 percent over the next couple of years, which could push mortgage interest rates up to 11 or 12 percent.

For many homeowners this would put them in financial dire straits, adding hundreds of pounds a month to their mortgages and putting them at risk of losing their homes altogether if they cannot find the extra money to make these higher monthly repayments.

It is now thought that these claims and predictions over the base rate increasing could result in people flocking to fix their interest rate before the base rate does go up, although nobody knows when this will be. Some experts have said that the recent reports and predictions are simply scaremongering, and have warned consumers not to rush into taking measures that may prove unnecessary.

However, others are warning consumers to look into the options available to them, as although the base rate may not go up yet it will go up at some point, and consumers need to have a good idea of what their options are if and when this happens. For those that would struggle to maintain repayments on their mortgages if the cost went up each month this is particularly important.

One financial industry official said: ‘If borrowers know they would struggle if rates started to jump, it is important to look at ways of preventing mortgage payments shooting up.’

Tags: finance, interest rates, mortgage, Mortgage loan

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Mortgage restrictions affect first time buyer numbers

Monday, August 30th, 2010

It has been reported that restrictions in the mortgage market have resulted in a drop in first time buyer numbers. A report has been released by the property website Right Move, with the data showing that there has been a significant drop in the number people looking to purchase their own home this July compared to the same month last year.

The property company claims that the number of first time buyers looking to buy their own home this July fell to 22 percent and this compared to 31 percent in July of last year. The research indicated that there were a number of possible reasons for the sharp drop in first time buyers looking to get onto the property ladder over the past twelve months.

Right Move officials also warned that the number of first time buyers was at half the level that was required for a healthy housing market. This will come as a blow for the property market, which has been experiencing real difficulties since the onset of the global credit crisis and has only recently started to experience any degree of recovery.

The availability of mortgages is a major concern for many people, and with banks still being very cautious over mortgage lending many may be concerned that they will not be able to get a mortgage. Another problem is that many would be first time buyers cannot raise the deposit that lenders are demanding, and this could be made even worse by news that the Bank of England may be intervening to have mortgage loans capped thus restricting access even further.

Miles Shipside from Right Move said: “With the number of prospective buyers at the bottom of the chain being half of normal levels, the question sellers further up the chain will be asking is ‘who will be at the bottom of my chain?’”

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

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Buy to let mortgage market could remain difficult

Thursday, August 26th, 2010

During the boom years in the property sector buy to met mortgages became very popular, and many people invested in properties to rent out over the course of the property boom. However, since the global credit crisis and the near financial collapse seen over recent years the mortgage markets have changed radically, and buy to let is just one of the sectors that have been affected.

Getting a buy to let mortgage has been difficult for the past couple of years, and although the mortgage market is said to have improved over recent months officials believe that buy to mortgage access will remain restricted for some time to come. Buy to let mortgage lenders are also facing a drop in confidence levels amongst would be landlords.

Research was carried out by LSL Property Services, and in its report said that there are a number of factors that are contributing towards the state of the situation. Officials believe that the bleak conditions in relation to buy to let mortgages could continue until at least 2012.

Increased capital gains tax in the UK has been partly blamed for the situation, as this means greater financial losses for higher rate tax payers. This, in combination with house price falls seen recently, has given rise to speculation that the buy to met mortgage market could continue to experience difficulties.

The survey that was carried out that previously 48 percent of landlords thought that it was a good time to buy due to rising rents and house prices. However, this confidence is said to have been stopped in its tracks because of the situation with capital gains tax and the more recent fall in house prices.

Tags: mortgage, finance, landlords, buy to let

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Boosting your chances of getting a mortgage

Tuesday, August 17th, 2010

Finding a suitable mortgage these days is not an easy task, and with so many lenders imposing restrictions when it comes to offering mortgage loans it is important to be prepared before you take the plunge. Without some sort of preparation and research you could end up wasting your time on mortgages that are unsuitable, that you cannot afford, or that you are not eligible for, so some forward preparation can go a long way.

One of the things you need to check is how much you are able to borrow, and it is advisable to do this before you even start searching for a property, as otherwise you could end up looking at properties that are out of your price range. This will also stand you in good stead if more than one person puts in an offer on the property you want, as the seller will have peace of mind that you can definitely borrow the amount needed.

Another important consideration is the type of mortgage product that you want, such as a fixed rate mortgage, a standard variable rate, a tracker mortgage, or one of the other mortgage products that are available. Many lenders offer a range of different mortgage products, and different ones will suit different needs. However, if you are unsure which is best for you it is always worth seeking financial advice from an independent mortgage advisor.

Your eligibility for a mortgage is another thing that you need to consider, and this includes checking your credit rating, as this may determine whether the lender is likely to take you on. You should check your credit rating as early as possible, and if it is poor it may be worth considering holding off getting a mortgage until you have time to improve it, as the difference in interest, and even the chances of getting a mortgage, can be greatly affected.

Comparing mortgages is vital when it comes to finding the right deal. You can do this yourself using resources such as the Internet, where you will find many lenders and deals. However, getting a mortgage can be a tricky affair, especially for first time buyers, so you may want to consider enlisting the help of an experienced and well connected independent financial advisor. You may have to pay a fee upfront, but can then be sure that the advisor will be working to get the best deal for you rather than one that makes him or her the most commission.

Tags: mortgage products, independent financial advisor, finance, mortgage, Mortgage loan

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Further problems for interest only homeowners

Thursday, August 12th, 2010

Over a number of years prior to the global credit crisis many people buying homes were able to get interest only mortgages, and these mortgages allowed the buyer to repay only the interest on the mortgage over the repayment term, with the actual loan amount being repayable only at the end of the repayment term.

The reason why so many people opted for this type of mortgage was because the monthly repayments were far higher because borrowers were only making repayments on the interest rather than on both the capital and interest. However, the idea behind these mortgages was that borrowers had a sideline investment that they could use to pay the loan off at the end of the mortgage term, and this is something that many failed to do.

As a result of the high risk associated with interest only mortgages many lenders have now stopped offering them, and there are concerned that this could cause severe problems for current interest only mortgage customers who need to remortgage.

Officials have said that around one million homeowners who have interest only mortgages could be sitting on a mortgage time bomb because they may find that if they need to remortgage they will get moved to a repayment mortgage, which means that their monthly repayments will be far higher.

A spokesperson from Private Finance said: ‘Borrowers are under increasing pressure to switch to a repayment loan. But the monthly cost of a repayment mortgage is far higher than interest-only, so if lenders stop offering interest-only options, borrowers may be unable to remortgage. This could mean going onto their lender’s standard variable rate (SVR), rather than remortgaging to a fix or tracker, which could become unaffordable when interest rates start to rise.’

Tags: remortgage, finance, Interest-only loan, mortgage

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Good news for first time buyers when it comes to house prices

Thursday, August 5th, 2010

One industry expert has recently stated that the recent fall in house prices in parts of the UK will come as good news for first time buyers, many of whom have been disappointed that property prices have been rising again over recent months, putting home ownership even further out of their reach.

Paul Holmes from property company Firstrung said that the country’s first time buyers would welcome the fact that house prices had fallen again recently, but he added that there was still a long way to go for first time buyers in terms of the price of property and the amount that they could actually afford.

For many first time buyers getting a mortgage is already a difficult enough task but with the price of property still high in the UK compared to many other countries many simply could not get a mortgage for the amount that they required. For many the deposit was still a huge issue, with many lenders still demanding deposits of 25 percent or more.

During the month of July asking prices in the UK fell for the first time this year according to the property website Right Move, and this resulted from an influx of sellers onto the market compared to a smaller number of would be buyers due to the problems that many buyers are experiencing in getting a mortgage.

One first time buyer explained the difficulties that she had been facing in trying to get onto the property ladder in the current climate, stating: “Although house prices are said to have fallen recently, which is good news for people like me, the price of property in England is still way too high, and with the higher deposits that lenders want buying is still out of the question for me.”

Tags: Mortgage loan, first time buyer, Property ladder, house prices, mortgage

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Small percentage of home loans arranged through brokers

Saturday, July 31st, 2010

In the past many people looking to take out home loans have gone through mortgage brokers in order to get the finance that they need, often because this has been the most convenient, hassle free, and sometimes the most affordable way of finding the right mortgage or home loan.

However, over the past couple of years the mortgage and financial markets have changed radically, with profound effects stemming from the global financial crisis and recession. This has had a huge impact on the way that people take out home loans and has had a particular effect on the number of people that go through a broker to get their home loan.

Recent research has shown that mortgage brokers in the UK are now often unable to access some of the best deals on the market, with many lenders reserving these deals for customers that go directly through them rather than through an intermediary.

The figures suggest that mortgage brokers are now accountable for only 10 percent of home loans, with the other 90 percent of the best mortgages only available directly through lenders. Prior to the global financial crisis mortgage brokers were accountable for around 70 percent of home loans that were sold, reflecting how the mortgage market has changed over the past couple of years.

One leading High Street bank, HSBC, stated: ‘The research shows just how much the mortgage market has changed over the last two years. With loans available from brokers failing to beat direct lenders’ lowest deals for over 90% of that time, customers can no longer rely on brokers to get them the best deal in town.’

An official involved in the research added: ‘Anyone using a mortgage broker needs to be aware that the range of products available may be limited.’

Tags: mortgage broker, mortgage, Bank, broker

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BBA says mortgage lending still subdued

Friday, July 30th, 2010

A recent report from the British Banker’s Association has shown that mortgage lending levels for the month of February remained subdued. In its report the BBA stated that the UK’s big banks approved 35,275 mortgages for the month of February, which was not much higher than 35,154 seen in January. (more…)

Tags: Banking, finance, British Bankers Association, Financial Services Authority, Personal finance, mortgage

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Is it worth overpaying on your mortgage?

Monday, July 19th, 2010

Whilst there is no doubt that many people are struggling when it comes to their finances following the last couple of years, which have been financially turbulent for everyone, the one good thing that has come into effect for homeowners is the rock bottom base interest rate, which stands at just 0.5 percent, the lowest it has ever been in the history of the Bank of England.

Whilst this rock bottom base rate is good news for homeowners that are still paying on their mortgages, as it means that their mortgage repayments fall if they are on a variable rate mortgage, it is not so good for savers, many of whom are not getting returns on their savings.

As a result of this situation many people have asked themselves whether it is worth putting the money they save on their mortgage repayments into a savings account given the low level of return that they will get on it. Instead, many have opted to use the extra cash to overpay on their mortgage, which could ultimately mean that they pay far less in interest over the term of the loan and could cut the repayment term dramatically.

For some of those people that have seen their mortgage repayments drop as a result of the base interest rate the savings have been significant, and considering that the base rate has been at 0.5 percent since March of last year many would have saved a small fortune if they had put the money into savings. However, by overpaying on their mortgage some homeowners have made even more in the long run because of the huge amount of interest that they will save and the years that they can cut off their mortgage term.

Industry officials have said that by overpaying by a relatively modest amount each month whilst the going is good and the base rate is low some homeowners could shave years of their mortgage repayment term and could save thousands of pounds in interest. On the other hand putting the surplus cash into savings will earn very little in the way of interest in the current climate.

By overpaying on mortgages consumers can really make their money work for them, and even if this is only possible on a temporary basis until the base rate increases and repayments increase it can still make a big difference to homeowners.

Tags: mortgage, savings, overpay, Mortgage loan, finance

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Irish banks told to hold fire on negative equity mortgages

Friday, July 16th, 2010

Banks in Ireland that were planning to start offering negative equity mortgages have been told to hold fire by regulators until a decision has been made with regards to whether these products should be allowed. There are fears amongst officials and regulators that these mortgages will simply push consumers even deeper into debt, sparking a debate as to whether they should be allowed.

Already there are around a quarter of a million homeowners that are currently in negative equity, where they owe more on their mortgage than the property is actually worth. According to figures this could swell to around 350,000 by the end of the year, which means a rising number of homeowners will find themselves tied to their property because of the negative equity.

With the negative equity mortgages that some lenders have been planning to offer homeowners would be able to transfer the negative equity from their existing mortgage onto the new one. However, whilst this could provide convenience for those that want to move to start a family or to take up a new job it could also land many people even deeper into debt.

Regulators are said to have written to twenty one banks so far telling them to hold fire on launching these mortgages until they have decided whether it is wise to allow the mortgages to be made available.

The regulator stated: “We intend to examine the merits of such products further with a view to consumer protection to see whether such products should be available to consumers and if so what restrictions should apply. Such a product may lead to consumers being overexposed or facing future repayment difficulties.”

Tags: finance, Ireland, mortgage, negative equity

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Expectations over house prices hit by mortgage concerns

Wednesday, July 7th, 2010

According to a recent report expectations over house prices are being adversely affected by consumer concerns over mortgages. Concern amongst consumers over both the state of the economy and the availability of mortgages has resulted in expectations relating to house prices in the UK being hit. The data comes from property website Zoopla.co.uk

The figures show that there has been a drop in the number of people that are expecting property prices to go up over the coming six months. This has fallen to 78 percent this month compared to 81 percent three months ago. The figures also showed that many people still thought it was very difficult to get a mortgage, and this is thought to have impacted on expectation over property prices.

According to the Zoopla survey 77 percent of those that were polled thought that the availability of mortgages had not improved over the last three months. 27 percent of those polled thought that it was now more difficult to get a mortgage than it was in May. Another 34 percent of those polled said that they found that trying to get a mortgage was their biggest obstacle when it came to buying a property.

Another 21 percent of those that were polled said that the public sector job cuts that were outlined in the recent emergency budget by George Osborne would negatively affect the health of the property market, and 25 percent thought that rising interest rates would impact negatively on the property sector.

Nicholas Leeming, commercial director of Zoopla.co.uk, said: “The fear remains that the revival in the housing market will be derailed unless the banks make a concerted effort to increase lending. With job cuts looming in the public sector and interest rate hikes expected at some point, the new government has its work cut out for it to ensure that home ownership remains affordable and attainable for most people.”

Tags: prices, property, mortgage, Zoopla.co.uk, Mortgage loan

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Can first time buyers get an affordable mortgage?

Saturday, June 26th, 2010

Over the past couple of years there is no doubt that things have been very difficult for first time buyers, and for many their dreams of homeownership have been dashed due to high deposit demands, stricter lending criteria, and higher interest rates charged to certain groups such as first time buyers.

However, although there have been extreme difficulties over the past couple of years when it comes to purchasing a home as a first time buyers the market is said to have eased up over the past couple of months, and this could mean that first time buyers won’t have such a tough time getting the mortgage that they need.

So, is it actually easier now for first time buyers to get a mortgage than it was say twelve months ago? Well, in actual fact the mortgage market has eased up to some degree, and there are now more mortgages available that are suited to first time buyers and even aimed at first time buyers, which is great news for those that want to get onto the property ladder.

However, things are nowhere near as easy as they were in the past. Just a few years ago first time buyers could get mortgages for 100 percent of the property and even for 125 percent of the property value, but this has now all changed. These days first time buyers would be lucky to find a mortgage for 95 percent of the property value, which just a few years ago was the norm.

The number of lenders offering 90 percent mortgages for first time buyers has increased, and this is good news for those hoping to get onto the property ladder as it means having to raise less of a deposit, although buyers may still have to stump up a substantial amount to be able to put down the necessary deposit, which can be a problem given that first time buyers have no previous property from which to take equity.

Another thing that could stand between potential first time buyers and home ownership is the fact that property prices are still quite high, and therefore many cannot get the level of mortgage that they need. A way around this is to look at scheme such as shared ownership or Homebuy Direct, which are schemes that make it easier and more affordable for first time buyers to get onto the property ladder.

Tags: finance, first time buyer, Mortgage loan, mortgage, Property ladder

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Government takes steps to protect struggling homeowners

Friday, June 25th, 2010

The government has taken steps to try and protect struggling homeowners in the difficult financial climate by bringing in a range of new measures that will prove additional safeguards for those that could otherwise be at risk of losing their homes.

The UK’s financial regulator has decided to make all mortgage advisors personally responsible and accountable through the introduction of new rules and regulations that will apply to companies that deal with consumers that are behind on their mortgage repayments.

The FSA started a review of the mortgage market in the autumn of last year, and has now said that all mortgage sale firms and employees will have to be FSA approved. In addition to providing additional protection for those that are behind with their mortgage repayments the regulator is also looking to increase protection for those that decide to sell and rent back their homes.

Sale and rent back scheme shave become increasingly popular over recent years, with homeowners desperately trying to find a way of being able to stay in their home before they are repossessed due to mortgage arrears. Through these schemes they can sell the home and then rent it back from the company, but there have been many problems including the companies evicting the former homeowners shortly after taking the property from them.

Under new regulations companies that buy homes to rent back to former homeowners will have to give them tenure of at least five years. According to reports these, and other new protective measures, will come into play at the end of June.

An FSA official said: “Sale and rent back is often used by those who want to sell in a hurry to stay in their home, and so it is vital that they are better protected during what is usually a difficult period financially. We also think it is wrong that arrears charges should be taken from customers already in difficult circumstances.”  

Tags: FSA, finance, sale and rent back, mortgage

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Average fixed mortgage rates fall to seven year low

Monday, June 21st, 2010

The average rate of interest on a two year fixed rate mortgage has fallen to its lowest level in seven years, according to market data. Reports have shown that the average rate of interest charged on a two year fixed rate mortgage has now fallen to just 4.52 percent, which is the lowest it has been since September of 2003 when it fell to just 4.51 percent.

With lenders trying to get consumers off variable rate mortgage deals many have been dropping their fixed rate mortgages since 2009, and this has seen the average rate on these fixed mortgages continue to fall steadily. Officials said that many consumers are on standard variable rate mortgages at record low levels, and lenders want to try and get them onto fixed rate deals by dropping the rates to make the deals seem more tempting.

Industry experts have said that homeowners are now increasingly staying on standard variable rate mortgages with low rates of interest rather than switching to higher rate fixed rate deals, and this is something that lenders are determined to address. The urgency for lenders has been further increased by the fact that the base rate has now been at a record low of just 0.5 percent for well over a year now.

One finance expert said: “Many borrowers are opting to remain on record low SVRs and overpaying their mortgage rather than secure a new deal at a higher rate. Lenders are trying to incentivise borrowers onto new fixed rate deals by making significant cuts to rates. A fifth of lenders have moved to increase their SVR since bank rate was kept on hold after finding their previous level unsustainable. Competition for a limited amount of mortgage business continues to increase amongst lenders, who are once again actively competing to be top of best buy tables. Previously, only deals for borrowers with large deposits were seeing cuts, but as the market improves borrowers with smaller deposits are being offered more competitive deals. The platform has been set for the mortgage market to return to some sort of normality, while still applying the lessons learnt over the last few years.”

Tags: finance, mortgage, interest rates, Fixed rate mortgage, Mortgage loan

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Reduction in the number of home loans in Scotland

Thursday, May 27th, 2010

Official figures have shown that the number of home loans granted to people in Scotland experienced a drop in the first three months of this year. The figures, which were released by the Council of Mortgage Lenders, showed that in the first quarter of the year the number of loans that were granted to homebuyers in Scotland fell by one third.

Between January and March of this year the number of home loans that were granted to homebuyers in Scotland came to 9700. Whilst this figure did reflect a drop compared to the final three months of last year the number of loans granted was actually 28 percent higher than in the first quarter of last year.

According to the CML the end of the stamp duty holiday at the end of last year played a big part in the reduced figure due to the increase in activity prior to the end of the stamp duty holiday causing a lull at the start of this year. Many of those that would have otherwise waited until the start of the year to buy a home ended up rushing it through at the end of last year in order to save the money that they would otherwise have to pay on stamp duty.

The total value of the mortgages that were granted to buyers in Scotland in the first quarter of the year came to more than £1 billion. The previous quarter, when the number of home loans issued was higher, the value of the loans came to £1.6 billion.

A spokesperson for the Council of Mortgage Lenders said: “The pace of recovery in Scotland at first sight appears slower than in the rest of the UK, but in fact throughout the current housing cycle, market activity in Scotland has followed that of the whole of the UK very closely, but with a lag of around one quarter.”

Tags: Mortgage loan, mortgage, council of mortgage lenders, Scotland, finance

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Borrowers could be at greater risk due to PPI ban

Saturday, May 22nd, 2010

Last week the Competition Commission announced that it was banning the sale of Payment Protection Insurance or PPI at point of sale in order to try and increase competition and reduce the cost of this type of cover, which has been causing controversy for some years. This was a provisional decision from the Competition Commission, and was welcomed by many.

However, one industry official has expressed concern that this ban on PPI at point of sale could actually adversely affect some customers, as it could mean that they are left unprotected and uncovered should anything go wrong. Finance journalist Lorna Bourke said that Britons could be left at greater risk as a result of this ban because they would have no cover in place.

The Competition Commission has already tried to ban PPI in the past, but some of the major banks appealed against this and their appeal was upheld. The ban on point of sale PPI could affect customers who do not bother or think about taking protection out elsewhere but will also affect the lenders themselves who could lose out because of the ban.

PPI is designed to cover repayments for the policyholder for a set period of time in the event that they cannot make repayments due to sickness, injury, or redundancy. However, these policies hit the headlines after investigations showed that the policies had often been mis-sold to those that did not want them, did not need them, and in some cases were not even eligible to claim on them.

Ms Bourke stated: “There is a real danger that banning all PPI policies sold alongside a mortgage or personal loan could result in borrowers having no protection at all. This could mean homebuyers losing their homes if they are unable to meet repayments.”

Tags: competition commission, mortgage, PPI, finance, payment protection insurance

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