Archive for the 'Mortgages' Category

Figures from the Bank of England show that mortgage approvals saw a surprise increase in February, rising to almost 38,000, from less than 32,000 in January. The increase is a positive move back towards a more active property market. However, it is still well down on what would be considered normal levels of activity. Normal levels would be around 70,000 mortgage approvals per month.

Readers should be aware that The Abbey has recently removed over 7,000 solicitors from its list of approved members. The move came as a complete surprise to the solicitors who were removed. Whilst we as customers pay the solicitors conveyancing fee, the mortgage lender normally lets the solicitor handle its side of the conveyancing process. For customers who are setting up an Abbey mortgage and attempt to use one of the solicitors who has been removed, they will be asked to pay for a different solicitor to cover the bank’s interests. The Law Society, which represents solicitors, is meeting with the Abbey to raise its concerns with the bank. For the moment, it would be wise for potential Abbey customers to check whether their intended conveyancer is currently on the Abbey’s list of approved solicitors.

Gordon Brown has announced the Homeowners Mortgage Support Scheme. This new scheme will enable households that experience redundancy or other significant loss of income to defer a proportion of their interest payments for up to two years. Banks will have to participate in the scheme in order for the Government to guarantee the deferred interests payments. The 8 largest lenders covering 70% of the mortgage market – HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays, RBS, HSBC – have agreed to support the new scheme. The details of the scheme have not yet been finalised but it is thought that the scheme will be open to anybody with a mortgage of less than £400,000 and no more than £16,000 in savings. Applicants would have to provide evidence of genuine economic hardship and have had trouble meeting repayments for 3 months. There are more than 10 million homeowners with mortgages of less than £400,000. It has been suggested that repossessions could hit 75,000 next year, rising from an estimated 45,000 this year. The Chancellor, Alistair Darling, said: “This is real help for homeowners at risk of repossession through no fault of their own. The scheme will give people who face a temporary fall in their income the confidence that they need to rearrange their finances so they can come through a difficult period without losing their home.” Teresa Perchard at the Citizens Advice Bureau said: “To ensure that borrowers are not saddled with unreasonable and excessive payments after the 2 years are up it will be vital that both parties explore all the options available during this period. More also needs to be done to help those on the margins of the mortgage market whose lenders have not signed up to this scheme.“

Information from the British Banker’s association shows that mortgage lending for house purchases in January was just slightly lower in number than January last year, but nearly 16% higher in value. The average rose from £126,800 to £146,700, while volume dropped from 45,039 to 44,804.

David Dooks, Statistics Director at the BBA, said “January saw a continued stable demand for mortgages. Actual borrowing on mortgages remains strong compared with this time last year, so the impact of higher interest rates has yet to feature.”

So at the moment it appears as if the three recent rises in the base rate have had little effect on general demand for property.

Property markets, as with other markets, rise and fall in value, but is a change in people’s living habits creating a permanent increase in property prices? Is the ratio of house prices to salaries rising for good? Let us know what you think.

The Bank of England has today decided to increase rates by a quarter of a percent. This brings the rate to 4.75%. The increase has been made in order to keep inflation from rising further. Inflation rose to 2.5% in June – above the government’s target of 2%.

A rise had been expected, but many analysts had been forecasting it to occur later in the year.