House Buying Guide » Mortgages

Mortgages figures low for 2010

chris — Fri, 21 Jan 2011 14:29:51 +0000

New figures from the Council of Mortgage Lenders show that mortgage lending in 2010 came to just £136.3 billion – down 5% on 2009. This is the lowest figure since the year 2000. This news won’t come as a surprise for those who attempted to obtain a mortgage in 2010, with many applicants reporting it to be particularly difficult to secure a reasonable mortgage – especially first-time buyers.

The CML also state that they expect the Bank of England base rate to rise sooner than previously thought due to the recent figures for inflation showing the figure rising from 3.3% to 3.7%. However the CML don’t believe the base rate will go above 1% before the end of 2011, nor 2% before the end of 2012.

Rent increases caused by mortgage difficulties

chris — Wed, 08 Dec 2010 19:46:58 +0000

As mortgage lenders continue to be very picky about who they will lend to and how much they will lend, more and more people are resorting to renting to resolve their accommodation needs. With the best deals only available to those with 25%+ deposits, potential first time buyers, in particular, are finding it very difficult to get on to the ladder. There are also some who are deliberately waiting as property price continue to slowly fall.

Fewer people buying houses has consequently caused an increase in demand for rented properties, which has enabled landlords to increase rent levels. Rent has now increased for nine months in a row, with the average figure for October being £691.

Jeremy Lead, RICS spokesperson, said ?The lettings sector has become increasingly strong over the past nine months, in contrast to the housing market which continues to slow?. This situation is expected to continue for the next three months at least.

Surprise increase in Mortgage approvals

chris — Mon, 30 Mar 2009 12:28:25 +0000

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.

Abbey Mortgage Warning

chris — Tue, 24 Mar 2009 13:36:18 +0000

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.

Help for mortgage holders

chris — Wed, 03 Dec 2008 16:13:03 +0000

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.“

Mortgage lending in January

chris — Wed, 28 Feb 2007 00:13:45 +0000

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.

Base rate rise

chris — Thu, 03 Aug 2006 12:33:43 +0000

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.

Interest rate stays at 4.5% in July

chris — Thu, 06 Jul 2006 11:59:41 +0000

The Bank of England’s Monetary Policy Committee (MPC) has today voted to keep the base rate at 4.5%. The move (or lack of it) was widely expected by analysts.

However, it is generally expected that rates may rise before the end of 2006. Rising inflation has led people to believe the MPC will decide to increase the base rate in the coming months in order to keep inflation in check.

This has been reflected in rises in fixed rate mortgage deals already, with many rising by up to 0.5% in the last few months.

FSA update on mortgage exit fees

chris — Mon, 19 Jun 2006 19:53:12 +0000

The Financial Services Authority (FSA) have been investigating exit fees on mortgages, or Mortgage Exit Administration Fees (“MEAFs”), since September 2005. It has been looking at whether the recent increase in the level of the fees charged by some lenders are fair to consumers.

The fee is labeled as covering costs such as changing name on the registration of the property at the Land Registry, but many think that lenders are increasing them disproportionately so they can recoup money ‘lost’ by offering extremely cheap mortgage deals to new customers.

Many mortgage contracts will state that the lender may increase the exit fee during the life of the mortgage, however, this means that the variation must comply with the Unfair Terms in Consumer Contracts Regulations 1999. The FSA has stated that “a variation clause is less likely to be regarded as unfair if the variation can only be made with a ‘valid reason’ which is specified in the contract.”.

With many lenders increasing their exit fees drastically in recent years, many may find it difficult to justify the increases as being ‘fair’. For example, Cheltenham & Gloucested charged just £50 5 years ago, but now charge £225 – an increase of 350%.

This issue is exacerbated by the fact that since 2003 the Land Registry has kept deeds in an electronic form, actually reducing costs for lenders.

The FSA has given lenders that are under investigation a month to produce a response, providing evidence of why increases to MEAFs were made. They will report on the issue in the autumn.

CML finds fixed rate deals most popular

chris — Wed, 14 Jun 2006 11:58:59 +0000

The Council of Mortgage Lenders (CML) has released results for April this year that show fixed rate deals accounting for 71% of all loans for house purchase and remortgaging – 17% more than April 2005. It says fixed rate deals are currently popular due to attractive deals offered by lenders, and consumer’s desire to lock in to long-term low rate deals.

The CML also showed that first-time buyers are now borrowed higher multiples of their salaries to get on the property ladder, with an average multiple of 3.21 – up from 3.15 in March. However, it also found that mortgage payments as a proportion of income had actually fallen from 17% in June 2005 to 16.2% now.

CML Director General Michael Coogan said: “Today’s data confirms that the market is in good shape. The strong take-up of fixed-rate deals is encouraging because they give consumers confidence in their mortgage payments and allow them to plan ahead financially.

“It is also interesting to see that while both first-time buyers and movers are borrowing a greater multiple of their income to get a mortgage, their payments as a proportion of income are lower than in the same period last year. This is potentially due to the higher take-up of attractive fixed-rate products over the past year.”