The Bank of England cut interest rates to a new record low of 1% on Thursday. While the Halifax reported that house prices rose 1.9% during January. This is in contrast with Nationwide’s figures last week which showed 1.3% drop in house prices. As the credit-crunch has shown, the supply of finance has driven up house prices. There will be no full scale recovery in the UK property market until finance becomes easier to obtain, especially for first-time buyers. And with rising unemployment, who knows what the future will bring!
Archive for the ‘Home loans’ Category
Base rate falls while house prices rise
Friday, February 6th, 2009Overpay your mortgage to save thousands
Wednesday, February 4th, 2009
Borrowers can save thousands of pounds in interest and trim years off the life of their mortgages by making regular overpayments. Even a lump sum overpayment can make a difference. Banks are currently pushing for overpayment as it helps to build their capital bases.
HSBC and Lloyds TSB are writing to all their customers informing them how to make overpayments after thousands have asked how to do this. But make sure the lender reduces the term of your mortgage, not your monthly repayments.
Repossession orders rise by 24%
Friday, August 15th, 2008
Official figures show 28,658 mortgage possession orders were made in England and Wales during the second quarter of the year, up 24% on the same period a year ago. In London, the number of court orders rose by 12% to 4,052. There were large increases at several county courts including Edmonton, 34% to 395, Kingston-upon-Thames, 22 per cent to 93, and Brentford, 20 per cent to 191. A mortgage repossession order, granted by a court, entitles the claimant - usually a lender - to apply to have the occupier evicted. But a significant number of homeowners issued with an order manage to avoid being forced out.
Councils are also looking at a safety net scheme where they would take over the mortgage, or part of it, of people falling into arrears and then rent back the property.
Abbey is new top UK mortgage lender
Saturday, August 9th, 2008
Abbey has toppled Halifax as the UK’s biggest mortgage lender by taking more than a quarter of all business in the first six months of the year. Chief executive Antonio Horta-Osorio said that while other lenders were withdrawing from the market, it was increasing mortgage lending to low-risk customers. However, he warned Abbey is unlikely to continue at such a rate for the rest of the year as other lenders return to the market. It came as Abbey, which is owned by Spanish giant Santander, reported a 20% rise in first-half profits to £485m. Santander, which has agreed to buy struggling Abbey rival Alliance & Leicester, said group profits jumped 22% to €4.73bn (£3.73bn).
Lloyds TSB and Northern Rock in mortgage deal
Sunday, June 15th, 2008
Lloyds TSB has struck a three-year deal to take on Northern Rock customers who are coming to the end of fixed rate mortgage deals. Certain mortgage customers will be offered the opportunity to switch to a Lloyds from July. The deal will assist Northern Rock in reducing the size of its balance sheet. Lloyds has set a maximum loan to value ratio of about 80% for the mortgages it will take on, but it said this will be flexible. The tax payers obviously have the rough end of the deal here - as Northern Rock which is now state owned will be left with the riskiest borrowers, just as housing repossessions are expected to rise. Northern Rock itself warned last month that arrears were rising and shifting customers could become more difficult as the economy worsens and rivals cut back on lending.
Nationwide increases minimum deposit to 10%
Monday, April 28th, 2008
Nationwide Building Society is today reducing its maximum loan to value ratio (LTV) to 90% on all of its products for new borrowers except its three-year fixed rate and three-year tracker mortgages. New borrowers will need at least 10% deposit on all their products except the two mentioned above. New customers wanting to take out the group’s standard variable deal, which it calls its base mortgage rate, will now need a deposit of at least 25%, while the maximum amount the group will lend on any of its mortgages to new borrowers will be capped at £500,000. The two remaining products that Nationwide is offering to people with a small deposit are only available by going direct to the lender and cannot be obtained through brokers. Nationwide described the move, which takes effect from May 1, as part of its ‘ongoing approach of managing the business in a prudent and sustainable way’.
How to avoid the negative equity trap
Wednesday, April 23rd, 2008Here are a list of what you can do:
- If your mortgage is interest-only, switch to repayment asap. It will be more expensive in the short term but will save you thousands in interest in the long run.
- Pay extra on your mortgage every month. This will reduce the debt and cut the interest that you are charged each month. But check how much you are allowed to repay penalty free.
- If you want to repay more than the bank will allow penalty free then put the extra cash into a cash Isa first for tax free savings. This can then be used to bolster your equity when you want to move home or remortgage.
- Don’t be tempted to borrow from other sources such as credit cards to repay your mortgage.
For more information, visit thisismoney.com
Mortgage approval slumps as banks run out of cash
Wednesday, April 23rd, 2008In a year, mortgages for people buying a home have dived by 46% as Britain’s banks run out of money to lend. Figures from the British Bankers Association (BBA) showed mortgage approvals for house purchase in March tumbling to its lowest figure since records began in 1997. This shows the extent to which banks are tightening their belts as they find themselves unable to secure funding for mortgages. Borrowers needing to remortgage or purchase a home are finding lenders have raised rates to reflect their own higher borrowing costs and increase margins on mortgages. Many are also demanding higher deposits to protect against house price falls and to raise the quality of their loan books. The rising cost of securing funding on the money markets has seen the inter bank lending rate Libor rise to 0.9% above the bank rate of 5% - the historical average is 0.13%. This has substantially pushed up the cost of new tracker rate mortgages, which are heavily influenced by Libor. The BBA said it expected lending to continue to weaken due to the continuing decline in mortgage approvals.
London’s negative equity locations
Sunday, April 20th, 2008The London postcodes at greatest risk from the housing crisis was revealed today by the Evening Standard. Tens of thousands of home owners across the capital will be plunged into negative equity this year if property prices fall by 20%. People who have taken on huge mortgages compared with the value of their property will owe more than the building is worth. The worst hit would be buy-to-let investors who tried to cash in on the housing boom, according to analysis obtained by the Evening Standard. Below are the top 10 streets and London boroughs most likely to be affected. Find out more at thisismoney.co.uk.
Top 10 London streets most at risk:
Calderwood Street SE18
Erebus Drive SE28
Queenstown Road SW8
Woolwich Common SE18
St Saviours Estate SE1
Glashier Street SE8
Greenhaven Drive SE28
St John’s Estate N1
Great Dover Street SE1
Borough High Street SE1
Risk level by London boroughs:
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