Britain’s biggest mortgage lender today defied Gordon Brown’s plea to cut mortgage rates. The Halifax is raising rates on some mortgage offers by 0.5% despite his calling bank chiefs to No10 to urge them to sign up to the Government’s strategy to tackle the global economic turmoil. The Prime Minister was also bluntly warned that a string of building societies could be forced out of the mortgage market by the looming crisis. Mr Brown is said to be prepared to offer banks help to raise funds but wants them to pass on interest rate cuts, do everything they can not to repossess the homes of people struggling to meet their mortgage payments, and to offer loans to first-time buyers. The Bank of England is injecting a further £15bn of liquidity into the markets, taking its total recent support to more than £50bn.
Archive for the ‘Property Market’ Category
Halifax defies plea by PM and raises its loan rates
Wednesday, April 16th, 2008Has the Bank of England lost control?
Thursday, April 10th, 2008Some are questioning whether the financial turmoil has rendered the Bank of England powerless to direct how much the biggest financial names on the High Street charge for credit and pay customers for their deposits. For many, today’s predicted cut in base rate will be meaningless. While banks and building societies have been cutting savings rates, they have also been raising mortgage rates for new borrowers. The only people to benefit would be existing mortgage customers on the track rates which follows the movement of the base rate. The current market turmoil could however be providing banks and building societies with the opportunity to rebuild their profit margins after being hit (at various levels) by the subprime market. Once again, the consumers are paying for the cost of the financial industries’ imprudence.
Mortgage criteria getting tighter
Sunday, March 23rd, 2008Several small building societies have been restricting or halting lending as a result of the financial turmoil. With lenders’ funds drying up, higher deposits are being demanded from first-time buyers. The Co-operative Bank now demands a higher deposit by cutting its maximum loan-to-value ratio from 95% to 90%. Bigger lenders, such as the Halifax and the Woolwich, have slightly increased the interest rates on certain tracker or fixed-rate deals, while making other deals available only to those able to put down a 40% deposit. The Cheltenham & Gloucester, part of Lloyds TSB, has also raised the interest rate charged on some deals. More than a million fixed-rate deals, typically lasting for two years, are due to expire in 2008, which will add to demand. As a result, the smaller building societies are withdrawing deals instead of being swamped by demand. Those wishing to move house are being told to act fast on mortgage deals as lenders are changing their deals frequently, sometimes several times a week.
Government plans to grade mortgages
Wednesday, March 5th, 2008The Government is planning to use next week’s budget to introduce plans to grade all mortgages in a bid to kick start the wholesale money markets. Chancellor Alistair Darling is understood to be arranging the introduction of a new system under which all mortgages are graded, with the least risky awarded a gold standard ‘Kitemark’. Investors have been reluctant to buy mortgage-backed securities for fear they contain risky sub-prime loans and this has made it difficult for banks to remove mortgage assets from their books. It is hoped that by providing investors with greater reassurance about the quality of the loans they are taking on, it will make it easier for lenders to sell on mortgages to investors. The scheme could help re-vitalise the wholesale money markets and provide banks with access to cheaper funding, which subsequently could be passed on to consumers in lower mortgage rates.
Nationwide deposits up to 25%
Monday, February 25th, 2008Nationwide increased the minimum deposit required to secure its best rates from 10% of the value of the property to 25%. With the average price of a London house now more than £300,000, buyers will have to raise at least £75,000 up front. It is a major blow for first-time buyers in particular. The clampdown by Nationwide comes as banks and building societies tighten lending conditions following the credit crunch. Until today, borrowers needed only to raise a deposit of 10% or more to take advantage of Nationwide’s best rates. They now need 25% or more - or face an extra 0.2% of interest. The rise only affects new borrowers and wipes out the benefit they would have enjoyed following this month’s cut in interest rates by the Bank of England. Nervous rival lenders are set to follow suit as they chase margins rather than market share.
Want to sell your house? What is the best method?
Sunday, February 24th, 2008Estate agents can cost you thousands in fees - so more and more people are turning to the web and listing their homes privately. The new breed of private-sale websites and bargain online estate agents claim to be doing well despite the credit crunch and a jittery property market. So how easy is it to go it alone? “Private selling isn’t for everyone, particularly those who lack the time or confidence to arrange and conduct viewings and negotiate with potential buyers,” reckons James Tallack, a senior researcher at the consumer rights group Which?. “However, if this doesn’t bother you, then there are huge savings to be made.” So why do we bother with estate agents? If somebody is selling privately, will they be able to do as good a job as a good-quality estate agent? Will they be able to negotiate the best price? Can they really check out all the buyers’ credentials? Can they try and help control the chain? “When you get these tougher markets, as we did in the early 1990s, then the good-quality estate agents really show what they are made of” insists Peter Bolton King, chief executive of the National Association of Estate Agents.
Last lender pulls 125% mortgage deal
Saturday, February 23rd, 2008Lenders have completely pulled out of the 125% mortgage market as the credit crunch continues to bite. Birmingham Midshires Solutions said it was pulling its version of the product, which will lend people up to 125% of their property’s value, due to market conditions. The group had been the only provider to continue offering the deals after Alliance & Leicester, Abbey, Northern Rock, Coventry Building Society and Godiva Mortgages all said they were scrapping them earlier this week. Faced with only limited availability of funds, lenders are keen to concentrate on less risky mortgages, and the problem has been compounded by fears that house prices could fall. There are now just two mortgage providers who will advance more than 100% of a property’s value, with Scottish Widows offering loans of 110% to professionals only, while Dunfermline Building Society is offering 110% to professionals and 105% to graduates but only in Scotland.
Northern Rock axes 125% mortgage
Friday, February 22nd, 2008Northern Rock has pulled its 125% mortgage after heavy public criticism for the super-size homeloan. The troubled bank will no longer offer the Together mortgage to new customers as it seeks to move towards low-risk lending and shrink its mortgage book. Alliance & Leicester, Abbey, Coventry Building Society and Godiva all pulled their 125% homeloans earlier this week. The only lender still offering 125% mortgages is Birmingham Midshires and experts have suggested it will soon take the product off the market. Fears have been raised that those coming to the end of 100%-plus mortgages may be in for a payment shock and unable to find credit elsewhere. Mortgage lenders have been reassessing their ranges in response to tighter market conditions and have become more reluctant to lend to those with chequered credit histories or high loan-to-value ratios.
Government rakes in £31bn in stamp duty
Thursday, February 21st, 2008Homebuyers have forked out £31.5bn in stamp duty over the past ten years. Last year alone, the figure reached £6.5bn - a staggering 675% increase since Labour came to power. In 1997-1998, just £830m in stamp duty was paid. Increases introduced by Gordon Brown when he was Chancellor, which were widely criticised at the time, are forcing record numbers of homebuyers to pay stamp duty. Before Labour came to power, the tax was charged at just one per cent on all properties sold for £60,000 or more. Today, it is charged at 1% on houses costing between £125,000 and £250,000, 3% on those worth from £250,000 to £500,000 and 4% for those sold for more than £500,000. In London, the average asking price for a home is £402,000, which would mean stamp duty of more than £12,000. The majority of first-time buyers are now forced to pay the tax, which - coupled with the recent property boom - makes finding enough money to buy a home even harder.
Insurance reminder for Landlords
Wednesday, February 20th, 2008Landlords are being reminded to value their properties accurately for insurance purposes. Around 2.76 million properties are owned by landlords across the UK. They are currently valued at approximately £641 billion, up from £571 billion this time last year. It is recommended that portfolios should be reassessed every two years to avoid the risk of underinsurance. Meanwhile Halifax General Insurance is reminding all property owners of the scale of storm damage experienced across Britain last year. Over 1.5 million homes had their roofs damaged by high winds and the value of claims resulting from water entering properties from a hole in the roof totalled £2.5 billion. Storm damage appears to be on the increase in the UK and Martyn Foulds, senior claims manager at Halifax Home Insurance, warns: “homeowners without adequate buildings insurance cover risk finding a huge hole blown in their finances by the cost of repairs”.
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