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.
Posts Tagged ‘mortgage rates’
Halifax defies plea by PM and raises its loan rates
Wednesday, April 16th, 2008Government 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.
Banks protest at Rock’s unfair advantage
Tuesday, February 19th, 2008Rival banks protested that the nationalised company could enjoy a huge competitive advantage over them and steal business away. And MPs complained that the Rock was risking repossessions by attracting new customers with offers to lend them far more money than their homes are worth, by offering cheaper rates on loans of up to 125% of property values - where a quarter of the debt is unsecured. The political crisis deepened after the Government refused to deny claims that taxpayers face a £100m bill for the cost of advice from banks and lawyers during the failed efforts to secure a private sale. The Prime Minister has said nationalisation was a temporary measure, although new Northern Rock boss Ron Sandler has said it will be ’some years’ before the bank can repay its debts. Today’s emergency Bill will give the Government special powers for 12 months to nationalise any bank, not just Northern Rock where it is necessary to protect “the stability of the UK financial system”.
What now for Northern Rock mortgages?
Monday, February 18th, 2008Homeowners with a Northern Rock mortgage will continue to pay it as normal. Monthly payments and terms and conditions will remain the same, but Northern Rock mortgage holders now owe the taxpayer money rather than the bank. They will find, however, that securing a new deal from Northern Rock is unlikely to be worthwhile, as the bank’s mortgages have become uncompetitive since the crisis began and better rates can be found elsewhere. The number of new mortgages from Northern Rock will be seriously reduced and rates are likely to remain uncompetitive. The Government will seek to avoid being accused of using the benefits of state ownership to beat rival mortgage lenders’ offers. Currently, Northern Rock’s two-year fixed rate mortgage is set at 6.99%, with a £1,995 fee – this compares to Halifax, which is offering a two-year fixed rate at 5.89% with a £999 fee.
