http://www.londonmortgageadvice.co.uk/news/article/329 Since April 2008, sold signs have been sprouting across the country, increasing to their highest number. The number of Sold signs instructed by agents in June rose to the highest level for 14 months, and showed a 19.2% increase on May, according to estate agency sign supplier Agency Express. There were 36.3% more Sold signs in June than June 2008, year-on-year. The West Midlands was region showing the greatest monthly increase in the number of boards moving from For Sale to Sold, with a 58.7% rise, followed by the East Midlands (35.1%) and Yorkshire (28.8%). The regions experiencing the lowest increase in sales were Wales, which remained static, London where there was a 7.6% increase and the North-East where 8.3% more Sold signs were instructed,were the regions experiencing the lowest increase in sales. Agency Express points out, however,that there is still some way to go: the latest June figure is 34% lower than the monthly average for 2007. While the number of new For Sale boards has crept up this year, from the lowest recorded level in December 2008, the lack of new instructions is also apparent: June’s new For Sale board activity is 32.9% down on last June. It is also 56.1% down on the highest recorded month in the last two years, which was May 2007. East Midlands (37.4%), Yorkshire (26%) and London (25.4%) are the regions showing the greatest monthly increase in the number of For Sale boards being put up are the. The regions showing the smallest monthly rises in the erection of For Sale boards were Scotland (2.1%), the North-East (13.9%) and the South-East (15.4%). “There are grounds for continuing optimism that we have seen the bottom of the market. Confidence is definitely returning and we have seen a step-change in the number of properties being sold right across the UK.Stephen Watson, former estate agent and managing director of Agency Express, said. “This in turn is likely to encourage more people to put their houses up for sale and we have certainly seen evidence of this happening already. But we are not out of the woods yet.“The number of properties sold in June is still significantly behind the monthly average we saw in 2007 and I would suggest that it’s likely to take another couple of years for a full recovery to take place.” 2009-07-03 http://www.londonmortgageadvice.co.uk/news/article/328 There has been reaction by property experts to yesterday's Nationwide Monthly House Price Index which saw a 0.9% in June. Some say that it highlighted renewed buyer enthusiasm for the best properties with very thin house sales volumes. The best locations and most desirable properties are seeing price stabilisation at the moment, whereas less desirable areas and homes are still seeing big annual price falls. Could be though that this renewed confidence and the increased buyer interest that estate agents are reporting will not last beyond the summer. Wtih mortgage rationing is set to continue, as the banks struggle to recover from the credit crunch, this is causing a clear disconnect between property viewings and buying figures. In addition, unemployment figures are getting worse daily and the wider recession continues apace. Massive national and personal debt problems will see much more house price pain when interest rates start their inevitable increases next year. An alternative view however is that the three-month rate of change has turned positive for the first time since December 2007 and is a sure sign of better things to come. However, transactions are still historically low, as we wait for the fundamental drivers of mortgage availability and consumer confidence to make a more assertive return. It could be that Nationwide's figures bring further evidence that the housing market is on an upward curve, with price rises expected to continue throughout the rest of the year. As the shortage of homes grows more severe and the competition for existing properties increases, so property prices could be forced up. 2009-07-02 http://www.londonmortgageadvice.co.uk/news/article/327 The latest news from NATIONWIDE regarding the cost of buying a house has now been publshed and it makes interesting reading. House prices increased by 0.9% in June, raising the average price to Ł156,442, according to the latest Nationwide index. The three month rate of change turned positive for the first time since December 2007 and the annual rate of change has improved to -9.3% from -11.3% in May the latest statistics also show. “If the pattern of price movements seen in the first half of the year is repeated over the second half, then prices could show only a small single digit fall for 2009 as a whole. This would represent a stark shift from trends seen at the turn of the year, when most indicators were pointing to a repeat of the large declines seen in 2008, Martin Gahbauer, Nationwide’s chief economist, said. “House prices have now risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noise. What is unusual about the recent trend reversal, however, is that it has taken place against a background of transactions activity that is still very low by historical standards. “Although it has risen from the all-time record low reached in November 2008, the industry-wide number of mortgages approved for house purchases is still 55% below its long-run average and 33% below the trough reached in the 1990s downturn. Normally, such a low level of house purchases would be associated with falling house prices.“Alongside the low level of mortgage approvals, however, there continues to be a relentless drop in the stock of property available for sale, as potential sellers and builders have responded to depressed demand conditions by reducing the supply of property coming onto the market. As a result, prices have been able to stabilise even in the face of very low demand. “On balance, the stabilisation of house prices is a welcome surprise that did not seem likely at the beginning of the year. However, there are still considerable headwinds facing the demand side and until we see a more robust recovery in house purchase activity, it is too early to be confident about a full-scale recovery of prices.” 2009-07-01 http://www.londonmortgageadvice.co.uk/news/article/326 87 per cent of home owners opting for this type of product as fixed-rate mortgages are dominating this sector of the loans market. In the second quarter of 2009 there was a 16 per cent rise in consumers opting for fixed-rate mortgages, according to Legal and General's Mortgage Purchase Index. "Who could blame [consumers]? Margins on these products are high and it's almost a cast-iron certainty that when the base rate next moves, it will be upwards." says Stephen Smith of Legal and General. Adding that fixed-rate mortgages will give home owners "valuable peace of mind" in "turbulent" economic times and warned that with rates on the rise now could be the time to seize such products. To glean an overall picture of the market, Legal and General's Mortgage Purchase Index tracks trends from thousands of mortgage providers around the UK. Barclays announced that it is raising the cost of fixed-rate mortgages for new customers, reported the Daily Telegraph, earlier this month. Depending on the type of fixed-rate mortgage being taken out, rates on this kind of product at Barclays were raised from between 0.2 and 0.7 of a percentage point,. 2009-06-30 http://www.londonmortgageadvice.co.uk/news/article/325 Research shows buy-to-let landlords are losing their properties at over three times the rate of other homeowners. 1,700 buy-to-let properties were repossessed by lenders in the first three months of this year, Council of Mortgage Lenders figures show. Buy-to-let mortgages much harder to come by, caused by the recession. Lenders are appointing more receivers of rent.In this process, a tenant is allowed to remain in a property instead of losing their home. It also gives the lender time to decide what to do with the property, whilst offsetting the mortgage interest against the rent. That in turn can help reduce the arrears faced by the landlord. 0.35% of buy-to-let properties were taken back by lenders - more than three times the rate in the owner occupier markets where 0.11% of mortgaged properties were lost. This has come about as many landlords got into trouble after paying too much for buy-to-let flats. Rents have often not lived up to expectations, and landlords have struggled to pay the mortgage. And with falling house prices - which have often hit city centre flats especially hard -many could not afford to sell either. The situation has been made more difficult by lenders getting tougher over mortgages, with buy-to-let loans particularly badly affected. At the beginning of last year it was easy to get a buy to let mortgage with a 15% deposit. Now borrowers need a 25% deposit to have any chance. And now what is happening is this is hitting the number of buy-to- let mortgages taken out. In the first three months of this year there were 22,400 new buy to let mortgages. Whereas at the height of the boom two years ago - when 346,000 buy to let mortgages were snapped up in just twelve months. 2009-06-29 http://www.londonmortgageadvice.co.uk/news/article/324 A study said on Wednesday says that European house prices sinking in the global economic crisis are likely to fall further next year although the British market may steady Standard & Poor's (S&P) estimated that British house prices may "stabilise" in the last three months of this year.This may leave them at about seven percent below the level in December last year, and they may remain "roughly stable" in 2010. Ireland would fall 13 percent this year and a further 10 percent in 2010. Spanish housing market is poised for an extended period of adjustment, with prices declining until 2012," it said. France, prices "will drop by about 10 pgrcent in 2009, and by two percent in 2010." "Given the magnitude of past increases on one hand, and the severity of the current economic recession on the other", many people were wondering how much longer the downward correction of prices would last. Jean-Michel Six,the agency's chief economist for Europe,said: "Since the beginning of the current downturn in mid-2007, price declines have been much steeper than in the 1980s-1990s."This pointed to two possible outcomes, he said: a fall lasting "four to five years -- and leading to a dramatic cumulative price fall", or a much quicker correction given the speed of price falls so far. Affordability had improved rapidly. But house prices had fallen far more quickly than during previous downturns and this had brought about a sharp loering of the cost of homes relative to incomes. On this measure, the price fall could "reach its end in the next year or so." Iin part, the crisis was caused by excessive debt taken on by households and companies, and the correction of this factor would take time.However, the level of household debt differed from country to country and was "much higher in Spain and in the UK than in France or Italy", suggesting that the housing downturn might last longest in highly leveraged countries. 2009-06-25 http://www.londonmortgageadvice.co.uk/news/article/323 It has been claimed that the majority of mortgage borrowers chose to fix their mortgage deal in the first quarter of this year, Some 87 per cent chose a fixed-rate mortgage product during the second quarter of 2009 according to Legal & General. And this is an increase from 71 per cent who chose to fix their mortgage repayments in the first three months of the year. It is claimed by Legal & General that while average two-year fixed-rate mortgage rates climbed from 4.78 per cent in quarter one to 5.46 per cent in the second quarter, average three and five-year deals actually got cheaper. "Borrowers who are prepared to take out variable rates have been few and far between. And who could blame them? says Stephen Smith, director of housing at Legal & General."Margins on these products are high and it's almost a cast iron certainty that when the base rate next moves, it will be upwards." Acording to Moneyfacts,however the average two-year fixed-rate mortgage costs 5.04 per cent – while that is still an increase it is a substantially smaller one than that observed by Legal & General. 2009-06-24 http://www.londonmortgageadvice.co.uk/news/article/322 Approvals for house purchases rose to 31,162 in May, up 15.8% compared with the same month a year ago as mortgage approvals by the UK's major banks have continued the steady rise of the last six months, figures show. Data also shows that borrowing on credit cards has dropped owing to householders' economic uncertainty as various lenders have raised the cost of fixed-rate mortgages in recent days. Whilst there are rising number of approvals - a signal of future activity in the housing market - the BBA said that the mortgage picture remained subdued overall. The modest recovery in the housing market is in danger of being nipped in the bud Some experts think that High Street banks were loosening their lending constraints and offering mortgages to people who did not have a large deposit to give. Others says that consumers' appetite to borrow had been hit by uncertainty over jobs, house prices and the state of the economy in general. This also meant that demand for new loans was contracting, and spending on credit cards was down 11.4% on a year ago. With interest rates still at a record low, the number of people remortgaging has continued to fall. Approvals were down 60% to 24,847 in May as many householders simply stuck with their lenders' variable rates. With the Bank rate still at 0.5% - Low interest rates were also hitting savings, with the BBA seeing a low level of new deposits being made by customers, who are likely to be searching elsewhere for higher returns. Negative equity stops home moves However, the capacity of banks to lend remains tight and so this has caused them to put up the cost of home loans. Nationwide and Barclays announced this week that they were raising the cost of their fixed-rate mortgages. This comes after the cost of inter-bank borrowing led most lenders to raise rates a week ago. The modest recovery in the housing market is in danger of being nipped in the bud," he said. In a report by ratings agency Fitch has suggested that, owing to falling prices, 23% of borrowers in the UK could face negative equity by the time property values hit their trough. Negative equity is the situation where someone's house has become worth less than their mortgage. If its peak-to-trough prediction of a 35% drop in house prices was correct, Fitch said that - by value - a third of all home loans would be in negative equity. A separate survey by website Findaproperty.com found that average rents in the UK increased for the first time since August 2008. They went up by 0.5% month-on-month to Ł823, the research found. 2009-06-23 http://www.londonmortgageadvice.co.uk/news/article/320 Following news that one in six homes is at risk as rainfall across the country increases with many potentially facing the insurance nightmare of affordable insurance cover being withdrawn, the property industry is echoing calls for the government to double flood prevention spending. Spending must increase from Ł570 million a year to Ł1 billion per year to avoid around Ł4 billion of yearly damage from flooding, the Environment Agency said last week. The governmentmust act now, believes the British Property Federation (BPF), which represents developers, investors and agents, and that not doing so could not only impact new development but also insurance for existing homes and businesses. There is a very real possibility of affordable cover being withdrawn in areas of high flood risk, it says. As valid property insurance is one of the terms set out by lenders, no insurance cover would mean no mortgages,. “These figures are a wake up call to the Government to increase the resources they dedicate to fighting the risk of flooding,says former head of property at insurance firm Aon, Bill Gloyn, who chairs the BPF’s insurance group, this will reduce the chances, and severity, or future flood events but also provide much needed confidence to the insurance industry to continue to provide flood cover for households and businesses 2009-06-22 http://www.londonmortgageadvice.co.uk/news/article/321 House purchases rose to 31,162 in May, up 15.8% compared with the same month a year ago as mortgage approvals by the UK's major banks continued the steady rise of the last six months. Hoever at the same time data also shows that borrowing on credit cards has dropped owing to householders' economic uncertainty. Various lenders have raised the cost of fixed-rate mortgages in recent days. The BBA said that the mortgage picture remained subdued overall, despite the rising number of approvals - a signal of future activity in the housing market . The modest recovery in the housing market is in danger of being nipped in the bud Some say that that High Street banks were loosening their lending constraints and offering mortgages to people who did not have a large deposit to give. Whilst other say that consumers' appetite to borrow had been hit by uncertainty over jobs, house prices and the state of the economy in general. This also meant that demand for new loans was contracting, and spending on credit cards was down 11.4% on a year ago. With interest rates still at a record low, the number of people remortgaging has continued to fall. Approvals were down 60% to 24,847 in May as many householders simply stuck with their lenders' variable rates. Low interest rates - with the Bank rate still at 0.5% - were also hitting savings, with the BBA seeing a low level of new deposits being made by customers, who are likely to be searching elsewhere for higher returns. Raising rates The recent drop in house prices and low interest rates has tempted some people back into the housing market. AREAS FACING NEGATIVE EQUITY Northampton: 16.9% of borrowers in negative equity Nottingham: 16.2% Derby: 15.1% Cardiff: 14.7% Wigan/Manchester: 14.5% Source: Fitch Ratings Negative equity stops home moves However, the capacity of banks to lend remains tight and so this has caused them to put up the cost of home loans, according to Ray Boulger, of mortgage broker John Charcol. Nationwide and Barclays announced this week that they were raising the cost of their fixed-rate mortgages. This comes after the cost of inter-bank borrowing led most lenders to raise rates a week ago. But Mr Boulger warned that any recovery of demand in the housing market could be stunted if the Bank rate rose, as predicted, in the coming months. "The modest recovery in the housing market is in danger of being nipped in the bud," he said. Negative equity A report by ratings agency Fitch has suggested that, owing to falling prices, 23% of borrowers in the UK could face negative equity by the time property values hit their trough. Negative equity is the situation where someone's house has become worth less than their mortgage. If its peak-to-trough prediction of a 35% drop in house prices was correct, Fitch said that - by value - a third of all home loans would be in negative equity. The areas already most affected were Northampton, Nottingham and Derby, the ratings agency said. A separate survey by website Findaproperty.com found that average rents in the UK increased for the first time since August 2008. They went up by 0.5% month-on-month to Ł823, the research found. 2009-06-22 http://www.londonmortgageadvice.co.uk/news/article/319 One in ten agents believed that the number of people selling would DOUBLE if HIPs were taken off the market a survey of members by the National Association of Estate Agents (NAEA) reveals. 20% of all agents believed that the number of sellers would increase by a fifth to on equarter. And an amazing 91 per cent of agents were adamant that customers paid little or no attention to the controversial packs anyway. In April, the average estate agent had 67 properties available to sell, compared with 84 in April 2008 and 100 in December. Chief executive of the National Association of Estate Agents, Peter Bolton King said: “The housing market has seen a number of positive signs in 2009, particularly an increased demand for property and more sales being completed.However this will be unsustainable without a steady supply of housing. HIPs are controversial and in the NAEA’s opinion, relatively useless. That is bad enough, but these figures suggest that professional agents believe that they are actively harming the market.The figures are significant because of fears that housing market recovery is being stunted because increased demand for property among buyers is not being matched by a supply of houses for sale.The Government should look at scrapping these packs, at the very least until the market has recovered. At that stage they should be reviewed. The NAEA would be happy to offer its professional opinion as to the best way forward.” 2009-06-19 http://www.londonmortgageadvice.co.uk/news/article/318 Facing their first rise in mortgage rates for a year homebuyers in a move by banks and building societies could extinguish the recent recovery in the housing market. For one, Nationwide has hiked the cost of its most popular deals, with others likely to follow suit in the coming days. Lenders are increasing the cost of their fixed-rate mortgages, the type of deal that around 80% of homebuyers are opting for at the moment. Nationwide has upped the cost of its fixed-rate deals by up to 0.86%, and state-owned Northern Rock has raised its five-year fixed rates by 0.2%, both with effect from tomorrow. If rates rise too far, too fast, it could very easily nip the recovery in the housing market in the bud. Here is the explanation. Banks are raising mortgage costs after an increase in their own funding driven by government bond yields. As investors have become more optimistic about the health of the UK economy, they have begun to fret about the return of inflation. That has prompted them to sell government bonds, known as gilts, whose long-term value is eroded by high inflation. When the price of gilts falls, their yield – the interest rate the government must pay to borrow – goes up. Today the yield on 10-year gilts hit a seven-month high of 4.01%. Since many other interest rates across the economy are set with reference to gilt yields, this increase is feeding through to borrowing costs for ordinary families and businesses. And with the news that mortgage costs are rising came as the Bank of England announced that up to 1.1 million households have been plunged into negative equity by the property crash. With prices down by 20% from their peak in autumn 2007, research by the Bank published tomorrow suggests that between 700,000 and 1.1 million homeowners now owe more on their mortgage than their house is worth. Bank of England's monetary policy committee will be concerned at the rise in mortgage costs. After slashing interest rates to just 0.5%, their lowest level ever, they embarked on the drastic policy of quantitative easing – buying up billions of pounds worth of government bonds – to bring down borrowing costs and boost lending to cash-strapped families and businesses. Could it be we are experiencing a spring bounce. Figures issued by the Council of Mortgage Lenders today showed a 16% jump in mortgage lending to people buying a home during April. Mortgage rates have been at all-time lows, and at the end of such a period there always comes a change of direction. It looks as though we're now there, and all the signs suggest fixed-rate mortgage rates are only heading one way – upwards. The fear is that once interest rates start rising, they will go up quite rapidly. When a few lenders start raising rates, the rest of the market are quick to follow. 2009-06-17 http://www.londonmortgageadvice.co.uk/news/article/317 Within the current mortgage market it even more difficult for first-time buyers to get on the property ladder where.In just two-and-a-half years, mortgages requiring a 10% deposit have almost vanished. It is difficult for existing homeowners to move up the ladder acknowledging that first-time buyers have long since been described as a core part of the property market. Without having a significant deposit,and since the onset of the credit crunch, mortgages have been harder to secure . According to research from price comparison website moneysupermarket.com there are now just 102 mortgages for people borrowing up to 90% of their home’s value, this is down from more than 3,000 different deals at the start of 2007. Moreover, first-time buyers are being hit with high interest rates with the average rate on a 90% loan-to-value (LTV) mortgage currently at 6.23%. What conclusions can we draw from this? The Government has failed to get mortgage lenders to open their books to first-time buyers. A 10% deposit is all most first-time buyers can expect to afford, so by pulling 90% LTV deals, and increasing rates on the remaining deals, lenders are keeping first-time buyers out of the house buying process - which simply creates a stagnant housing market. The Council of Mortgage Lenders (CML) said last week that the number of loans approved for house purchases in the UK rose by 16% in April compared with March. At the same time, the Royal Institution of Chartered Surveyors (Rics) reported that new buyer enquiries rose for the seventh consecutive month in May, while completed sales were at their highest since August 2008. 2009-06-16 http://www.londonmortgageadvice.co.uk/news/article/316 The Confederation of British Industries,CBI predicts that UK GDP, supported by low interest rates and quantitative easing, should flatten out during the second half of 2009, with quarter-on-quarter figures of -0.1% and 0% in Q3 and Q4, and modest quarter-on-quarter growth of 0.1% and 0.3% in Q1 and Q2 of 2010 The UK’s leading business group expects modest growth to resume during the first three months of 2010, with the pace of growth gradually picking up during next year. . Director-General, Richard Lambert, CBI said: "The world recession has deepened, so it is not surprising that the UK economy has continued to suffer. However, the harshest period of the recession looks to be behind us, the economy is stabilising and this should continue during the second half of this year. "The return to growth is likely to be a slow and gradual one; difficult credit conditions are still affecting business behaviour. For positive growth to return, lenders need to feel more confident so that credit can start flowing again."Some commentators have been carried away by recent tentative indicators as evidence of ‘green shoots’. It will take some time before we can be sure these shoots have roots we can depend on for sustainable growth and, in the meantime, the government must do everything it can to help firms get access to credit." They reckon, by the end of the recession, the economy will have shrunk by a cumulative 4.8% - not as severe as the 5.9% seen in the early 1980s - after five consecutive quarters of falling GDP. Also they expect there to be very slight growth from the start of 2010, with the pace picking up slowly, such that trend growth rates are restored only by the end of the year. For 2010 as a whole, this profile yields an average annual GDP growth of a modest 0.7%. This follows a fall this year in GDP of 3.9%.CPI inflation is expected to fall below the Bank of England’s target of 2% in 2009 Q3 and remain there throughout the forecast period to the end of 2010. Quantitative easing is expected to continue for some months yet, but by the spring of next year, the Bank is expected to wish to return monetary policy gradually towards a more normal footing, with very modest increases in the official rate of interest from its current 0.5%. Importantly, the labour market is proving to be even more flexible than hoped, with many more private sector employees accepting wage freezes and short-time working than in previous downturns. This should help limit the pace of job losses through 2009, and the CBI now expects unemployment to peak at a slightly lower level than previously thought. Unemployment is still expected to continue to rise until Q2 2010, to a peak of 3.03 million (9.6%), before edging lower during the remainder of 2010. Public spending will be constrained not only by the rise in unemployment, but also a more elevated savings ratio and only modest increases in incomes. Through 2009 and 2010, the savings ratio is forecast to remain at a similar level to the two-year high of Q4 2008. Meanwhile, average earnings (including bonuses) should continue to fall on a year ago during Q2 and Q3 2009, followed by weak growth from Q4 and into 2010. The CBI’s figures show household consumption shrinking by 2.9% in 2009, and growing only modestly in 2010 (0.5%). The weakness of construction investment over the early part of 2009 has led to a modest revision in the outlook for business investment. Business investment is expected to shrink by 12.4% this year, from the -9.3% expected in April, and by a further 1.4% in 2010. Firms have reduced their stock at a rapid pace at the start of this year, this should now begin to ease and firms should start re-building their stocks next year. The public finances are expected to be under growing pressure from the recession and net borrowing is expected to reach Ł172.3 billion in 2009/10 and Ł182.2 billion in 2010/11, representing 12.2% and 12.6% of GDP respectively. There is still have some way to go before the UK economy is truly out of the woods and we see sustainable growth. For consumers, some of the worst fears of earlier in the year may now not be realised, but they will still face tough times as higher saving and lower income eat in to their ability to spend.However, the restraint shown by businesses and their staff in setting pay awards and accepting short-time working should help to curb the pace of job losses, lessening the pain for some, and shows the real strength of Britain's flexible labour market 2009-06-15 http://www.londonmortgageadvice.co.uk/news/article/315 Latest statistics from RICS show a further increase in both new buyer enquiries and sales, as well as a reduction in the level of stocks on surveyors books has begun to provide some support for property prices. New enquiries edged up again in May, as witnessed bu a number of chartered surveyors, with 48 percent reporting a rise rather than a fall, the seventh consecutive monthly gain. Sales also rose, albeit from very depressed levels, indicating that the increase in footfall of potential buyers is steadily improving activity in the housing market. The average numbers of properties sold over the past three months rose to 11.8, up from 10.6. At the same time the net balance of surveyors reporting a fall in house prices rose from a negative balance of 58.7 to 44.1 percent. As a result of new instructions continuing to fall,the average number of properties on surveyor’s books has dropped in the past month to 58.4 from 69.4 (they have fallen by more than one third over the past year). The lack of new supply, coupled with the increase in activity, is now providing some support for house prices. This is being most visibly reflected in the sales-to-stock ratio, widely seen as a key indicator of market slack, which saw a sharp increase from 15.2 to 20.1 percent. As to the outlook for both house prices and sales, this improved significantly in May, with a net balance of 40 percent more Chartered Surveyors expecting sales levels to increase, the highest figure in the survey’s history (1998). Only 11 percent more surveyors are expecting prices to fall rather than rise. This compares to 42 percent last month and represents the best reading since July 2007. One might deduce form the above that the housing market does appear to be close to bottoming out. Activity is picking up and prices noew stabilising. However the lack of supply has been important in underpinning prices. And with unemployment set to continue, and finance for first time buyers still in short supply, there are a number of major impediments for the market to overcome for the rest of the year. 2009-06-10 http://www.londonmortgageadvice.co.uk/news/article/314 With the closure of all its 160 UK Cheltenham & Gloucester (C&G) branches with the loss of 1,500 jobs, Lloyds Banking Group is announcing further job losses today. Lloyds Since April, has axed almost 3,000 jobs. According to the union, Unite 20,000 jobs have been axed in the finance industry in the first four months of 2009, with Lloyds making up over 10% of the losses. Analysts said, at the time of its merger with HBOS,that it was inevitable that the integration of the two banking giants was bound to create thousands of jobs losses because of the level of overlap between the two banks. A spokesperson for Lloyds said that C&G was an important brand to the group and “would continue to be so”. So, according to the BBC, the C&G brand will be kept for mortgages and savings. In related news, yesterday it was reported that 87% of new shares offered by Lloyds Banking Group have been bought by the bank’s shareholders. Lloyds announced the cash call in order to replace the Ł4 billion of preference shares held by the Government in the bank for equity. Lloyds will become the first bank to repay some of the Government’s Ł37 billion bailout of the UK banking sector and therefore returning money to taxpayers. Lloyds TSB (as it was previously known) made a profit of Ł807 million - an 80% fall compared with the previous year, while HBOS made a loss for the full year of Ł11 billion. The two banks together are expected to be in loss this year. For the full 2008 year. 2009-06-09 http://www.londonmortgageadvice.co.uk/news/article/313 According to the Halifax House Price Index, UK property prices increased by more than Ł4,000 in May, with the average house price rising by 2.6% during the month, the biggest monthly rise since 2002. This indicates a stabilisation in the property market. Following the latest data from Nationwide, which recorded a 1.2% increase in house prices in May, the second consecutive monthly increase, thesw figures semm ot back that one up. Halifax calculates that the average property is now worth Ł158,565, a similar level to mid-2004. Halifax housing economist, Nitesh Patel,said: "It is always important not to place too much weight on any one month's figures.Historically, house prices have not moved in the same direction month after month even during a pronounced downturn. For example, prices fell by 11% nationally during 1991 and 1992, but there were five monthly price rises in this period. House sales remain substantially below their long term average and market conditions are expected to remain difficult with housing activity continuing at low levels over the coming months.” however despite these rises there a re many observers who believe that, while activity in the property market may be picking up, prices have further to fall this year. 2009-06-05 http://www.londonmortgageadvice.co.uk/news/article/312 There were genuine fears that we could be about to see a collapse of the financial system. But the government predicts there will be growth next year There is a fresh optimism in the air and some economists suggest it could be time to start talking about having reached the bottom of the recession. What sort of recovery should we expect? It has been consumer spending that has led the recovery inthe past, but personal debt was a part of what started this downturn. Even if there is not a big rise in spending, retailers could still boost growth by boosting their stock in the near future. Retailers will have to restock their shelves at some point soon, which will make the recovery look better than the growth in demand would suggest. Nonetheless, consumer spending is unlikely to be the leading factor in the recovery. Some have suggested it could be an export-led recovery. Exporters are already benefiting from the weak pound against the euro and the dollar, which makes their products cheaper to their overseas customers. The problem with an export-led recovery is that it means we would have to wait for other countries to have their recoveries before we can. However, is the UK manufacturing sector in any state to lead the UK economy's recovery? Some companies will have been forced by the recession to lose a significant chunk of their workforce and some of those will be highly skilled people who they've reluctantly had to let go because of the pressure they're under. In the past, what was keeping the pound strong was the earnings from financial institutions. A possible source of growth in the recovery could be green technology. It is not just the manufacturing sector that could see an upturn in exports - the service sector could also benefit. The UK tourist industry is expected to benefit from the weak pound encouraging visitors from overseas. There may even be some growth from the financial services sector. And, there has also been some talk of an inflation-led recovery. The thinking is that if debt is the big problem for both the government and individuals, some controlled inflation would reduce the value of that debt. Well,it looks as if we may be relying on exports and investment when the recovery comes, but perhaps we should not raise our hopes too high. 2009-06-04 http://www.londonmortgageadvice.co.uk/news/article/311 The annual rate of house price falls eased from 15% in April to 11.3%, with a typical home now costing Ł154,016. House prices fell by 0.5% compared with the previous three-month period, the lowest quarterly drop since January last year. During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods. The combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet. Less properties are coming onto the market as many sellers choose to rent their properties to tenants, rather than try to sell them in a depressed market. It has helped stabilise the ratio of sales to the unsold stock of properties on estate agents' books. More reasons for the price rises could include potential sellers holding back, fearing that they would not be able to get the price they wanted in the current economic conditions, and fewer homes being built. Some sellers might not be able to hold off for long, particularly if they have lost their job and their income has fallen. Reports of increased interest from new buyers might also tempt some potential sellers back into the market. Volatility is typical of a housing market dragging along the bottom and mirrors the testing economic conditions What happens with UK rents could affect house prices.If the supply of homes onto the market does increase, the recent moderation in the pace of house price falls may not be sustained. Now, however, it is unclear how the balance between supply and demand will ultimately work through in the coming months. Estate agents and others have given the latest figures a guarded welcome. Volatility is typical of a housing market dragging along the bottom and mirrors the testing economic conditions. Some estate agents have reported an increase in activity among first-time buyers, but levels of lending still remain low and people, especially first-time buyers, still need a large deposit. First time buyers should not be unduly worried at this point, as there is a good chance prices will fall again slightly in the quieter summer months. However, anyone seriously considering getting onto the property ladder needs to commit in the next six to nine months or they could well miss the bottom. 2009-06-03 http://www.londonmortgageadvice.co.uk/news/article/310 In the UK property market, for those investing, there have been different levels of optimism among recent indicators. News around the turn of the year that buyer enquiries were on the up was a particularly low level, given that prices and transactions were still falling, but something stronger and higher has begun to appear since. To begin with, signs emerged that mortgage lending was starting to grow again, while transactions stopped declining and began to rise again. To this may be added a few hints that the wider UK economy has seen the worst of the recession, such as improved readings in the Organisation for Economic Co-operation and Development's Composite Leading Indicators. People that commentate on these things have urged caution over any conclusion that there may be a big rebound in the market soon - suggesting that the historic levels of lending and transactions are still low - but recently appear to have brought reason for the highest level yet. As recently as last week Nationwide recorded a 1.2 per cent rise during May, the second time in three months that its index has seen an increase. Now may have tilted the balance much more in favour of the optimists, who may consequently see now as a very good time to invest. Firstly, housing website Hometrack recorded that the average UK house price remained the same in May as it did in April - the first time in 20 months it has not fallen. However, in the context of one survey showing prices rise and another staying put, those looking for positive signs may be cheered by the latest Land Registry statistics. April's data revealed saw a drop of 0.3 per cent, compared with 0.4 per cent in March and two per cent in February. Could this reveal a pattern of a slowing decline, rather than an end to the slide and for that reason more solid conclusions must be kept on hold until May's survey arrives. It may be noted that had the level of price decline increased in April, this would form a counter-argument to any suggestion that the market really is bottoming out. Instead, a slowing decline may be seen as a precursor to a stabilising of prices in May. London saw the highest rise in April at 1.4 per cent, adding weight to the assertion of that London the capital is already seeing the price stabilisation that other parts of the country will experience later this year, from the third quarter onwards. 2009-06-02 http://www.londonmortgageadvice.co.uk/news/article/309 In a sign the housing market may be stabilising after a very sharp slide, the BBA said the number of mortgages approved for house purchase rose to a seasonally adjusted 27,685 in April from 26,671 in March. Down 15.5 percent on the year, this was the smallest annual decline since August 2007, when the credit crunch hit and the housing market started to come off the boil. Could this be that the figures suggest that the mortgage market may be stabilising? Despite record low interest rates and the Bank of England's efforts to pump money into the economy, analysts cautioned that lending conditions remained tight, and that the housing market was still a long way from recovery. One must not forget that the improvement is from a such a low base and the fact that approvals haven't really increased at all this month is a worrying signal of credit conditions.The BBA figures showed net mortgage lending rose by 2.7 billion pounds compared with a downwardly revised 3.4 billion pound rise in March -- the smallest increase in 8 years. The average value of the loan stood at 129,100 pounds. It has been suggested that interest from prospective homebuyers may be improving as Britons slowly regain confidence in the economic outlook. House prices also seem to be falling at a slower rate than last year. However, banks remain cautious about lending while the economy remains deep in recession and unemployment is climbing, and this could hamper a pick-up in housing market activity. The BBA said the number of re-mortgaging approvals fell to 25,418 last month, down 63 percent on the year and its lowest since December 1999. Approvals for housing equity withdrawal were down nearly 39 percent on the year to 19,409. 2009-05-29 http://www.londonmortgageadvice.co.uk/news/article/307 Tighter lending criteria mean that homeowners may struggle to remortgage, according to some experts. Millions of homeowners with mortgage deals that expire over the next year are in for a horrible shock. Fears are growing of a sharp rise in defaults and home repossessions when the Bank of England begins to increase the cost of borrowing as the economy recovers.Economists forecast that interest rates will rise as early as next year; any increase is likely to be passed on quickly by lenders in the form of higher SVRs. While interest rates are low, borrowers will be fine to sit on SVRs but once rates start to rise, which are expected to happen next year, payments could become unaffordable and lead to repossession for those who can’t cope. With a Ł150,000 interest-only mortgage on the current average SVR of 4.61 per cent, a borrower is paying Ł576 a month. But if interest rates rise by 2 percentage points over the next 18 months, as some economists expect, monthly repayments will increase by Ł250, or Ł3,000 over the course of the year. A rise of 4 points, predicted by 2012, will lead to repayments soaring by Ł5,000 a year. The chronic shortage of mortgage funding means that borrowers with even the slightest question mark over their financial or employment history are being rejected for new deals.The restrictions are unlikely to ease over the next year as banks continue to pick and choose the best borrowers. However, there are nearly 4 million who have seen their wages cut, face redundancy, have moved frequently, are self-employed, or face high levels of debt. A further one million borrowers are in negative equity, according to the Council of Mortgage Lenders (CML). These borrowers, who are trapped with a home loan that is worth more than the value of their property, will find it impossible to secure a new mortgage deal from most lenders. Another 1.3 million homeowners are considered bad risk because they have missed mortgage payments or credit card bills, have been repossessed, or were given a county court judgment. And, this group is set to double over the next 12 months as unemployment passes three million. At least half a million borrowers will be three months in arrears by the end of the year, according to the CML. Mortgages for borrowers considered credit-impaired have vanished from the market in the past two years. At the peak of the housing boom, there were more than 7,000 mortgage deals for borrowers with less than perfect credit histories.Another group of borrowers who will struggle to secure mortgage finance are those with a self-certification mortgage.Matt Andrews, of MoneyWorkout, the broker, says: “Without proving their income, families were allowed to stretch to a slightly larger property by securing a mortgage outside their income capability. 2009-05-27 http://www.londonmortgageadvice.co.uk/news/article/308 The British Bankers' Association (BBA) said today, mortgage lending from high street banks slumped to an eight-year low in April, but there were also signs of an increase in homebuying activity.Net lending, which takes into account repayments, increased by Ł2.7bn over the month, down from Ł3.4bn in March. Gross mortgage lending stood at Ł7.9bn in April compared with Ł8.7bn in March and a six-month average of Ł9.9bn. The figure is 52.4% lower than in the same month last year. However, there was some evidence that activity among homebuyers had picked up as gross lending for house purchases crept up to Ł3.5bn against a six-month average of Ł2.9bn. This was up on the previous month's Ł3.4bn, but 29.7% lower than the amount lent in the same month last year.The number of mortgages approved for house purchases also edged upwards to 27,685, around 1,000 more than in March and well above a six-month average of 23,812. The average home loan for a purchase had a value of Ł129,100, 16.7% lower than last April.Borrowing on credit cards, meanwhile, increased very slightly in April with Ł6.1bn in new spending going on to plastic compared with a six-month average of Ł6bn, but down 10.8% compared with last April. However, the value of repayments matched the amount spent at Ł6.1bn. Lending through personal loans and overdrafts remained steady at Ł1.5bn, down 39.3% compared with the same month last year. While there is evidence that people are being relatively conservative in their borrowing, figures published today by comparison site Confused.com suggested worrying levels of consumer debt. Research by the firm showed that on average for every Ł1 earned an individual will owe Ł1.02. According to the study, the area of the UK with the biggest discrepancy between borrowing and income is Kingston upon Thames in Surrey, where debts were equivalent to 169% of annual income, followed by Watford, with 166%. People in Manchester fared much better with debts equalling 51% of income. Clip Contact us Article history EmailClose Recipient's email address Your first name Your surname Add a note (optional) Mortgage lending from high street banks slumped to an eight-year low in April, the British Bankers' Association (BBA) said today, but there were also signs of an increase in homebuying activity. bang banks should never have been allowed to lend money as mortgages. 2009-05-26 http://www.londonmortgageadvice.co.uk/news/article/306 As part of a new government and banking initiative,homeowners struggling to meet their mortgage debt could be offered lower monthly repayments With other institutions lined up to join the scheme soon, the Homeowners Mortgage Support (HMS) scheme is being offered by 10 banking groups and building societies, The scheme means that borrowers who suffer a temporary loss of income could cut their mortgage interest payments by up to 70% for up to two years. The Council of Mortgage Lenders (CML) currently forecasts 75,000 repossessions this year with as many as 500,000 mortgages in arrears of three months or more by the end of 2009. The roll-out of HMS comes amid rising repossessions and levels of arrears among borrowers, with many struggling to cope after losing their jobs. Many families are worried about how to pay the mortgage right now, and there is a determinatio to ensure there is real help available for them. Borrowers must contact there lender straight away if they are concerned about how to pay the mortgage as often a solution can be found. HMS provides borrowers with breathing space, with interest payments deferred for up to two years. The government is keen to stress that HMS is not a payment holiday and does not allow people to dodge their debt. Repossession is a last resort. It is not yet clear what impact the HMS scheme will have asit will be some months before it will be possible to assess the impact of the various industry and government measures. The CML expects to be able to update its forecasts on arrears and repossessions, taking into account these measures as well as the prospects for employment and the wider economy, over the summer. Lloyds Banking Group (which includes Halifax and Bank of Scotland), Northern Rock, the Royal Bank of Scotland (which includes NatWest and Ulster Bank), Bradford & Bingley, Cumberland Building Society, and the National Australia Bank Group (which includes Clydesdale and Yorkshire Bank) have all confirmed their full participation in the scheme and will offer HMS from today (21 April). The following, Barclays (including First Plus), HSBC, Nationwide and Santander (including Abbey and Alliance & Leicester) have all confirmed they will offer comparable arrangements to HMS to their customers, but will not take up the government scheme. This means that customers should receive a similar level of support as people with banks offering HMS. Bank of Ireland (which includes Bristol & West), GMAC, GE Money, Kensington Mortgages, the Post Office and Standard Life Bank, meanwhile, have confirmed they will offer customers HMS as soon as possible. Lenders fully recognise their responsibility to keep people in their homes where repossession can be avoided, The fact that some lenders are utilising the new scheme and others are not indicates simply a difference in their approach not in their commitment to it. The following circumstances qualify:- You have suffered a temporary loss of income. For example, you or your partner may have been made redundant, have had your hours cut or are no longer able to work overtime. * You have no insurance policies in place protecting your mortgage payments. You are not eligible * If you own more than one home. * If your income is unlikely to return to its previous level. For example, you might have a long-term illness preventing your from working. * If you have insurance in place that protects your mortgage payments. * If you would still be unable to keep up with repayments even if they were reduced. * If you are claiming Jobseeker's Allowance - in this case you can claim support for mortgage interest instead. If you qualify for HMS, then the first step is to contact your lender and explain your situation clearly. In most cases you will then be referred to an independent money adviser, such as the Consumer Credit Counselling Service, to discuss your situation further. It will also explain how HMS works, outlining the risks as well as the benefits. If you and your lender agree that you are suitable for HMS then you can expect the following help: * Renegotiated monthly repayments. You and your lender will agree how much you can realistically afford to pay back each month. Under the scheme, you must be able to pay at least 30% of the interest due on your mortgage each month. * After 12 months, you are required to meet with your lender to review your circumstances. * You will benefit from lower monthly repayments for up to two years or until your situation changes. If your income does change during this time, then you must inform your lender. If your income returns to previous levels you are likely to no longer be offered HMS. * After two years (or if your situation changes) the interest payments you have deferred over the period will be added to your mortgage balance. You will, therefore, have to repay back this money, with interest. How you pay this back, and over what timeframe, will be decided between you and your lender. However, bear in mind that your monthly repayments are likely to increase. While HMS allows you reduced monthly mortgage interest payments for up to two years, this scheme does not allow you to avoid paying this money back altogether. After two years (or if you are no longer eligible for HMS) you will be required to pay back the interest payments missed. Your lender will add this to your total mortgage debt, and this will attract interest as your overall mortgage rate. It will be up to your lender how your monthly payments will change as a result. 2009-05-26 http://www.londonmortgageadvice.co.uk/news/article/305 Offsetting like this reduces the amount of interest you need to pay the lender each month. So you can either simply pay less each month, or keep payments the same and pay off your mortgage earlier. You won’t receive interest on your savings as a result, but you’ll still have access to them when you need them. So really, it gives you the opportunity to manage your money as it suits you. As you’ll see on page 6, to save more interest you can also make overpayments on your mortgage if it suits you. We calculate your interest daily, so anything you put in your savings or current account starts working immediately to reduce interest on your mortgage. Term reduction We will collect the monthly mortgage payment as normal. We will deduct any offset benefit from the capital balance, thus reducing the mortgage term. Although the default option is to reduce the term, you can switch between term and payment reduction at any time with no fee – just contact London Mortgage Advice to find out how. Payment reduction Your monthly mortgage interest payment is reduced to reflect the credit balances in the offset arrangement. Depending on how much you’re able to offset over the course of the mortgage you could save thousands of pounds in interest payments – contact your Financial Adviser to find out how. If you have a mortgage of Ł120,000, but have Ł10,000 in savings and current accounts, by offsetting, you will only pay the mortgage interest on the Ł110,000 difference. You can then choose to either pay less each month as you are only charged interest on Ł110,000 or you can choose to overpay, without incurring early repayment charges, each month to reduce the term of the mortgage. Is an Offset Mortgage right for you? It could be particularly useful if you: have excess funds left in your current a • ccount to put in your savings • already have savings - as you can have these effectively working for you at the full mortgage rate by offsetting them • are looking to reduce your mortgage – you can do this by either regularly saving and offsetting or make as many capital overpayments as you like • require flexibility to access your Barclays savings and current accounts whenever you want - you can dip in and dip out as you need, and even transfer money online between accounts • are a higher rate tax payer - you will not pay any tax on interest you would have earned on your savings or current accounts • have unpredictable cash flow - if you are self-employed, receive occasional large bonuses or commission, or work on highly-paid short-term contracts, any large sums you receive will start working hard for you immediately, as your interest is calculated daily. This could also be the case with other sources of income such as rent • save regularly towards your annual tax bill - as you can have this money working efficiently all year to reduce your mortgage payments. If you have savings or a little left over each month, an Offset Mortgage could suit you. That applies whether you’re remortgaging or buying a new home. Unlimited overpayments available Unlike many Offset Mortgages, ours lets you overpay as much as you like, whenever you are able.* We calculate interest daily - so your money works harder Anything you put in your savings or current account starts working immediately to reduce the interest payable on your mortgage. * Fees may apply on full redemption You can choose from many eligible accounts, and view and manage them online You choose up to 12 of your eligible Barclays current and savings accounts - see page 9 for a list of eligible accounts. You can then see all your accounts online, alongside your mortgage account, and make transfers when it suits you. You keep any historical ISA allowances If you’ve saved money in an ISA in the past you can offset this. But if in the future you don’t need to offset your ISA accounts, you will have retained your historical tax-fee savings capability. Your savings offset at the whole mortgage rate By offsetting with Woolwich, you are effectively getting interest on your savings at the full mortgage rate. For example, if your mortgage rate is at 6%, your savings and current account will offset the mortgage interest at that rate. You can also reduce your tax bill. Even though your current and savings accounts do not earn interest, they do reduce what you pay on your mortgage - and you won’t pay tax on your savings because it’s not earning any interest. This is particularly efficient if you’re a higher rate tax payer because you won’t pay tax on savings interest earned. 7How can an Offset Mortgage reduce the length of my mortgage? If you choose term reduction, we’ll collect your full monthly mortgage payment, and the benefit from offsetting your savings will be used to reduce the capital part of your mortgage, thus helping to pay it off sooner. If I have chosen to reduce my monthly payments, how will I know what I’m paying each month? We’ll send you a monthly statement showing a daily breakdown of the benefit you receive from your linked accounts, and the monthly direct debit payment we will collect. How and when do I choose which accounts to offset? To ensure you make the most of your savings and current account balances, pick the accounts you want to offset as soon as you set up your Offset Mortgage. If you open new accounts after that time, you can add them when you do - up to the maximum of 12 eligible accounts. What do I get when I open my offset account? As part of your Offset Mortgage, we will open a Mortgage Current Account and a savings account for you. They will both be linked to your mortgage and you can keep your funds in one of the accounts or separate into the two accounts. The credit balance is offset against the mortgage which reduces the amount of interest charged on the mortgage. How many people can be part of an Offset Mortgage? The maximum number of applicants is two. Can we offset joint savings accounts? You can offset a joint account against a joint mortgage for the same names, but you can’t use a joint savings account to offset an individual’s mortgage. Your questions answered 8Can I offset an individual named account on a joint mortgage? Yes, you can use the savings or current account of an individual named on the mortgage to offset a joint mortgage they have. Please note that account information for their individual account will appear on the joint monthly mortgage statement. When will my reduced payments show on my account? This will not show on your first mortgage payment - this debit interest is always collected in full in the first month. Offsetting credit balances will begin to show in arrears, from the following month onwards. What interest rate will I pay? All Woolwich Offset Mortgages are tracker mortgages and so the interest rate moves up and down in line with Barclays Bank Base Rate. Which accounts can I use to offset? Please use the following table to see which types of accounts you can use. If you hold any other account, please ask and we can advise you of the best way to move funds, or open a new account. If you do not have a Barclays account, we can set up a suitable one for you. 9 Eligible Current Account Types Barclays Bank Account Additions Platinum Flexible Current Account Staff Current Account Premier Life Current Accounts Plus Additions Active Eligible Savings Account Types Openplan Savings Reserve Openplan Savings Pot 1 Openplan Savings Pot 2-12 Barclays Mini cash ISA Barclays Flexible Savings Pot 1 Barclays Flexible Savings Pots 2-12 Barclays Cash ISA Tax Haven ISA Tax Beater Cash ISA What happens if I have more in savings balances than I have outstanding on my mortgage? Because of the way the Offset Mortgage is structured, you wouldn’t receive any credit interest. If this becomes the case, you would be better off transferring the surplus into a savings account not linked to the Offset Mortgage. If I have exactly the same in savings as I have on my mortgage, will I pay or receive any interest? This is called 100% offset, and theoretically it will mean you pay no interest on your mortgage and receive no interest on your savings. In reality there will be slight anomalies as credit interest uses the actual number of days in the calendar month, while debit interest simply divides the year into 12 (so each ‘month’ is 30.4 days). For example, in a 28 day February, the credit interest applied in March will be for 28 days whilst the debit charged will be for a twelfth of the year i.e. 30.4 days, there will therefore be a difference. Will I get credit interest on my savings? No, your savings will instead be use to reduce your mortgage interest. But it also means you won’t pay tax on any savings interest you may otherwise have earned. Can I withdraw an account from the offset arrangement? Yes. Simply let us know which account you no longer wish to offset and we can arrange this for you. Please see the question below for the effect of this withdrawal. What happens if I withdraw an account from the offset arrangement? Any account you chose to withdraw from the offset arrangement will continue to operate under the terms and conditions of that particular product. You will earn interest (if applicable) on any credit balances held in that account in accordance with the terms and conditions for that particular account. Any credit balances held in the withdrawn account will not form part of the offset calculation. You can opt to return any eligible account to the offset arrangement at any time. 10 6 2009-05-22 http://www.londonmortgageadvice.co.uk/news/article/304 After the Financial Services Authority admitted that allowing their growth was one of the key mistakes made during the housing boom, self-certification mortgages, often branded in the worlst light could face a ban,. Self-certification loans give borrowers the chance to verify their income, ideal for those in self-employment or freelancing. However, retail markets managing director, Jon Pain, admitted that the FSA could have made a mistake in allowing this side of the mortgage industry to flourish.Many borrowers inflated their salaries to get larger mortgage loans . Many of the specialist lenders heavily marketed and sold self-certified products, and a large percentage of these have led to correspondingly high levels of arrears and fraud.2007 was a boom year for self-cert, with as many as 45% of all mortgages approved with no check on income. 2009-05-21 http://www.londonmortgageadvice.co.uk/news/article/303 The National Association of Estate Agents (NAEA) reported that property sales in April were at their highest since October 2007 which gives further evidence that the housing market may be recovering. The average estate agent sold 10 properties last month, up from 8 the previous month and a record low of 5 last August, according to the NAEA. Peter Bolton King, chief executive of the National Association of Estate Agents commenting on the findings, said: “What we are beginning to see now are consistent positive indicators that have held firm or improved since the beginning of the year. Six months ago people were talking about how British people’s attitude to owning property had changed in the recession. The NAEA always said that this was nonsense, and that demand for property remained strong, but confidence in the market had gone. These figures show that this confidence is returning.” Meanwhile property website Rightmove revealed that property asking prices are up for the fourth month in a row by 2.4%. The average asking price of a home increased by Ł5,000 to Ł227,441, during the four weeks to May 9 - the largest percentage rise since May 2003 in the midst of the housing boom according to Rightmove. There is a word of caution however, that as vendors see their equity dwindling away due to falling house prices, they may be pricing their homes at unrealistic levels. There is a worry that the lack of supply of good housing stock could delay the recovery of the housing market. And it is widely reported new buyer enquiries continued to rise in April - the sixth consecutive monthly rise and the fastest pace since August 1999. 2009-05-20 http://www.londonmortgageadvice.co.uk/news/article/301 Britons are reluctantly taking the decision to return to Britain from Spain. Many are saying that they cannot make it work any more financially and that although would love to stay, things are so hard there that they cannot last any longer. Their Spanish dream over. With the low value of the pound, the end of Spain’s decade-long building bonanza and the global financial meltdown have conspired to make Britain a more attractive place to many expatriates, despite the deepening recession at home. And the Spanish sunshine and way of life cannot hide the dire recession into which Spain is falling. Unemployment stands at 17.4 per cent — more than double the European average — and more than four million people are out of work. The property market, which had employed large numbers of Britons in southern Spain, is stagnant. No new homes have been built for four months by any big developer. Whilst the sun is nice but it doesn’t pay your bills. And opportunities are very thin on the ground there. In England there are still more opportunities and you have the support of family and friends. Applying for state benefits in Spain might prove difficult for many British expatriates, many of whom speak little Spanish. If you want to get help from the authorities you have to wade through red tape. Official figures do not exist for how many are heading home. The British Embassy estimates that one million Britons live at least part of the year in Spain. And for those hunting for jobs in Britain, the idea of swapping the Spanish sun to start again in the gloom of Britain in recession may seem strange. However, many returning expatriates say that although things are tough in Britain, competing for jobs with Spaniards who have the advantage of the language and family contacts often makes it harder in Spain. 2009-05-19 http://www.londonmortgageadvice.co.uk/news/article/300 Despite the fact that house prices have fallen, analysis from moneysupermarket.com has revealed ,frst time buyers continue to be priced out of the mortgage market. Just six per cent of mortgage products fall into this category but lots of first itme buyers are looking for a 90% mortgage If they are lucky enough to get 90 per cent LTV mortgage, they face an interest rate that is 30 per cent more expensive than a 75 per cent LTV mortgage deal. Despite falling house prices, finding a large deposit is no mean feat, we're generally talking about many thousands of pounds. Lenders should not be so focussed on the wquity – if an applicant can prove they are able to afford repayments, they should be trusted with the mortgage. Yesterday Abbey mortgages announced that it was increasing the LTV on all of its fixed rate mortgages from 60 per cent, to 70 per cent. This is a good example of a bank trying to help its customers – others should follow their lead. Whilst 70 per cent is still high, it will reduce the thousands of pounds required upfront for a deposit, and as house prices have dropped it will open more doors for those looking to remortgage if they have lost equity in their property. But with a mojority of firt time buyers looking for a 90% deal lets hope things get better. 2009-05-18 http://www.londonmortgageadvice.co.uk/news/article/299 According to the latest monthly lending survey from the Council of Mortgage Lenders, First-time buyers and home movers are benefiting from the lowest debt servicing costs since 2004,despite borrowers still needing large deposits to be able to enter the market, and overall lending remains constrained. Uup from 31% in February and the highest proportion since December 2007,house purchase lending accounted for 35% of all mortgage lending in March, On the other hand, remortgaging, still accounted for a higher number of loans in March, but the number was only 8% higher than in February and 45% lower than in March 2008. Because of attractive reversionary rates automatically cutting in for many borrowers as they come out of their existing deals, and because of reduced remortgaging opportunities for those with reduced levels of equity as a result of falling house prices the CML expects remortgaging to remain muted. First-time buyers accounted for an increasing share - 40% of loans, up from 38% the previous month. First-time buyers on average borrowed three times their income and 75% of the value of their property in March. Both these average measures were unchanged from February. The combination of low interest rates and lower house prices mean that their monthly interest payment now equates to only 15.1% of their income, the lowest proportion since June 2004 (15.1%),for those with deposits large enough to enable them to buy.Because the flow of lending is still constrained, there is a sharp dividing line in the housing and mortgage markets between those who can raise a substantial deposit and those who can't. For those who can, the burden of debt payments is low and mortgage interest is consuming proportionately less income than for a number of years. This is good news for now. Even so, a mortgage is a long term commitment. People borrowing now should be mindful of the years ahead when interest rates eventually rise, as they will. 2009-05-15 http://www.londonmortgageadvice.co.uk/news/article/298 Landlords are struggling to meet their mortgage repayments in thier thousands as the economic downturn devastates the buy-to-let market. Many are months behind with mortgage payments and repossessions of buy-to-let loans had also risen. According to the Council of Mortgage Lenders there are about a million buy-to-let landlords in the UK. There is a concern thatsern that that the buy-to-let market may produce significantly higher arrears and defaults than the owner-occupier segment. On another front is the era of self-certification mortgages coming to an end. Self-cert loans, in which homeowners were not required to provide proof of income, were aimed at self-employed borrowers but were open to abuse. About 45 per cent of loans were approved in 2007 without a check on the borrowers’ income. There is evidence of irresponsible self-cert lending that it would address by requiring all applications to be accompanied by proof of income. Figures suggested that the pace of house price falls could be easing. House prices fell by 1.3 per cent in March, after a sharper drop of 2.8 per cent in February, figures from the Department for Communities and Local Government show.However, the annual decline in house prices widened to 13.6 per cent from 12.3 per cent. The figures, which are based on a sample of completed sales from 60 lenders, show that flat-owners were the hardest hit, seeing the value of their property falling by 1.9 per cent in March. Terraced houses held their value the best, falling by only 1.1 per cent during the month.Prime London asking prices have edged up for the fourth time in five months in April, suggesting that sellers are confident that buyers are returning to the market. The average asking price in prime London rose by Ł4,462, according to primelocation.com, the property website, an increase of 0.34 per cent. South West London showed the biggest improvement, with a monthly increase of 1.36 per cent. Wimbledon prices have risen by 4.4 per cent since March. . 2009-05-14 http://www.londonmortgageadvice.co.uk/news/article/297 Britain's battered economy is seeing sterling surged to a four month high amid further signs of life. Manufacturing and jobless figures were better than traders expected,who took heart from the smallest drop in manufacturing for 13 months and the most modest rise in jobless benefit claims since October. The indicators do suggest the downturn is close to bottoming out, although the recession is not over. Oil prices jumped above $60-abarrel on optimism the global economy may also be past its worst. Sterling pound gained as much as 1.2% to $1.53 against the greenback, its strongest level since 9 January. It also rose to 89.29p against the euro. It might suggest the economy as a whole will bottom out in the third quarter of the year. On the jobs front it is better than earlier this year and better than expected. It suggests the labour market could stabilise a little earlier than financial markets are thinking. However, the chances of seeing a durable recovery will depend, in part, on efforts to restore the banking sector to health. There is clear evidence of thawing in the markets. 2009-05-13 http://www.londonmortgageadvice.co.uk/news/article/296 Is now the time to buy, or is it wiser to hold fire until concrete evidence emerges that house prices are finally starting to rise again? As the average price of your home has slumped by a whopping 15 per cent to around Ł150,000 over the past year as the global recession and the credit crunch began to bite so the question belomes more relevant. There is growing optimism that the pace of the decline in values has slowed right with a string of interest rate cuts, an increase in the number of mortgages being approved, and measures introduced by the Government to stimulate the market. And so,what should people do? What will happen to house prices? We could expect prices to continue falling throughout this year and into 2010 as well.. This is largely based on the awful outlook as we expect the economy to continue contracting and for unemployment to rise quite sharply. House prices could fall a further 14 per cent, while the two previous property slumps have seen values falling for four years, and then stagnating, before rising. Being currently two years through this downturn, you're probably not going to miss out by holding off from buying for a bit longer. As long as buyers can strike an attractive deal, this should cushion the effect of any further price falls over the next couple of years. Maybe average values will stabilise over the next few months. We might then expect there a very small increase in average prices over the next couple of years amounting to between one and five per cent. But this will depend on your locality as some areas are still likely to suffer falls. For first time buyers, homes are more affordable than at any time in the past six years, according to Halifax, whose house price to earnings ratio has fallen 26 per cent from a peak of 5.84 in July 2007 to 4.34 in March 2009. Martin Ellis, housing economist at Halifax, says this proves houses have become more affordable, even though market conditions are likely to remain tough with the potential of further falls. However, it can be argued that it's now more difficult for them to get on the property ladder. A couple of years ago they could get 90 or 100 per cent mortgages, but the available loans-to-value have shifted downwards. The reductions in interest rates are now having an effect and people are beginning to realise you can now buy a property cheaper than you can rent one. The advantages of buying now are that interest rates are extraordinarily low, which means mortgages are generally more affordable, while it's also possible to drive a hard bargain as those needing to move are struggling to attract potential buyers. It could actually be a good time to climb up the property ladder, becuase if you're trading up then, theoretically, things ought to be moving in your favour because 20 per cent off a Ł500,000 house is more than the same percentage off one worth Ł250,000." The tightening of lending criteria during the credit crunch is also starting to be relaxed now which will help the market However, the more money buyers can put down, the cheaper the rate they will pay. Ideally, they will need to have a deposit of at least 15 per cent and even more attractive deals are available for those who can stretch to 25 per cent. 2009-05-12 http://www.londonmortgageadvice.co.uk/news/article/295 Over the last two months,average fixed-rate mortgage deals have increased, even though the Bank of England kept interest rates at an historic low of 0.5 per cent this week and pumped a further Ł50 billion into the system. MoneyFacts, the personal finance publisher, says average two-year fixed rate mortgage, still the most popular deal, was 4.87 per cent at the start of March, just before the Bank cut bank rate from 1 per cent to 0.5 per cent. Following that, fixed rates started to come down and fell to 4.60 per cent in April, but since then have started to creep back up and yesterday were ate 4.62 per cent. They are likely to climb higher once the latest increases are taken into account. The profits lenders were making from home loans were now the highest for a very long time, with banks and building societies putting up their rates to protect their profits ahead of the expected surge in repossessions later this year. Lenders are creaming profits with the hardest hit being first time buyers. Those who have just a 10 per cent deposit – the case for most people trying to get on the housing ladder – have seen rates drop from 6.38 per cent to 5.97 per cent before climbing back up to 6.13 per cent. The big worry is that fragile signs of a potential recovery in the housing market could be squashed if first time buyers are shut out altogether from buying a property. Recentlythere have ben signs that the fall in house prices is slowing down, while there are reports that the number of potential house buyers has been increasing. The pick up in activity is being constrained by the availability of finance for buyers, especially those with small deposits. It is sad that rates are climbing back up. And especially hard on first time buyers. 2009-05-11 http://www.londonmortgageadvice.co.uk/news/article/302 A woman in the Lone Star State of Texas was sentenced to 99 years in prison for mortgage fraud. Yes, you read that correctly: nearly a century in jail. Though other recent Texas mortgage fraud convictions have seen prison sentences of between 18 months and five years, Kandace Yancy Marriott of Gun Barrel City, Texas, got the maximum sentence possible after being found guilty of orchestrating a complex mortgage fraud scheme where she received monthly mortgage payments from her clients, failed to remit those payments to the mortgage lender and embezzled the homeowners' funds, causing her clients to default on their home loans. How did Marriott get the book thrown at her? Apparently, being convicted of committing multiple felonies in Texas gives the judge discretion to add years of jail time for each one. Now, according to the state attorney general, she and her husband, Darrell L. Marriott, sold manufactured homes through their company, One Way Home & Land, illegally forged homebuyers' signatures, inaccurately completed loan applications and falsified supporting documents, including the buyers' rent payment verification statements, proof of employment and Social Security Administration benefits data. Predominantly, the scheme involved low-income purchasers whose residential loans were guaranteed by the Department of Housing and Urban Development. As a result, when the unqualified buyers defaulted on their home loans, their mortgage lenders did not suffer financial losses. Instead, HUD had to cover the default costs, meaning taxpayers ultimately will pay. And according to the Texas AG's office, HUD lost more than $4 million due to Marriott's actions. Her husband and Marriot closed the One Way Home & Land after litigation and investigations ensued in late 2005. According to the AG, they then opened a Kaufman County firm under the name Torenia, where they continued engaging in fraudulent activity. In March, retired senior district judge Robert Dohoney, who presided after the acting judge recused himself due to knowing the defendant, sentenced Marriott to 99 years. Where you have real estate sales, comps (comparable sales) are often used to determine value. So, what are the comps for this kind of fraud in Texas? According to the U.S. attorney's office for the Northern District of Texas, a former title company escrow officer from Commerce, Texas, was sentenced to 42 months in prison the same month for defrauding her employer of more than $1.2 million. In January, three Dallas businessmen who were found guilty of running a massive mortgage fraud scheme were each sentenced to prison terms ranging between 18 and 60 months. this begs the question how did Marriott wind up being sentenced to nearly a century in prison? Although Tom Kelley, a spokesman for the Texas AG's office, was surprised at the judge's ruling, saying he was "shocked" when he heard the sentence, one of the reasons is simply that the state can be - and often is - very harsh in doling out sentences to people convicted of multiple felonies. The state's prhosecuting attorney, David Glickler,said that these are the rules in the Texas legal system. "That's the beauty of Texas punishment," he said. "We go from five to 99 years." He added that during the trial, he pointed out that every false statement made is a second-degree felony and proved to the jury that Marriott had made hundreds of false statements, each being a first- or second-degree felony. In part, the harsh sentence was also due to the prosecution revealing at the trial that Marriott ran a massive organized fraudulent operation for years. "It was a criminal enterprise," said Mr. Kelley. "This crime was part and parcel of the everyday course of business. She trained all of her staff on how to manipulate and massage documents," Mr. Glickler said. "They manipulated and tricked buyers into not even knowing who owned homes. She was instrumental to the whole process; she didn't just run the company that did this." Linda Howard, a former saleswoman who worked for Marriott,during the trial testified about how the company manufactured Social Security Administration letters and verifications of employment every single day. Mr. Glickler said the witness' demeanor was so nonchalant and matter-of-fact about the company's daily fraudulent activities, the jury found it shocking, which the prosecuting attorney supposed might have gone a long way toward handing down the maximum sentence. Marriott apparently didn't win the jury over with her behavior during the trial. Mr. Glickler said that she was caught lying multiple times in her testimony, not just over the case itself - although she did testify she wasn't hands-on with the business when multiple witnesses claimed she was - but over trivial and tangential matters. During the trial,for example it came up that she and others opened an events hall in downtown Corsicana and got a liquor license for the property. Marriott testified that when they opened the events hall, the hall owner insisted the license be in Marriott's name to expedite the process. She said in her testimony that she was unhappy to do this, as she was a fundamentalist Christian who didn't drink, but complied. However, the prosecution proved that the license wasn't in Marriott's name. "So, why would she lie about something as silly as that? I think she wanted to see if jurors were religious and they could bond over the topic," said Mr. Glickler. Amazingly, Marriott is appealing, though not on the grounds of cruel and unusual punishment. In fact, her notice of appeal is on the grounds that the evidence was factually insufficient. Her appeal, which is going to the 10th Court of Appeals in Waco, will take up to a year before the prosecution sees a brief on it. Marriott's defense attorney, Ed Mason, did not return calls requesting comment. Her husband has been indicted in the case, as has their daughter, Kally, and Karen Hayes, Marriott's sister. As of May 15 they were all awaiting trial. Marriott's 99-year prison sentence was ultimately due to the constant and malicious nature of the crimes,according to the Texas AG's office, which primarily targeted low-income victims, and the prerogative of the Texas judicial system. "Every little thing was a felony and things piled up," said Mr. Glickler. "She committed felonies like we breathe air." 2009-05-10 http://www.londonmortgageadvice.co.uk/news/article/294 Halifax has reported a significant improvement in the mortgage payments to earnings ratio in its latest First Time Buyer Affordability Review. Mortgage repayments account for 31% of average income, down from a peak of 48% in 2007 and below the long-term average of 37% recorded over the past 25 years, for the average first-time buyer,. What is more, the house price to average earnings ratio is down 26% from a peak of 5.84 in July 2007, to an estimated 4.34 in March 2009. A leading spokeman for Halifax, Martin Ellis says: “There has been a marked improvement in housing affordability for potential first-time buyers in many parts of the UK over the past 18 months. This trend continued in the first three months of 2009. The significant reductions in house prices, relative to average earnings, has resulted largely from the decline in house prices.” But first time buyer levels are low. This is due to tighter lending criteria which has been reflected in “a much reduced availability in mortgages at high loan to value ratios. Conditions in the housing market are likely to be tough during the remainder of 2009 despite the improvements in affordability.” It is expected that increasing unemployment, low consumer confidence and the turmoil in the financial markets to continue to put downward pressure on house prices during 2009 and that prospective first-time buyers should take acclunt of this when doing their calculations. 2009-05-08 http://www.londonmortgageadvice.co.uk/news/article/293 If you have a 40 per cent deposit,first time buyers and and existing borrowers have their pick of mortgage deals. In the past six months,, the number of new mortgage products which require a minimum deposit of 40 per cent has increased by almost two thirds,according to Moneyfacts At the same time,the number of mortgages which require a ten per cent deposit have decreased by the same amount. Darren Cook, analyst at Moneyfacts.co.uk, said: "Banks are far from predicting the end of the housing slump and are hedging their bets by increasing the number of their best mortgages to those who are fortunate to have a 40 per cent deposit." He added that with a ten per cent deposit consumers will be paying interest at an average rate of 5.98 per cent. But here is the good news, Abbey has said that the mortgage market is set to grow this year. Abbey have nnouncement that profit at the bank jumped by 25 per cent in the first quarter of 2009. So maybe mortgage availability is about to take a turn for the better 2009-05-07 http://www.londonmortgageadvice.co.uk/news/article/292 The Association of Residential Letting Agents (Arla) is introducing a licensing scheme for its UK members and a code of practice for letting agents. In a separate measure, ministers were planning a registration scheme for private landlords in England and Wales. The Arla scheme will mean the following:- Hold a professional qualification relating to lettings Take part in continuing professional development Have professional indemnity insurance Have plans in place to protect any money they are holding for clients Have an annual independent audit carried out on clients' funds. Under the scheme, if an Arla licensed agent went out of business, any money it owed to clients would be protected. "Lettings agencies are going out of business and owing their landlord clients thousands of pounds, or even tens of thousands of pounds, in rent," said Peter Bolton-King, Arla's chief executive. "So this offers protection to landlords in the worst-case scenario." "For too long the rental sector has been seen as the black sheep of the property market, with a lack of regulation and a requirement for redress to protect the consumer when the agent's failings are to the financial detriment of that consumer," said Ruth Lilley, head of membership and professional development at Arla. Tenants in England can expect: A tenancy agreement That deposits be held by a tenancy deposit scheme That landlords should carry out repairs That landlords should give notice of inspecting or entering a property That rented properties should have a gas safety certificate That they should not be harassed or illegally evicted The National Association of Estate Agents plans to introduce its own licensing scheme later this year. "This recent development will surely come as a wake-up call to anybody operating in the sector that is not part of a regulatory organisation and cannot demonstrate to the consumer that they meet industry standards in the operation of their business," said Caroline Pickering, who chairs NALS. Landlords who did not keep their property in good condition could be struck off and have their licence revoked if property was not kept in good condition. The paper said the reforms would be outlined in a Green Paper within 10 days. Private landlords in Scotland are already required to register. However, last week, the charity Shelter Scotland said that rogue landlords were continuing to operate there three years after the scheme was introduced. 2009-05-06 http://www.londonmortgageadvice.co.uk/news/article/291 Time for a recap! Mortgage repayment refers to the process of repaying a loan taken out to buy a property. The amount to be repaid is usually measured in tens or hundreds of thousands of pounds. Mortgage repayments will be necessary for anyone who does not have the cash to buy a property outright, which is the vast majority of people in the UK. However, there are a number of different ways of tackling mortgage repayments. Some may be better for you than others, but this will depend on your circumstances and the risks you wish to take. A standard repayment mortgage: You pay a regular amount which covers both the interest on the mortgage and the repayment of the borrowed capital. Repayment terms are usually between 15-25 years. An interest-only mortgage: You only pay the interest on the money you borrow. You invest money separately, with the aim of repaying the borrowed capital in one lump sum at the end of the mortgage term. Within these two methods, there are a number of different options and products that can be used. Variable rate: The interest rate of the borrowed capital follows the changes in a variable rate set by the lender. This can change at any time. The rate you are charged is set at a level either above or below this Standard Variable Rate (SVR). Tracker rate: The interest rate follows an external tracker, such as the Bank of England Base Rate or the London InterBank Offered Rate (LIBOR). Any change made to those rates is applied instantly to your own mortgage rate. Fixed rate: Your interest rate remains at a fixed amount, and does not change. These methods can either be permanent or change after a set period of the mortgage i.e. a mortgage that tracks the Bank of England Base Rate for five years before changing to the SVR of the lender. Additional options and deals can also be applied in conjunction with the above or as entirely separate products, these include: Capped rate: The interest rate has a set upper limit, and sometimes a lower limit, beyond which it cannot pass. An upper limit provides security both for the borrower, preventing tracker or variable rate mortgages from moving up to a level they cannot afford. A lower limit provides security for lenders, preventing a mortgage from dropping to a level where they could potentially be losing money. Discount rate: A discount rate mortgage offers a lower interest rate for a set period over the start of a mortgage. This period can be anything from six months to ten years long in some cases. After this period, the interest rate reverts to a higher Standard Variable or tracker rate. Flexible mortgage: A flexible mortgage is an increasingly popular product that allows more flexibility in mortgage repayments. Overpayments, underpayments and payment holidays are all available subject to conditions. Regular overpayments can significantly shorten the overall length of a mortgage. Underpayments and payment holidays can allow breaks in repayment when needed. Offset mortgage: An offset mortgage takes into account your savings when determining the interest on your mortgage. Any savings held are deducted from your mortgage borrowing, leading to lower interest repayments. Current Account Mortgage (CAM): A CAM is similar to an offset mortgage, but in this case your mortgage and current account are merged together. Your income is usually required to be paid into this new account, with the any savings in the account deducted from the total of your mortgage. This can lead to lower interest repayments for disciplined savers, and therefore a mortgage that is paid off earlier. For those who plan to invest their money separately and pay off their mortgage in one large lump sum, there are a number of options: Endowments: The now largely discredited endowment mortgages are still offered by some providers. Regular payments are made into the endowment over the course of the investment, with any returns reinvested. Money cannot be accessed until maturity, with the time until maturity set to a period over which the money is expected to grow large enough to pay off the borrowed mortgage capital. However, endowment underperformance over the past decade has lead to 80% of endowment mortgages not reaching their targets, according to government figures. Individual Savings Accounts (ISAs): Money is paid regularly into mini or maxi ISAs. This money is invested into the stock market, with the usual range of choices that an ISA provides. ISAs are designed to provide tax free saving, which is another advantage. However, investors in the stock market should be aware that the value of their investments can both rise and fall. While an ISA mortgage can offer a faster method of repaying your mortgage, it can also do exactly the opposite. Pensions: This option allows you to repay a mortgage through capital raised in a pension scheme. This will only be a viable option for a select group of house buyers, and it is worth consulting with your accountant or independent financial adviser before seriously considering this course of action. What are the average costs of a mortgage repayment? Over time, you will have repaid more the amount you have borrowed. This is due to the interest charged on the mortgage, which is used by the lender for a number of reasons, including paying off bad debts from other borrowers. Interest payments on your mortgage will become smaller as you repay more and more of the capital, which for a standard repayment mortgage will mean the borrowed capital will shrink far faster towards the end of the mortgage period. Overcoming early interest payments is the major part of mortgage agreements, which is why early overpayments can make a large difference in later years. Choosing between different mortgage products will largely depend on your personal and financial circumstances. Different factors you should take into account are: How much can you repay per month? Bear in mind that should the interest rate of your mortgage go up, you will be required to pay more. For those on tight budgets, a fixed rate mortgage may be better over the long term. It is also possible to remortgage to another product if rates become too high, but that itself comes with its own fees and charges. Interest rates, length of repayment and repayment amounts all improve depending on how much money is put in. While there are a number of 100% loan-to-value (LTV) mortgages available, it is far more preferable to have some sort of deposit. Mortgage lenders will allow you to borrow up to a certain amount depending on your income. The maximum currently offered by some providers is four to five times your yearly income, but most offer amounts between three to four times your income. Borrowing more increases your monthly repayments and takes longer to pay off. A longer period of repayment can offer lower monthly payments but will also mean you pay more in interest over the course of the mortgage. The sooner the mortgage is paid off, the less you pay overall in most cases. If you’re not confident in your job or feel your income might fluctuate for other reasons, then it may be worth either delaying taking out a mortgage or arranging a flexible mortgage that will allow more leeway in both good times and bad. If in doubt, you can always consult external advice such as your accountant or an independent financial adviser. Those with spotty or impaired credit histories may find it difficult to find an appropriate mortgage. There are a number of options here. One is to repair your credit history before taking on a mortgage agreement, while another is to obtain a credit repair mortgage or similar product. Those with significant other savings that they do not wish to invest directly in the mortgage may want to consider an offset mortgage or CAM. If You are going to have the time to be on the lookout for the best deals, say by taking advantage of discount mortgages and swapping to better deals when their discounted rates expire, be sure to arrange terms and conditions that allow you to do that. Some local building societies and specialist mortgage providers offer preferential deals to those who live locally. It may be worth including this in any comparison you make. Mortgages are provided through banks, building societies and specialist mortgage companies and also work through third party organisations such as brokers or intermediaries. Unbiased and qualified advice on mortgages can be obtained from registered mortgage brokers who specialise in this market. 2009-05-05 http://www.londonmortgageadvice.co.uk/news/article/290 According to research recently conducted ti is revealed that fixed-rate mortgage products may become popular in the near future, thanks to the currently low base rate. It has been found by Abbey, which conducted the research, found that the number of people who believe that the base rate has reached its lowest ebb has nearly doubled over the course of two months. The number of people, according to the mortgage lender, holding out for a lower base rate has fallen from 17 per cent of people to seven per cent in the same period of time. Nici Audhlam-Gardiner, director of mortgages at Abbey, explained that the bank has launched a new range of mortgages to deal with the possibility of increased demand. Speaking to a very interested audience she added: "In the last few weeks, we have extended our range so there is something to suit every borrower whether they are remortgaging, moving house or making their first step onto the ladder." The base rate, which is set by the Bank of England, is currently 0.5 per cent. 2009-05-01 http://www.londonmortgageadvice.co.uk/news/article/288 Fionnuala Earley, Nationwide's Chief Economist, said: “The price of a typical house fell by 0.4% in April. This reverses some of the rise seen in March, but is in line with our expectations, given the current economic conditions. April’s decline leaves the average price of a typical house at Ł151,861, down 15% from 12 months ago. The 3-month on 3-month rate of change, generally a smoother indicator of the short-term trend in prices, improved to -3.1% in April from -4.1% in March. “The chancellor announced several measures aimed at boosting the housing market in his Budget. The scheme for government guarantees for new, high-quality residential mortgage backed securities are welcome and may help to boost the amount of mortgage credit available. However, since the availability of credit is only part of the reason why the housing market is in the doldrums it is unlikely to lead to a swift turnaround in its fortunes. Lenders have already indicated that the availability of credit is less of an issue than it has been, but at the same time expect that the demand for secured lending will fall further. Given the weakness of the economy and the expected further increase in unemployment this comes as no surprise. “The extension of the stamp duty holiday is also welcome in so far as it reduces the transactions costs for borrowers at the least expensive end of the market. While there has been no further increase in the amount of the tax free threshold, the impact of falling prices since the initial extension was announced in September 2008 means that more buyers could now benefit. Prior to the increase in the threshold the typical house price was above the old Ł125k limit everywhere except the Northern region. consequently, as house prices have come down, the typical house price is now below the new Ł175k threshold everywhere but in London and the Outer Metropolitan region. And for first-time buyers, only London has a typical house price above the threshold. She continued “It is possible that the extended period of the higher threshold will be more of an incentive for firsttime buyers to enter the market now that affordability has improved due to falling interest rates and house prices. But it seems more likely that, for the most part, buyers will remain cautious as long as they think that prices will continue to fall. The latest data from Nationwide’s Consumer Confidence Survey shows that consumers still think that prices will fall over the next six months. However, there has been a significant moderation in the rate at which they think prices will fall. This, along with the recent pick up in buyer enquiries and the increase in house purchase approvals in February, has encouraged some to suggest that this is the turning point in the market. And, while affordability is indeed more favourable and there does seem to be some cautious optimism from some quarters, it is still far too soon to say that this is the start of a solid revival in the market. “The housing market is very sensitive to income and, as a result, conditions in the labour market are crucial to its performance. The economy is now in the deepest recession since the Second World War and unemployment is continuing to increase, with the latest data showing that it breached the two million mark. ven though negative inflation will mean that real earnings will be increasing, it is likely to be some time before this feeds into a strong enough change in sentiment to encourage a full scale revival in the housing market. That said, the correction in house prices and improved affordability conditions provide a good grounding forthe market once domestic and global economic conditions once again become more favourable.” 2009-04-30 http://www.londonmortgageadvice.co.uk/news/article/287 After tumbling for every month since October 2007, British homeowners were treated to a rare respite on Thursday. House prices finally rose, albeit by a tiny amount, in March, according to data by the Nationwide thrift. Based on the Bank of England's latest survey, there could be more good news around the corner. The price of a typical house, yhe Nationwide figures showed, that increased by 0.9%, slowing the annual rate of decline from 17.6% to 15.7% and making the average home worth 150,946 pounds ($221,580). In addition and not least the survey also showed mortgage approvals rose in March, up 5,000 to 37,900, their highest level in nearly a year. The news follows months of aggressive interest rate cutting by the Bank of England, which has reduced the base rate to 0.5%. In March, the Bank went further, instigating a quantitative easing policy in a bid to get credit flowing. The data shouldn't be taken as evidence that the bottom had finally been reached, according to Fionnuala Earley, chief economist with Nationwide."The current upturn in activity is more likely to reflect the return of buyers who have delayed purchasing through the worst of the financial turbulence," she said. "These are only month- on-month figures and it is wise not to get too excited about them in the general trend of things. I wouldn’t suggest that we are seeing green shoots yet." Following on form this news is the possibility of more good news to come. Also on Thursday, the Bank of England said it expected credit conditions to improve over the next three months, as its quarterly survey found that a narrow majority of lenders said they expected a small increase in credit availability in that period. The drying up of credit has been a big force behind the plummet in the housing market. "Improvements in the cost and availability of funds were expected to support increased credit availability over the next three months," said the central bank. The Bank of England's survey suggests that the various policy measures taken by the central bank and government to boost lending were finally beginning to have an impact. according to IHS Global Insight economist Howard Archer, "It raises hopes that credit conditions will increasingly become less of a constraint on economic activity over the coming months." 2009-04-29 http://www.londonmortgageadvice.co.uk/news/article/286 Although promising that Nationwide mortgage holders would never pay more than 2% above the Bank of England base rate, one of the U.K.'s best-known mortgage providers has turned about face this evening. From 30th April those applying for a mortgage with Nationwide will not be able to take the base mortgage rate which is currently 2.5% and will instead be passed onto a new standard mortgage rate which will start at 3.99%. It is a substantial change of attitude by one of the U.K.'s best-known mortgage companies and there are serious concerns that others will follow suit in the short to medium term. This could also severely hamper any potential recovery in the UK property market at a time when hopes have been growing and confidence appeared to be improving. The company has also announced that there will be no guarantees attached to the new standard mortgage rate which will effectively allow the company to move the rate upwards and downwards without any formal connection to UK base rates. As to why Nationwide has chosen to take this route at this moment in time is something of a mystery although the company claims to be rebalancing the difference between savers and mortgage holders. 2009-04-28 http://www.londonmortgageadvice.co.uk/news/article/285 Recently, the number of homeowners looking to swap their homes instead of selling them has increased dramatically as the housing downturn has deepened. Over 6,000 properties have been registered on www.homeswapper4sale.co.uk, the specialist website, since it was created in August last year. Those undertaking this practice are people who have to move and others are using the sites as a means of bypassing estate agent fees. Typically, estate agents charge about 2 per cent of the selling price - a hefty expense at a difficult time financially. However, even estate agents and developers are using the sites as they concede that buying and selling through the traditional channels is not working. You simply post details of your property, including pictures, and the location, price range and size of property you would like to move to. There are many reason for using this service. Some users are looking for a similar property, while others will be trying to downsize or find something more grand. Some want to move to far-flung parts of the country, while others may want to move only a few miles, especially in London. In addition, there is even the option of swapping with an overseas homeowner. Swappers are alerted by e-mail or text message when they are matched with someone. If the two sellers are interested in each other's homes, they can then arrange viewings and proceed in the same way as they would for any other house purchase. One of the key advantages of a home swap is that there is no chain, with your sale or purchase relying on the sale or purchase of one or more other properties. Because only two parties are involved in a house swap, it should allow people to move much more quickly, with less risk of a sale falling through. However, anyone who has tried home swapping will know that, like online dating, it is rarely as simple as it sounds. Home swapping first appeared in the UK in the 1990s, partly as a tax dodge. This was because, until a few years ago, most house swappers could avoid stamp duty. The Revenue cracked down on this relief in 2003 and once the exchange has been completed both parties now need to pay stamp duty on the full value of the property acquired and register the swap with the Land Registry. The valuation for each property should correspond to the price that they would be expected to fetch if they were being sold. If you find a match at the same price, you can do a direct swap, otherwise one party will need to make up the difference. Any attempt to fiddle the numbers to cut your stamp duty bill will be frowned upon by the taxman. As well as doing all the usual checks, your lawyer should draw up a contract of exchange that includes all terms of the transaction, including any cash payments. Some lawyers will charge double what they would for a normal house purchase because house swaps are out of the ordinary. They will need to do extra work to ensure that everything is above board and correct. It also makes sense to pay for a survey to make sure that everything is in working order in your new property. Swappers who advertise will need a home information pack (Hip), which costs about Ł300. Since April 6 all properties are required to have a Hip from the first day that they are put on the market. You might not even escape an estate agent's fees if you decide to keep your options open by advertising through a traditional estate agent and on a home-swap website. You must also talk to your mortgage lender before proceeding with a house exchange to make sure that it does not have any objections. Another drawback is the shortage of homes to swap. The number of swappers advertising is growing, but the concept is still in its infancy here, so the chances of finding a perfect match are slim. 2009-04-27 http://www.londonmortgageadvice.co.uk/news/article/284 London mortgage broker, london mortgage advice. Northern Rock, the nationalised mortgage lender, is planning a major mortgage initiative, lending up to Ł14 billion to prospective home buyers in the next two years. The news accompanies acknowledgement from the company that a higher than expected level of customers could be facing early debt repayment problems. Northern Rock, the northern mortgage lender will attempt to boost the ailing UK housing market, with the potential for a Ł5 billion boost to lending this year. Repayment arrears amongst customers of the bank have shot up in the last three months. Because of the bad economic climate, Northern Rock is expected to make a substantial loss this year, the bank warned. They also made it clear that they had anticipated the repayment problems faced by customers. In contrast to their earlier lending practices, Northern Rock now lend conservatively and apparently focus on risk management in their lending . 2009-04-24 http://www.londonmortgageadvice.co.uk/news/article/283 The Homeowner Mortgage Support Scheme, announced by Gordon Brown in December, was supposed to help all homeowners - however some of Britain’s biggest lenders have declined to participate. It is designed to give support to those who have experienced a sudden drop in income or if a homeowner has been made redundant. Households at risk of repossession can defer up to 70 per cent of the interest on their monthly mortgage payments for up to two years, if their lender has signed up to the scheme. Halifax, which is taking part in the scheme, said yesterday that a borrower with a mortgage of Ł100,000 with a fixed rate of 4.5 per cent who participates in the scheme could pay as little as Ł110 a month. The same mortgage would cost Ł630 a month on a full repayment basis. So far, taxpayer backed Lloyds Banking Group, which owns Halifax, and Royal Bank of Scotland, which includes Natwest, have signed up. Northern Rock, the nationalised bank, and Bradford and Bingley, which has had the government take over its mortgage business, are also on board and will offer the scheme from today. Other lenders have announced they will join the scheme at a later date, including Bank of Ireland, Kensington, GMAC, GE Money, the Post Office and Standard Life Bank. Lenders that participate will have the security of a Government guarantee if the borrower defaults. Borrowers who bought their home before December 1, 2008, are owner-occupiers, and have an outstanding mortgage of less than Ł400,000 and savings of less than Ł16,000. According to the Government, the scheme applies to “borrowers who suffer a temporary loss of income ... to help them get back on track with their finances.” You must also prove you have talked through “other options” with your lender, and have been making regular payments for at least five months and have sought independent financial advice. This is payment deferred, not cancelled. The money will be added back on to the debt at a later date. You can't apply if you own more than one home – for instance if you are a buy to let borrower. You are also disqualified if you are unlikely to ever again earn an income similar to your previous wage or if your lender believes you are unable to meet the reduced repayments. Those with mortgage payment protection insurance are also ineligible, as are those claiming Jobseeker's allowance, in which case you can claim for support for mortgage interest. Lenders that have chosen not to sign up to the scheme include HSBC and Abbey, which have significantly grown their share of the mortgage market since the start of the credit crunch. Nationwide, the UK’s biggest building society has also declined to take part, as has Barclays, owner of Woolwich and First Plus. They have pledged to make “comparable arrangements” and will be relying on their own procedures for helping those in trouble. 2009-04-23 http://www.londonmortgageadvice.co.uk/news/article/282 Homeowner Mortgage Support Scheme – a new Government initiative which allows households at risk of repossession to defer up to 70% of the interest on their monthly mortgage payments for up to two years – has gone live from today, though some major lenders have opted to offer their own alternative. Given the required green light by Brussels under EU state aid rules on Monday, the initiative is open to borrowers who bought their home before 1 December 2008, are owner-occupiers, and have an outstanding mortgage of less than Ł400,000 and savings of less than Ł16,000. Lenders offering the scheme will have the security of a Government guarantee if the borrower defaults. From today, the following major high street lenders will offer their customers the mortgage support: Lloyds Bank Group, Northern Rock, the Royal Bank of Scotland, Bradford and Bingley, Cumberland Building Society, and the National Australia Bank Group. In addition to the above specialist lenders and building societies, including Kensington and GMAC have also signed up, though Barclays, HSBC, Nationwide and Santander have all confirmed they will offer comparable arrangements to their customers, while opting not to take up the Government guarantee. Director general of the Council of Mortgage Lenders, Michael Coogan, commented: "Lenders are working strenuously to keep borrowers in their homes where they have a good prospect of being able to get back on track and sustain their home-ownership in the long term. The government is helping, through changes to Income Support for Mortgage Interest, the mortgage rescue scheme, and now the home-owner mortgage support scheme. "Lenders fully recognise their responsibility to keep people in their homes where repossession can be avoided. The fact that some lenders are utilising the new scheme and others are not indicates simply a difference in their approach to forbearance, not in their commitment to it." 2009-04-22 http://www.londonmortgageadvice.co.uk/news/article/281 Buy to let mortgages have soared In 2006, 10% of all mortgages taken out by UK homeowners (a record Ł17.5 billion) were buy-to-let mortgages - highlighting growing popularity. In fact, over 152,000 buy-to-let mortgages were issued in the just the first six months of 2006. The popularity of buy-to-let mortgages include: Long term investment Low interest rates - buy to let mortgages offer an attractive alternative investment High demand for rental accommodation due to a rise in the overall UK population, high divorce rLate, and a growing number of higher education students Competitive, specifically-designed, accessible buy to let mortgages by lenders to make life simple for the landlord. Buying a property to let can benefit the private landlord in two ways. Firstly, it can provide a stream of income. Secondly, many Buy to Let landlords purchase property because of the potential for long-term accumulation of capital growth. This section provides guidance about how to take out a successful buy to let mortgage, the pitfalls that may occur and the knowledge needed to avoid them. Click here for more buy-to-let FAQs. 3 main differences in buy to let mortgages: Rent Potential - the decision as to whether or not a mortgage will be offered is usually based on the rent you will earn as well as your income. In some cases your income is not ever considered. Interest Rate - buy to let mortgages have slightly higher interest rates. Larger Deposit - typically a minimum of 25% of the property's value is required as a deposit.Becoming a private landlord should not be seen as an easy way of making easy money. It can be riskier and more complicated. It can also be very time consuming, more than most forms of investment, and there is no guarantee that house prices will continue to rise. That said, having a second property to let to tenants could reap considerable financial rewards over time. Click here to find buy to let mortgage deals.When buying a second property to let you will need to decide whether your primary objective is income or capital growth. In other words, are you looking to make a profit month on month or are you looking to make a profit through increased equity from the second property as it increases in value over time? The decision may affect the type of property you purchase, and the location.When you manage a property there are many costs involved in addition to the monthly mortgage repayments. As a guide, you should be aiming to achieve a gross rent of about 135% of the rental property's interest only mortgage repayments in order to cover your costs should anything go wrong. Costs include: Property upkeep - maintenance costs for the property. Letting agent's fees - letting agents charge around 10% of the monthly rent for finding and vetting tenants with an additional cost of around 5% if you require a full management service. Ground rent / service charges - applicable to leasehold properties. Legal insurance - to cover costs from evicting tenants in the event of non-payment, very important, as this can be very expensive.Insurance - building insurance and contents insurance for the items provided as part of the rental agreement.Furnishings - the purchase of any furniture. If the property is to be let furnished, make sure you are covered for this by your home insurance. Gas / electrical appliances - cost of maintaining appliances and ensuring they comply with any regulations such as safety tests. Decorating costs - the property may require work ranging from painting, to a new bathroom suite before it is suitable for letting to tenants. Choosing a property to let it is wise to take advice from local letting agents to determine; what type of properties are in need, and in which parts of the town is best or most wanted. They can tell you if there is a University in the town, and if students are looking for somewhere to live. The Association of Residential Letting Agents (ARLA) state that a property needs to be in the right area, close to transport and other facilities, and in good condition. When choosing a letting agent to act on your behalf it is very sensible to choose one that is a member of the ARLA. The reason being, all members of the ARLA must join in a bonding scheme to protect rent and tenant's deposits. The bond provides total compensation of up to Ł2 million a year. here are a number of tax issues that need to be looked at in order to maximise your tax position, such as being able to offset your maintenance costs, letting agent fees etc as well as any interest paid on a buy to let mortgage against your tax. You can visit the ARLA website at www.arla.co.uk for further information on becoming a private landlord. 2009-04-21 http://www.londonmortgageadvice.co.uk/news/article/280 Is there going to be a battle over fixed rates? We ask this after Banks and building societies have begun cutting the cost of their mortgages following the Bank of England half-point interest-rate cut to 0.5%. Fixed rates have further to fall and some brokers have been advising borrowers to fix for five years to protect themselves from future rate rises. While most economists agree that the Bank of England is unlikely to cut rates again, mortgage experts are saying fixed-rate deals have further to fall. Some experts don’t expect the cost of two and three year deals to fall much further. However, the cost of funding five-year fixed-rate loans have fallen significantly. Long-term fixed-rate deals could come down to 3.5% later this year. The Bank of Engalnd has said it will pump Ł75 billion into the economy in this way over the next three months. Some high street banks have said that homeowners on cheap variable-rate deals should fix now. However following the Bank of England’s strategy on quantitative easing, swap rates will fall sharply and so you can expect to see many lenders, including Cheltenham & Gloucester, offer cheaper fixed rates next week, particularly over longer terms. It is not likely to return to the heady days of 2007, when banks offered deals below the cost of funding, the government’s instruction to taxpayer banks to lend more should help drive down the cost of mortgages further. But lenders are unlikely to offer better deals for those with small deposits. Lenders will remain cautious in terms of the criteria required to get the best deals — so some homeowners could get caught out by falling house prices if they wait to long. One problem though is as property values tumble, people who may have a comfortable amount of equity now could find they do not qualify for the best deals in a year’s time — an argument for getting a valuation and remortgaging as soon as possible. Those on their lender’s SVR, are unlikely to see their rate fall further because we may have had the last of the cuts. So if you can fix at around the same rate, so you may as well do so. However,if you’re on a super-low tracker, it’s a different story — you’re going to have to pay more. 2009-04-20 http://www.londonmortgageadvice.co.uk/news/article/279 About 900,000 homeowners are currently in negative equity says a new research article by James Tatch, senior statistician at the Council of Mortgage Lenders. But, the research suggests that around two-thirds face 'modest shortfalls' of less than 10%. And to put this into perpesctive, this equates to around Ł6,000 for those first-time buyers with negative equity, and Ł8,000 for other home-buyers. The ability of affected households to move house will be reduced. None the less, even in today's weaker market, the CML estimates that home-owners still have around Ł2.1 trillion of unmortgaged housing equity. "Although negative equity has resurfaced as house prices have fallen, one big difference from the early 1990s downturn is that it is less concentrated among young, first-time buyers, and more evenly spread across wider age groups and those at different points on the housing ladder. So said Bob Pannell, CML head of research. Commenting further he said,"Negative equity will contribute to subdued property turnover, but otherwise should have few adverse effects for the majority of households affected. Where people needs to move house for job or other priority reasons, lenders can often be flexible to existing borrowers with low or negative equity, as long as their financial position is sound and they have a good payment track record. Otherwise, sitting tight and building up savings or overpaying on the mortgage are the strategies most borrowers are likely to adopt. "It should be easier for households to rebuild their equity position than in the early 1990s, as low interest rates on their mortgage can help them to save or overpay more quickly." 2009-04-17 http://www.londonmortgageadvice.co.uk/news/article/278 The general features on offer from lenders who offer a range of different flexible mortgages in the UK, are as follows: -Change the regularity of your repayments -Make under or over repayments -Take repayment holidays -Borrow back some of the loan capital Often with the greater flexibility comes a slightly higher than average interest rate charge, but this is often recalculated on a daily basis. However, the main advantage of a flexible mortgage is that you have the ability to repay the mortgage capital early and save on interest rate charges. Many flexible mortgage interest rates are calculated daily meaning you make savings almost instantly after you make a capital repayment. In the same way, if you borrow back, you will be paying a larger interest rate straight away, if interest is calculated daily. One of the big advantages of being able to borrow back is that you can make use of the equity in your home, if it has increased. This may be a cheaper way to borrow compared with an unsecured loan. In the Uk the flexible mortgage has become one of the most popular ways of mortgaging in recent years. Lenders are increasing the flexibility and range of their mortgage products regularly to suit consumers. Some lenders offer a service where by the borrower combines their flexible mortgage with their current account. It is true to say that lenders often use their flexible mortgage deals to attract custom from mortgage holders looking to remortgage. 2009-04-16 http://www.londonmortgageadvice.co.uk/news/article/277 Recession could boost appetite for equity release.The equity release sector could potentially gain from the recession as income from savings is squeezed by unprecedented low interest rates and the slump in the availability of mainstream lending. Norwich Union predicts that current market conditionsare ripe for the equity release market to double from lastyear’s levels over the next five years. In 2007 retirees released Ł1.2bn through equity release and NorwichUnion thinks the market will hit Ł2.4bn by 2013. Tristam Carson Head of Intermediary Sales for AgePartnership commented, “The key drivers for growth in the equity release market are already in place and beginning to have an impact on clients and businesses like. The reality of clients in the 55+ egment nowfeeling the pinch of reduced ncome from their pension,coupled with increased energy costs is meaning there is a greater need than ever for good quality equity releasea advice. A poll by Hodge Equity Release found 73 per cent of IFA’s expect to see interest from consumers within their equity release business increase by at least 5% in the nextthree months and 60% predict at least a 5% increase in completed applications.Despite Britain's entry into an official recession, Hodge found 57% of IFA’s feltthere had been more interest in equity release among consumers during the last three months of 2008 than during the initialhalf of last year.Tim Loy, Chief Executive of Leeds-IFA Age Partnership,commented “There was a lot more interest in equity releasebut a lot of the conversations that werebeing had at this stage were tentative, early enquiries.” 2009-04-15 http://www.londonmortgageadvice.co.uk/news/article/276 Those who own their own home who have become landlords to avoid selling for a loss on their properties are taking serious risks if they let out their property without complying with the necessary rules. New landlords, especially those who hadn't planned on starting a lettings business, must make themselves aware of the rules and regulations so they can operate their tenancies successfully." There are more than 50 Acts of Parliament and 70 sets of regulations governing the private rental sector – and many new ‘accidental’ landlords are ignorant of these laws. The onus is on the landlord to make sure they comply with all regulations and they are liable if something goes wrong, even if they employ the services of a letting or managing agent. Ignorance of legislation is not a defence. And they also need to consider details like the terms of their mortgage before lending, as a specific buy-to-let mortgage is needed to allow for the leasing out of a property. When letting a property that is not a buy to let mortgage it is vital homes owners let their mortgage lender know, otherwise they are in breech of their mortgage contract. Plus another problem is home insurance – basic policies do not cover the rental of property and failing to disclose a change in occupancy will be looked upon a fraud. Owners need to let their insurance provider know they are renting or their insurance policy could be invalidated. What is more, a landlord is responsible for making sure the property complies with gas and fire safety requirement, providing an energy performance certificate, and protecting tenants deposits, according to the NLA. An owner will also be responsible for responding to tenant requests and maintenance problems. The only solution is for landlords - accidental or experienced - to ensure they have a thorough understanding of relevant regulations. Common regulations in the private rented sector: Electricity and gas: Boilers must be checked annually by a registered tradesman, who will issue a Gas Safety Certificate. Tenants should be given a copy when they begin the tenancy and within 28 days of an annual check. All electrical items and fittings should be checked regularly as landlords could be liable if a tenant is harmed by an electrical item provided. If the property was built after June 1992, tenants must have an adequate means of escape and a mains-operated inter-connected smoke alarm should be fitted on every floor. It the property is a furnished let, furniture and furnishings made after 1950 must meet fire resistance regulations. Landlords who own flats in a block are required to liaise with the managing agents and other homeowners to ensure that a fire risk assessment of the common parts is carried out. Energy Performance Certificates: From October 2008 it became a legal requirement for landlords to make an Energy Performance Certificate of the property available to prospective tenants when letting a property. Failure to do so can result in a Ł200 fine and the landlord being prevented from marketing the property until the EPC is obtained. From 6 April 2007, all deposits (for rent up to Ł25,000 per annum) taken by landlords and letting agents for Assured Shorthold Tenancies in England and Wales, must be protected by a tenancy deposit protection scheme. Rental homes spread over three stories or more and occupied by at least five tenants in two or more households are classed as Houses in Multiple Occupation and require a license by the local authority. 2009-04-14 http://www.londonmortgageadvice.co.uk/news/article/273 From today marketing a property is now illegal until most of a HIP – complete with an answered Property Information Questionnaire – has been compiled. For the HIP industry, it marks the end of a long, wearisome and, for some, ruinously expensive journey through a landscape pitted with political U-turns. For opponents, including many agents, this was the day they thought they would never see. There remains huge confusion as to how local authorities will charge personal search firms for access to information, and whether HIP prices will rise, by how much, and what the variations will be. There have been repeated calls right up to the last minutefor HIPs to be scrapped during the recession, and for the Government to re-examine their viability once the economy begins to grow again. There are fragile signs of recovery emerging in the housing market and the Government risks shattering these making sellers provide a HIP before they market their property. Sellers are already cautious in the current market and this could prevent people from testing the waters, and risks a drought of good saleable properties. Estate agents across the country can see HIPs are simply not delivering and want them abolished. Sellers don’t know what they are and buyers ignore them. A great deal of the latest controversy has centred around the Property Information Questionnaire, which must be completed by the vendor and included in a HIP. Perhap however the provision of simple, easy to understand, upfront information regarding a property will enable buyers to make a more informed decision, making them less likely to pull out later in the process. This could also raise consumer awareness and appetite for the HIP, as vendors completing the questionnaire are likely to request to see similarly completed forms for any properties they go on to view. However, the property cannot be marketed without an up-to-date Index. If there is an EPC, Sale statement, Land Registry office copy of title and plan, and a completed PIQ together with an Index showing these items, then the property can be marketed. 2009-04-06 http://www.londonmortgageadvice.co.uk/news/article/275 When dealing with estate agents in England, Wales and Northern Ireland, what rights do homebuyers have?Is the estate agent obliged to pass on if I have put an offer in on a flat? The estate agent must pass it to the seller when an offer is made for a property, promptly and in writing, except those which the seller has told the estate agent not to be passed on - for example, all those below a certain price.However,the estate agent does not have to give you details of other offers they have received.I have been told the seller has received a higher offer. Should I believe that?Badly-handled offers are one of the top complaints at the estate agents' ombudsman.People who try to increase the price of a property after accepting an offer can cause heartbreak for a buyer.But even if it is questionable ethically, if you are the vendor and are offered an extra Ł20,000, then you are likely to accept.But could a higher offer simply be a ruse to get you to part with more money? It can be difficult for the buyer to know.According to the Office of Fair Trading (OFT), an agent must not invent a bid or claim to have a cash or first-time buyer unless this is true. Nor can they state that they have a potential buyer unless this is true.The OFT suggests that people should demand to see evidence if they have suspicions.This can be difficult in practice, though, particularly if you want to keep on good terms with the agent.Can I force the estate agent or seller to take the house off the market, or stop advertising, after I have had my offer accepted? You can not force an estate agent or seller to take the property off the market, or stop advertising - just because you don't want to lose your dream home.You probably fear being gazumped. But the agent is working to get the best price for the seller, and is employed by him - not you.If you put in an offer to buy a house which is accepted by the seller, but then the seller decides to go back on the agreement and accept a higher offer from a different bidder, then you have been gazumped.However, some will offer to do so out of goodwill, or if you are seen as a good buyer, for example, because you are not in a chain.Can an estate agent demand a deposit? Yes, in England, Wales and Northern Ireland, but the estate agent should not hold a deposit or any other money unless they are covered by adequate insurance.And all money must be held in a separate client bank or building society account or accounts, as set out in the Estate Agents (Accounts) Regulations. Receipts for deposits must be provided. Estate agents can be known for using rather "creative" language to describe properties. Is this allowed? One of the most common gripes handled by the Ombudsman for Estate Agents are "inaccurate sales particulars". While some artistic licence may be acceptable, it is an offence for an estate agent to make certain statements about a property which are false or misleading.Can estate agents put for sale or sold signs outside empty homes? This is generally seen as an "undesirable practice" by the authorities, and estate agents can be prosecuted.Can the agent hit me with extra charges - and misleading contracts?Estate agents must state either the exact amount you will be charged, or when this is not possible, provide details about how the costs will be worked out or give an estimate. Find an agent which belongs to an Ombudsman's schemeBe aware of the agents' legal obligations Remember the agent is working for the seller, not the buyer Complaints about agents should be made to your local authority's trading standards officeIf the agent cannot sort out a problem and he is signed up to the OEA code of practice, you can take your complaint to the OmbudsmanDo not use the same legal adviser as the seller. It warns people to watch out for terms which could catch them out. For example, if you opt for sole selling rights, and then find a buyer yourself, you will still have to pay the estate agent.Another one to watch out for, if you are a seller, is a "ready, willing and able purchaser contract". You will have to pay once a buyer, who is able to exchange unconditional contracts, is found. This still applies if you withdraw your property before the sale is completed. In this scenario, you may also be charged for the cost of "For Sale" boards and advertising. Can an estate agent discriminate against me because I don't want its financial advice services?o. Estate agents must treat all buyers "fairly", under the terms of the Estate Agents Act 1979.So-called "preferential listing" is also not permitted. This is when buyers are told they will be put on an open and fast-track priority or preferential service list if they take financial services, such as insurance or a mortgage, offered by the estate agent. Estate agents are duty-bound to treat buyers and sellers "fairly" However, with limited sanctions in place, Which? believes it can be very difficult for consumers to challenge these sorts of practices when they occur. What about conflicts of interests an agent may have? If you are selling or buying a property that your estate agent or his/her close associates wants to buy, you must be told promptly and in writing.Who can I complain to, if it all goes wrong?For a long time, many consumers have been frustrated by the fact that the estate agency industry is self-regulated. 2009-04-05 http://www.londonmortgageadvice.co.uk/news/article/272 First time since October 2007,the price of a typical house increased in March rising by 0.9% during the month, according to the Nationwide. There are reasons to be positive about the news. The indicators suggest that we are now closing in on the bottom for house prices, and murmurings of a recovery are justified. Overall house prices are no longer falling at any significant level, and if things continue as they are, you can expect to see monthly price rises across the board after the summer. Behaviour by investors is a good early indicator of market recovery, and we are now seeing a dramatic shift in sentiment. As early as November it could be seen that distressed house prices were reaching their lowest point, which was the first sign of the market reaching the bottom. Cash buyers have been purchasing in volume since then, and we are now suddenly seeing an influx of anxious investors, worried that they may have already missed the best opportunity to enter the market. And what is more the next big phase will be anxious first-time buyers coming in to the market. Two years ago the average first-time buyer put down a 10% deposit, and there are signs that parents are willing to subsidise deposits if required." On the other hand na opposing view could be that the reported rise in house prices will not fool anybody who is struggling to sell their home or trying to obtain realistic mortgage finance in the ‘real world’. Sales volumes are currently so low that the monthly house price statistics from any one single lender are virtually meaningless and if you look at Nationwide’s latest quarterly data, it in fact shows a 4% decline on the previous quarter, with the latest annual price recorded to be 15.7% down. And repossession numbers and ‘real’ house price drops continue to increase daily. Today’s reported price increase could be a statistical blip - there will be little respite for anyone losing their job or needing to sell their home in 2009. Consumers will continue to be conservative about taking on more debt for the foreseeable future, until the economy shows a strong and consistent improvement. No one should delay selling in the hope of price rises, as they are set to fall a further 10 to 15% this year as the credit crunch and unemployment continue to bite. 2009-04-03 http://www.londonmortgageadvice.co.uk/news/article/271 Suppliers are to put up water rates, as millions of households are set to see their annual utilities bills rise still further Due to come into effect today (April 1st), The new changes will see the average water bill increase by 4.1 per cent, or Ł13 and were due to come into effect yesterday (April 1st). consequently, consumers can expect to pay Ł343 a year on water rates alone, taking total utilities costs - including heating and lighting - to an average of Ł1,595 a year, uSwitch.com has revealed. Will Marples or Uswitch reveals the following:- A Ł13 increase in water bills may not seem much, but it adds to the steady flow of money draining away from household budgets. Consumers will be shocked to find that they are now paying an extra Ł353 a year to cover the bare essentials of heating, lighting and water. At the beginning of 2008 these cost Ł104 a month or Ł1,242 a year. To ensure they are only charged for what they actually use householders could significantly reduce their bills by installing water meters. 2009-04-02 http://www.londonmortgageadvice.co.uk/news/article/270 The Bankd of England say that the number of mortgages approved for house purchase jumped by 19 per cent during February. Also consumers made the biggest net repayment of loans since records began in 1993 even though concerned about jobs. With Building Societies also reporting a surge in receipts last month as consumers saved more money. Some Ł1,595 million was deposited in building society accounts in February - the highest February net receipt on record. Despite the Bank Rate being so low people are still keen to save, probably in response to the uncertain economic outlook and reduced job security. Some are suggesting that the positive mortgage figures show that the worst could be over in the housing market as buyers re-enter the market to snap up property bargains. Although there would need to be a significantly bigger pick up in activity before house prices stop falling. House prices have tumbled by 20 per cent since the market peaked in summer 2007. Perhapsw housing market activity may finally have turned a corner. This might suggest that the pick-up in new buyer enquiries is feeding through into actual activity. With new buyer enquiries still rising, this is clearly quite hopeful. But there is still a long way to go. All this follows early signs that the US housing market, which has also been hit hard by the sub-prime crisis and resulting credit crunch, also showed signs of a pick up. Sales of existing homes jumped by 5.1 per cent last month, spurred on by first-time buyers snapping up foreclosure bargains. 2009-04-01 http://www.londonmortgageadvice.co.uk/news/article/269 The reduction in the Bank of England's Base Rate is lilely to benefit the private rented sector as cash rich investors look for alternatives to poor returning savings accounts. Residential investment property could potentially offer significantly better returns,with millions of savers on savings rates of less than 1%. But investors need to be careful about choosing the right property. There are opportunities for cash rich individuals to generate better returns in the current environment through residential investment property. Savings returns are poor because of the reduction in Bank of England Base Rate and equities remain unpredictable and erratic. Tenant demand is strong. Even though the outlook for house prices in the short-term is still uncertain, yields are strengthening and property investors are able to pick up bargains. Experienced buy-to-let investors already appear to be taking advantage of low property prices and are adding to their portfolios, but we may see investors that have never considered property before purchasing rental investments. But there is a the need for potential investors to thoroughly research their prospective market and to only buy property with proven sustainable rental demand. A good quality property that will let through economic cycles will always represent an attractive investment proposition. 2009-03-31 http://www.londonmortgageadvice.co.uk/news/article/268 Britain's larger building society, Nationwide is to buy core elements of the Dunfermline Building Society. It has taken over Ł2.4 million of retail deposits, representing the accounts of around 300,000 Dunfermline members, as well as Dunfermline's Ł1 million prime mortgage lending book. Ntionwide, has also acquired Dunfermline's 34 branches and retail sites, and all related employees, plus Dunfermline's head office at Dunfermline. It will continue to trade as Dunfermline Building Society and will complement the other regional brands operating in Nationwide's group - Cheshire Building Society and Derbyshire Building Society. Graham Beale, chief executive of Nationwide, said: "This is good news for the members of Dunfermline who are now joining the world's largest building society. As members of a solid, stable and dependable organisation, members of Dunfermline can be assured that their savings are safe. Nationwide has a strong association with Scotland and has been providing service to customers in this key market for many years. This transaction will enhance Nationwide's ability to operate nationally and locally, whilst recognising the goodwill attached to a historic and important Scottish brand. "Nationwide is in a unique position by virtue of its size and financial strength, to provide support to Dunfermline, and we regard it as both responsible and commercially beneficial to undertake this transaction. This transaction excludes high risk assets: commercial loans and some residential loans (including the acquired and equity release portfolios) were not transferred, and the transaction will enhance the overall value to Nationwide's membership over the medium term." And the Dunfermline brand will remain and Dunfermline's customers will continue to use their existing channels - branches, telephone and post - for transactions, as usual. With the combined business of Nationwide and Dunfermline there will be around 900 branches with a good geographical spread across the UK. In addition, it is also expected that upon completion of the transfer, Nationwide's market share of retail deposits will increase to around 11% and the combined business will have a member base of 15 million. 2009-03-30 http://www.londonmortgageadvice.co.uk/news/article/267 The value of family three and four-bedroom houses has been the worst hit in the housing market slump according to a report that comes form the National Association of Estate Agents. The association said that top-end, executive properties had increased in value between January and February. The same was true of smaller, two-bedroom homes. There appears to be a trend for people buying up smaller houses than they may have done previously, possibly because they can only get smaller mortgages. It may also reflect a trend of downsizing. Unfortunately sellers are consistently over-pricing properties. And to make matters worse and in another blow to would-be buyers, the UK's largest building society the Nationwide has announced it was increasing its mortgage rates for new borrowers by up to 0.3%. 2009-03-27 http://www.londonmortgageadvice.co.uk/news/article/266 Essentially there is little difference between the process that one follows for a buy to let mortgage in the UK than there is for any other type of mortgage. The lender still has to consider your credit worthiness, the value of the property, how much down payment you can afford and all of the other usual considerations. However, in addition, the lender will usually be interested in what the market is for letting properties in the same area as the one that you are thinking of investing in. The lender will look at property taxes and average rents for similar properties. Other than those particulars, however, the process moves along nearly the same. A buy to let mortgage can be arranged for either commercial or residential property. Terms can range from between five to forty-five years. There are fixed and variable interest schemes available, and the lender takes an interest in your property just like with any other mortgage so your property is still at risk if you fall into arrears. One difference is that a lender will consider your potential cash flow from rental income as part of your available money to repay the loan under some circumstances. Because not all lenders view buy to let mortgages as a risk that they are willing to take, your best route is to choose a mortgage broker who specializes in buy to let schemes. This way you have the best opportunity of getting you application reviewed by the largest number of lenders who are likely to make a decision in your favor. Since you do not have to pay a fee to engage the broker there is no reason not to take advantage of their services. Before you buy You should work with either a commercial or residential real state broker, depending upon the type of property you are looking to invest in, who understands the buy to let market in the area that you are considering. Choose an agent who is bonded and who has a large portfolio of potential properties for you to review. Have your broker help you choose areas that are compatible with the type of property that you want to buy. Choose property that matches the needs of the area. For example, you might find it hard to fully let an office building in an area that is used primarily for light manufacturing. Likewise, a warehouse might not go over well if it is surrounded by an office park complex. If you are thinking about purchasing residential property with your buy to let mortgage then make sure that you look in neighborhoods where there are already properties for let. It may be very hard to let a home in a neighborhood populated exclusively by high-income home owners. Planning your cash needs You should also determine the maximum that you are willing to spend to buy property. Besides considering the purchase price you will need to determine your available down payment and other expenses such as the services of a solicitor, stamp duty, survey/valuation fees, broker fees etc. You should also consider after-purchase expenses including remodeling to make the building fit for its intended usage, utility deposits and agent's fees if you plan to use a letting agent to attract and vet tenants. Other expenses are sure to include insurance, routine property maintenance plus ground rents (if applicable) and property taxes. Usually your tenant is responsible for utilities after they move in as well as any Council Tax, TV licence fees, and the like. Consult with your accountant In many cases there are tax allowances and deductions which can be taken against rent that you receive. Your usual and customary expenses, including maintenance, insurance, cleaning and landscaping, as well as other recurring expenses likely apply. While you may not deduct the actual cost of your initial improvements, subsequent repair and replacement of those improvements likely will be deductible. In some cases you can take a flat 10% of the rent as a deduction against normal wear and tear. The tax maze can be very complicated so be sure to let your accountant help you navigate it. During the buy to let mortgage loan process If you are using a mortgage broker then you will not have to jump at the first approval that you receive. The chances are you will be presented with multiple offers. Read each one over and set aside the ones that are so far away from your expectations that even intense negotiations could not make the offer better. Re-read the remaining offers and make a list that details the good and bad points of each one. Send the offers and your list to your solicitor and have him review the contract and your concerns. Once you are through with that step its time to negotiate. Depending upon the level of service that your broker provides you can either have them handle the negotiations, or you can hire your solicitor, or you can do it yourself. What can/should be negotiated? Anything from the term of the loan to interest rates, pre-payment or early cancellation fees, payment due dates, lender's fees, fixed and variable interest rates, items of concern found by your solicitor and anything else that doesn't strike your fancy the first time out. There is no risk to attempting to negotiate and you can always be sure that you will NEVER get what you want if you don't ask for it. Buy to let mortgages used to be very hard to obtain and only people who didn't really need the money were able to get approval. This is no longer the case. Competitive lenders, especially those lenders who work with buy to let mortgage brokers, realize that the market for residential and commercial property letting is on the rise again. Now is the right time to find a broker and get busy building your investment portfolio of properties. About the Author Commercial Lifeline are independent Commercial Mortgage brokers saving you money on your Commercial Mortgage and Bridging Finance through lender choice. Download our free Commercial Mortgage guides by visiting our Commercial Mortgage Guide page. This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact. About the Author 2009-03-26 http://www.londonmortgageadvice.co.uk/news/article/274 Confused? what with falling house prices affecting loan-to-value (LTV) ratios, brokers calling the bottom of the fixed-rate market and risk-averse lenders rejecting loans. Six months after the Bank of England first began cutting interest rates, brokers believe that it is time to consider fixing before rates start to climb, particularly if you have enough equity in your home to qualify for the best deals. Brokers recommend locking in now because the Bank of England is likely to increase rates sharply next year to tackle an expected rise in inflation. Ratios of 90 per cent or more are rare and expensive. High-LTV borrowers who have reverted to cheap SVRs have two choices: to sit and wait or to lock in to a pricey fixed rate. Though ates are high, but remaining on an SVR could be risky. Falling house prices could push LTV ratios higher, making it harder to get a loan later in the year. =If you decide to remain on a SVR while rates are low, it is vital to use the money saved to overpay your loan, reducing the LTV ratio. Some SVRs have fallen in line with the base rate. Smaller building societies have consistently failed to pass on the Bank of England's monthly cuts. For example, Chelsea Building Society has an SVR of 6.45 per cent, while the Stroud & Swindon has an SVR of 6.29 per cent. If you have a smaller mortgages and a good credit record should waste no time remortgaging. Borrowers with less equity in their home may struggle to find a competitive new rate, but sitting on the SVR will only compound the situation. It is tempting to sit and wait to see if rates for homeowners with higher LTVs fall further. But could you cope financially if rates begin to rise? If not, it would be smart to pick a fix now. aSome lenders allow you to break your mortgage contract for a fee, known as an early repayment charge (ERC), typically a percentage of the total outstanding debt. Paying an ERC of 3 per cent on a Ł200,000 loan would cost Ł6,000. Houses buyers locked in to high rates for three or five years could still save by paying the charge and switching deals. However, do your calculations carefully and seek advice. Lenders are making a cautious return to the market for first-time buyers. Abbey unveiled a new deal this week, fixed for four years at 5.84 per cent. It requires a 15 per cent deposit and a fee of Ł495. To access cheaper rates, buyers need to raise at least a 25 per cent deposit - about Ł40,000 on the average house price. A government scheme designed to boost home ownership. HomeBuy Direct, a shared-equity scheme, allows first-time buyers to combine a traditional loan from a bank or building society with a joint loan from the Government and a property developer to purchase a new-build property. Schemes include NewBuild HomeBuy, a shared-ownership scheme that allows homebuyers to purchase a share of a property and then rent the rest, usually from a housing association. The share that you own can be increased gradually - a process known as “staircasing”. Lenders have pushed up the cost of larger mortgages recently. Best-buy deals are now frequently capped at Ł500,000 or even Ł250,000. C & G has restructured its range, grouping loans between Ł500,000 and Ł1 million with pricier deals for loans up to Ł2 million. Its cheapest fixes and trackers are now available only on loans up to Ł499,000. A two-year fix up to 60 per cent LTV has a rate of 3.89 per cent for loans below Ł499,000, or 4.89 per cent if you want to borrow more than Ł500,000. 2009-03-25 http://www.londonmortgageadvice.co.uk/news/article/264 Lord Turner, chairman of the Financial Services Authority has highlighted that holding out for cheaper fixed mortgage deals could be a waste of precious time. According to his recent report,mortgage rates can stay high for six to nine years following the credit crunch. He wants banks to hold more cash but if they do then it is the customers who will pay, because it increases the banks' costs, which are in turn passed on to you and me in the form of a wider spread between the rates paid on our savings and the rates charged on our debt. The margins on tracker mortgages are now so large. Previously in the good times the margin between the Bank of England rate and a tracker was just say 0.1%-0.5% but now in the worst cases we can see margins of 4% plus for deposits of 15%. Customers should beware that bank rises could not be far away. there is renewed optimism from some qurters that suggests that inflation could be round the corner and what htis means is interest rates will go up. This will push the headline rate of some deals up to very high rates, above 8%. And these margins are inlikely to come down. This begs the question, should you be locking into a fix now to protect yourself from these big tracker margins? There are some attractive fixed rate deals out there for those with large deposits or those ready to remortgage with lots of equity available. But also if you have a small deposit there is also an argument to lock into a fixed rate. If you play the waiting game on a tracker and house prices fall further, you may find you don’t have enough equity when you try to switch to a fix in a year or so. However if you are an existing homeowner on your lender’s standard variable rate, you may not feel the time is right as the chances are the SVR is lower than the current fixed rates. However if short term loss is a price you’re willing to pay for long-term security, then it’s time to fix. 2009-03-25 http://www.londonmortgageadvice.co.uk/news/article/265 As the impact of the Credit Crunch reverberates through the economy the effects reach ever further, often taking individuals and companies unaware, no less an example can be found in the property letting market. It is estimated that in 2009 there will be over 150,000 repossession claims for private sector landlords, this represents around 5% of the private rental sector. One of the key factors to avoid such a predicament is continuity of rental income, and this requires adequate checking of tenants before letting a property. The impact of the credit crunch is going to have a severe effect on the financial situation of many people, and in particular those who have a poor credit history. We have carried out some research that we feel all landlords and letting agents should be made aware of: In 2009 there will be an estimated 880,000 CCJs issued for non payment of debts The actual figures are increasing from 1,990 per day in December last year to 2,430 per day in 2009. This is an increase of over 22% In 2009 there will be an estimated 150,000 people made bankrupt / insolvent Bankruptcies and Insolvencies will increase from 298 per day in December last year to 411 per day in 2009. This is an increase of over 37%. For every 10 tenants checked, on average one CCJ is found Credit-Check-Services.co.uk sampled 500 tenant reports during Q4, 2008 and found an average of 1 Count Court Judgement (CCJ) or Court Decree (CD) for every 10 tenants checked. With the projected increase in defaults we expect to see an increase in the number of tenants with CCJs awarded. The key message for landlords is don’t become a statistic, take action to help ensure you maximise rental incomes through adequate checking of tenants. Ask yourself this question, can a landlord afford not to check tenants for County Court Judgements / Court Decrees? 2009-03-25 http://www.londonmortgageadvice.co.uk/news/article/263 It is a fact that fixed rate pricing has only really stared to come down in the past few months, and even then only for those borrowers with a hefty deposit. There has been a great deal of market instability and this has led to much fluctuation in the amount of fixed rate mortgages taken out by investors and homebuyers in the UK. Over the last quarter nearly 3 quarter of mortages taken out have been taken out on a fixed rate. This is an increase on the 3 months previous. If we refer back to an earlier article we can see a pattern emerging. This is what was said then. "Borrowers are becoming more keen to take up lower rate deals yet enjoy stable repayments for a fixed period of time to help them to budget more easily in the current difficult financial climate. As such new lower fixed rate mortgages may be gaining popularity again. In the history of the Bank of England, standing at just half percent following a series of base rate cuts over the past five months, the base interest rate is now at its lowest. For those that do not want to have to worry about fluctuating mortgage repayments each month these mortgages are providing an effective alternative to the lenders’ standard variable rate mortgage deal. So, some banks have now launched competitive fixed rate mortgage deals in response to the recent rate cuts. There are a number of lenders launching competitive deals and the two year fixed rate mortgage is proving a popular choice. Now that the base rate is so low and a number of fixed rate deals for under 4 percent are coming onto the market, some homeowners are looking to fix their repayments at these competitive rates to make it easier to manage their finances. Up to now, many homeowners and property purchasers have been opting for the lenders’ standard variable rate mortgages since the base rate started to fall last October, with many hoping that they would benefit from the rapidly falling rate. Despite the falling interest rates, and expectations that the base rate could fall to as low as zero over the course of this year, over 50 percent of homeowners were still opting for the security of a fixed rate mortgage to ensure that they repayments remain stable each month for a period of time." 2009-03-24 http://www.londonmortgageadvice.co.uk/news/article/262 Could it be that the Financial Services Authority (FSA) imposes restrictions on the initial size of mortgages in the future? A review of banking regulation by Lord Turner says there is case for limiting the size of home loans to protect people from borrowing too much. What's more it might also protect banks from the dangers of excessive lending. Hovever of course ther are some potential disadvantages to any such restrictions, and so the FSA will consult on the issue this autumn. The rapid extension of mortgage credit is the key factor in the origins of the financial crisis in the US, the UK and several other countries. The FSA's September paper on the future of mortgage regulation is seen as a real opportunity to help shape a future regulatory landscape that will serve both lenders and consumers better. It would involve a fundamental change to its past policy if the FSA does decide to formally limit the size of mortgages. To be published in September, the FSA's consultation paper will look at various methods of regulating mortgages, including formal limits on either the LTV or LTI ratios, The FSA's consultation paper,. As well as protecting lenders and borrowers, limits on the mortgage market could also stop rising house prices exaggerating wider economic booms and busts. However, there were some serious potential disadvantages to such a policy. Because they would not be able to raise enough money for a larger deposit, thus preventing them from buying a house some people would be kept out of the property market.But restrictions on mortgage lending run the risk of stifling activity in the housing market and could cause more problems than they solve. 2009-03-23 http://www.londonmortgageadvice.co.uk/news/article/261 Could supermarkets pose a greater threat to the traditional financial services companies in the next decade than anything else. This might be the result if a survey was conducted among financial services providers including high street banks and building societies, specialist investment providers and insurers.If senior individuals in the organisations were asked to rank different sectors in terms of threat in the next decade supermarkets might come out on top. Supermarkets have been able to enter and achieve significant market growth for several reasons, including the fact that consumers have confidence in their brands and their almost fully outsourced operations mean costs are kept to the minimum. In addtition supermarkets also have a diverse product range spanning many financial sectors, as well as the ability to source products from a broad range of providers, without any perceived fears of conflict of interest which often inhibit some financial companies. The dynamics for distributing the standard financial products, that most people require, to meet basic protection, savings and investments, pension and insurance needs, have changed. Whilst people don't necessarily want a one stop shop, they also don't want to trawl around different providers. The more enlightened companies have used the same tactics as supermarkets to increase their product ranges. 2009-03-20 http://www.londonmortgageadvice.co.uk/news/article/260 Offsetting savings against their mortgage, could be a good idea for savers looking to make the most of their money. In the current economic climate offsetting savings against a mortgage can provide more lucrative returns in the environment of low interest rates. There could be large savings to be made and it could be that there are hundreds of thousand of mortgage payers who could benefit. Offsetting is different from overpaying as it allows customers to access their savings at any time. And for those mortgage holders who that are nervous about the current financial situation, this could offer the most lucrative and safest alternative to a low rate savings account. Many mortgage holders might be ignorant of the benfits of offsetting and other might think that the subject is too complicated. However if they were to see a mortgage broker then they would be in a good position to make an informed judgement. It is not necessary to have a high savings balance to benefit from offsetting, ss long as you have a mortgage rate that is higher than your savings rate after tax. Then you will be in pocket. 2009-03-17 http://www.londonmortgageadvice.co.uk/news/article/259 You may think doing without such mortgage payment protection will save you money each month, but if things do suddenly take a turn for the worse, you will soon realise what a false economy this is as you struggle to make ends meet. It is understandable that people are tightening their belts and trying to save money wherever they can, but it is important they do not make cuts they will later regret. With mortgage payment protection insurance you make sure that you are insuring homeloans. And it covers: accident, sickness and unemployment. It is easy to see the benefits of protecting yourself against possible redundancy and although it is what a lot of people are worrying about at the moment, people will still fall sick or have accidents that stop them from working and having the right insurance in place will help them deal with the problems that this could cause. It is best to go to a broker who can look at the whole market place for the most suitable and cost-effective option rather than plumping for the first thing you see. In the case of MPPI, your mortgage lender is likely to offer you its own cover when you arrange your homeloan, but don’t feel like you have to take out its policy. It may seem like one less thing to sort out having been through the arduous process that a mortgage application can be, but you can often save money by shopping around. There are other things to think about as a homeowner if you want to be covered for all eventualities. For instance – buildings insurance – isn’t optional as no lender will give you a mortgage without it. And you also need to think about protecting your possessions, particularly if you have valuable electrical equipment or expensive jewellery. Finally, but by no means least, is – life insurance. You may think it morbid to take out such a policy, but it makes sense to ensure your mortgage can be paid off in the event of your death, particularly if you have a family. 2009-03-16 http://www.londonmortgageadvice.co.uk/news/article/258 If you are in trouble with your mortgage payments, do not ignore the problem. When you fall into arrears, your lender should contact you, asking you to put the problem right. If they are not happy with your response, they should write to you, warning of court action There are some key pieces of advice that you should follow if you are in arrears and at risk of losing your home. Do not ignore your lender's warnings. You must consider the following Can I cut back on spending without hardship? Can I rent out a room or increase my income in any other way? Am I behind on other loans secured against my home? If you feel that you can't make savings, don't give up. Visit your local advice agency - Shelter, Citizens Advice Bureau (CAB) or Consumer Credit Counselling Service. Experts will advise on next steps and how best to negotiate with your lender. These organisations also have good advice on their websites. Then talk to your lender. While some lenders will still push for possession, most only take action if there is no alternative. And lenders must explore every avenue to keep people in their homes. If lenders cannot prove this, judges now have the powers to throw out the case. Be honest with your lender, be honest about your finances, the amount you can afford to pay and, importantly, don't try to overstretch yourself. The lender will be far more helpful if they know you're really trying to pay your mortgage. This could stave off repossession. If you ignore your lender, or cannot make payments they have asked for, the lender can apply to your local county court for a possession order. Do not ignore the problem and hope it goes away 2009-03-14 http://www.londonmortgageadvice.co.uk/news/article/257 In January as buyers were forced to come up with record deposits to secure a loan, mortgage lending slumped dramatically Lending criteria tightened further over the month in response to worsening market conditions,despithe the efforts of Government to pursuade lenders to ease the criteria. There were only 8,900 loans to first-time buyers, who on average raised a 24 per cent deposit for their home – the largest amount on record. There are still mortgages on the market available at 90 per cent,but industry experts do not believe that many buyers are actually accepted on these rates. The current withdrawal of many specialist, small and foreign lenders from new lending has created a huge gap in the capacity to fund mortgages to match consumer demand and this is continuing in 2009. Government schemes to restore the flow of funds are primarily focused on a few large banks and recent lending commitments by a few lenders cannot fill the gap overnight although it is hoped that we see more funds flowing into mortgage activity later in the year. Those who can get access to credit are reaping the benefits of low interest rates, however. A poll of chartered surveyors this week showed increasing interest in the housing markets but record sales lows. The Royal Institute of Chartered Surveyors (Rics) blamed a lack of available finance for frustrating potential buyers from entering the market. 2009-03-12 http://www.londonmortgageadvice.co.uk/news/article/255 With a fixed rate mortgage your monthly payment will not alter for the period of the fixed rate. If you are the kind of person that likes the reassurance of knowing exactly what your monthly payments will be, then a fixed rate may be the most suitable mortgage for you. A fixed rate has the advantage also of potentially saving you money if interest rates generally move higher during the fixed rate term. On the other hand if interest rates move downwards you might be regretting having tied yourself into a fixed rate term. Some lenders will lend more money if you take a long term fixed rate. At the end of the fixed rate period you will revert to the standard variable rate or another rate that that will last for the remainder of the mortgage term. Usually there will be a penalty charge covering the fixed rate period during which you will pay a charge for redeeming the loan. There are some fixed rate deals without redemption penalties. At the end of a fixed rate term, assuming there is no tie in period or penalty for going elsewhere it may be beneficial to re-mortgage to another lender 2009-03-10 http://www.londonmortgageadvice.co.uk/news/article/253 Will there be a battle over fixed rate deals?I ask this after Banks and building societies have begun cutting the cost of their mortgages followings last week’s Bank of England half-point interest-rate cut to 0.5%. Some are saying that fixed rates have further to fall and some brokers have been advising borrowers to fix for five years to protect themselves from future rate rises. While most economists agree that the Bank of England is unlikely to cut rates again, mortgage experts are saying fixed-rate deals have further to fall. Experts don’t expect the cost of two and three year deals to fall much further. However, the cost of funding five-year fixed-rate loans fell 0.23 points on wholesale markets last week to 2.88%. Long-term fixed-rate deals could come down to 3.5% later this year. The Bank of Engalnd has said it will pump Ł75 billion into the economy in this way over the next three months. Some high street banks have said that homeowners on cheap variable-rate deals should fix now. However following the Bank of England’s strategy on quantitative easing, swap rates will fall sharply and so you can expect to see many lenders, including Cheltenham & Gloucester, offer cheaper fixed rates next week, particularly over longer terms. It is not likely to return to the heady days of 2007, when banks offered deals below the cost of funding, the government’s instruction to taxpayer banks to lend more should help drive down the cost of mortgages further. But lenders are unlikely to offer better deals for those with small deposits. Lenders will remain cautious in terms of the criteria required to get the best deals — so some homeowners could get caught out by falling house prices if they wait to long. One problem though is as property values tumble, people who may have a comfortable amount of equity now could find they do not qualify for the best deals in a year’s time — an argument for getting a valuation and remortgaging as soon as possible. Those on their lender’s SVR, are unlikely to see their rate fall further because we may have had the last of the cuts. So if you can fix at around the same rate, so you may as well do so. However,if you’re on a super-low tracker, it’s a different story — you’re going to have to pay more. 2009-03-08 http://www.londonmortgageadvice.co.uk/news/article/252 Borrowers are becoming more keen to take up lower rate deals yet enjoy stable repayments for a fixed period of time to help them to budget more easily in the current difficult financial climate. As such new lower fixed rate mortgages may be gaining popularity again. In the history of the Bank of England, standing at just half percent following a series of base rate cuts over the past five months, the base interest rate is now at its lowest. For those that do not want to have to worry about fluctuating mortgage repayments each month these mortgages are providing an effective alternative to the lenders’ standard variable rate mortgage deal. So, some banks have now launched competitive fixed rate mortgage deals in response to the recent rate cuts. There are a number of lenders launching competitive deals and the two year fixed rate mortgage is proving a popular choice. Now that the base rate is so low and a number of fixed rate deals for under 4 percent are coming onto the market, some homeowners are looking to fix their repayments at these competitive rates to make it easier to manage their finances. Up to now, many homeowners and property purchasers have been opting for the lenders’ standard variable rate mortgages since the base rate started to fall last October, with many hoping that they would benefit from the rapidly falling rate. Despite the falling interest rates, and expectations that the base rate could fall to as low as zero over the course of this year, over 50 percent of homeowners were still opting for the security of a fixed rate mortgage to ensure that they repayments remain stable each month for a period of time. 2009-03-06 http://www.londonmortgageadvice.co.uk/news/article/251 In the period from 2008 to 2009 there will be an estimated Ł32,900 bankruptcies as the recession bites harder. This represents a threefold increase on the period 2006 to 2007 In the first six months of this financial year alone - up to the end of October - 19,100 individuals or firms declared themselves penniless. At the same time, the number of companies going into administration owing money to HMRC could more than double, according to official Government figures. If the number of firms failing continues at the same rate, some 5,400 will have called in the administrators after being chased by HMRC by next March - a year-on-year rise of 132%. Is the Government failing small businesses. At the very time small businesses need the most help the Government is actually driving them under, hastening the rapid increase in bankruptcies. In his multi-billion-pound economic rescue package, Gordon Brown was supposed to be helping Britain on a path of recovery. 2009-03-05 http://www.londonmortgageadvice.co.uk/news/article/250 . People buying houses are demanding bargains as expectations continue for property prices to fall. There are homes being put up for sale and more are also finding buyers, but at prices well below sellers' expectations. As a result, the average sale price is now 88 per cent of the figure at which a property is first marketed, according to the latest survey from Hometrack, the housing data group However, these numbers suggest signs of activity in a market that was very slow before. And new buyer registrations are rising by 17 per cent and with agreed sales up by 36 per cent in February, after falls in the previous few months. There has also been word from Nationwide, which reported last week that there had been some evidence from estate agents and housebuilders that new buyer inquiries had picked up slightly as prices fall and interest rates are cut. While the percentage increase in activity may appear relatively high, the underlying transaction levels of market activity are about 60 per cent lower than they were a year ago. As such, this increase in market activity is off a very low base and falls well short of what could be classifed as ‘green shoots' of recovery. While demand for housing does exist, it was not at the levels of two to three years ago. The pick-up in buyer demand is strongest in southern England, with rises of more than 20 per cent in the number of people registering with estate agents in London, the South East and the South West. 2009-03-04 http://www.londonmortgageadvice.co.uk/news/article/249 Northern Rock is expected to reveal that more than 170,000 of its borrowers are in negative equity when it publishes its 2008 annual results this week. And what is more, Lloyds Banking Group conceded last week that 15% of its mortgage book before its takeover of HBOS — Ł17 billion of a total Ł113 billion — related to customers who owed more than their property’s value. Britain’s largest mortgage lender is Lloyds after it saved HBOS from collapse in January, predicted property prices would fall by another 15% this year — taking them down around 35% from their peak. Tumbling house prices, coupled with soaring unemployment, would cause Lloyds’ arrears and repossessions to surge this year, it said in its financial results. Mortgage hokders with little or no equity in their home will not be helped by moves to force lenders to pump billions into the mortgage markets. They will be stuck on lenders’ standard variable rates — which banks can change at will — as they are unlikely to be eligible for any new deals. In recent times lenders have restricted top deals to those with at least 25% equity in their home. There are no deals available for those with a deposit of less than 5%. Returning to the lending market last week, Northern Rock is pledging Ł14 billion of home loans to new and existing customers in the next two years. It will write some large loans — but only up to 90% of a property’s value. Another bank, Royal Bank of Scotland (RBS) will also lend more in return for further financial help from the government that could see up to 95% of the bank owned by the taxpayer. The government has a 68% stake now. They pledged to lend at least Ł9 billion to residential customers this year, and a total of Ł50 billion to homeowners and small businesses in the next two years. However, while the picture remains bleak for borrowers with little or negative equity, signs of life are returning to the market for homeowners with sizeable deposits. . Competition for business is hotting up, and the better rates we’re seeing puts pressure on other banks to lower theirs. Interest rates are unlikely to go up this year — and could well go down 0.5 percentage points next week. Northern Rock will write some loans at up to 90% of the value of a property. The Treasury said that would help first-time buyers and home movers looking to upsize to take advantage of lower house prices. But borrowers with less than 10% of equity in their home will not be helped, and will be stuck on their lenders’ standard variable rates. Northern Rock has one of the highest SVRs at 4.79%. 2009-03-03 http://www.londonmortgageadvice.co.uk/news/article/248 There has been a near doubling in the number of rental properties on the market. And this is driving down average rents. The rise in rental properties was being driven by people who had been unable to sell their home and deciding to rent it instead. The surge of rental homes coming on to the market was forcing rents down, as landlords had to compete for tenants. The average rent has come down by as much a Łi50 per month. With mortgage lending down the number of new rental properties coming onto the market rising dramatically since the beginning of the year, the decline in rental values that began in the second half of 2008 has accelerated and is likely to get worse as supply continues to outstrip demand. This sudden surge in new rental properties is a result of the restricted availability of mortgages, the lack of buyer confidence and the dramatic slump in property sales in the second half of 2008. While tenant demand is still high, it is nowhere near high enough to keep up with the avalanche of new properties flooding the market. 2009-02-27 http://www.londonmortgageadvice.co.uk/news/article/247 Recent indications of renewed interest in housing, as reported by the pick up in new buyer enquiries, have yet to filter into sales, but do suggest that falling prices and interest rates are raising curiosity now, which could flow through quickly once confidence returns.Large cuts in interest rates have helped affordability, but have not yet affected housing market confidence sufficiently to boost the levels of new transaction activity or slow the pace of house price falls. It looks also like the MPC has not finished cutting interest rates yet. The Bank’s economic forecast factoring in a 25bp cut, left inflation significantly below its target two years ahead and GDP contracting sharply. Further cuts in rates will be welcome in the housing market, but the economic conditions that require them will mean that there is unlikely to be a swift turnaround in the housing market in 2009. Falling mortgage costs may be helping sales Expenditure on housing, including rents, council tax, mortgages, maintenance and insurance, is one of the major components of household expenditure. The latest available data shows that it accounted for about one fifth of total household weekly expenditure in 2007. Amongst mortgage holders alone, the average weekly spend on mortgages was Ł138.80 per week, about 14% of the total household weekly spend. Given its share of the household budget, changes in housing costs can have a real impact on the overall disposable income of the household. In the current climate, falling interest rates have reduced the mortgage costs of existing variable rate borrowers by about a third. This provides substantial relief for borrowers who may otherwise have struggled with their payments and provides additional disposable funds for those who would not. The change in mortgage costs may be one of the factors behind the resilience of retail sales amid the deteriorating economic background. Current variable rate borrowers have seen mortgage payments fall by a third since 2007 For these or existing borrowers on variable rates with a typical loan size, the reduction in interest rates since 2007 has led to a significant reduction in mortgage payments. About one third of the overall stock of mortgages is on a base-rate tracker mortgage . For these borrowers, the 4.5 percentage point fall in rates seen since the end of 2007 means that their monthly mortgage payments have fallen by around Ł240 per month. Those on standard variable rates have seen a fall of a similar amount. Unsurprisingly, those borrowers in the highest priced areas have seen the biggest change to their housing costs, with Londoners seeing monthly savings of more than Ł350 and those in the Northern region seeing nominal falls of just less than half this amount. New buyers also benefit from improvement in affordability Variable rate borrowers have benefitted from the cut in rates almost immediately, and those buyers wanting to enter the market for the first time will have seen both lower mortgage rates and lower house prices. A typical first time buyer at the end of 2007 would have paid about Ł150,000 for a property, borrowed about 90% of the value and paid an interest rate of around 6%, depending on the type of loan chosen. The monthly outgoing would have been about Ł915. However today, the reduction in house prices and mortgage rates means that outgoing would be around Ł530, if the buyer qualified for one of the best tracker deals of 3.99%. But this would require raising a deposit of over Ł25,000. Alternatively if such a large deposit was not available, a fixed rate at a 90% loan to value ratio would still cost Ł167 less than at the end of 2007, even though the fixed rate is higher. This is due to the fall in house prices, which also means these borrowers can put down a smaller deposit. While lower interest rates alone will not lead the housing market to suddenly pick up, more affordable loans will provide support for both new and existing borrowers in the weak economic environment. It is too early to say that the market has reached its trough, given the economic recession, however, falling house prices and interest rates have made the situation for borrowers today much easier than it might have been. 2009-02-26 http://www.londonmortgageadvice.co.uk/news/article/246 Increasing interest rates on fixed rate deals are being imposed by lenders on borrowers who cannot put down big deposits. Cheaper deals have been only for homebuyers who can afford to put down hefty deposits, although many banks and building societies have cut fixed rate deals in the past week, . Everyone else will see fixed rates go up instead. Alliance & Leicester for instance has dropped its cheapest two-year fixed rate deal to 3.49%. You then get a massive 2% fee of the amount borrowed. Repayments on a typical Ł150,000 loan over 25 years would be Ł750. And the total cost of two years Ł21,000. If you are willing to pay out a 1% arrangement fee, the rate has fallen to 3.99%. Repayments are Ł791 a month and total cost Ł20,484. Both require a 25% deposit. However, and here's the rub, if you can only put down a 15% deposit, you'll actually see the three-year fixed rate go up - to 5.99%, although the fee has dropped from 2% to 1%. Repayments are Ł966 and total cost Ł36,276. -------------------------------------------------------------------------------- 2009-02-25 http://www.londonmortgageadvice.co.uk/news/article/245 In a series of measures due this week to revive the U.K. banking industry, Chancellor of the Exchequer Alistair Darling ordered Northern Rock Plc to expand lending by 14 billion pounds ($20 billion), This is aimed at pushing the availability of mortgages in the U.K. after unrest in financial markets stopped credit and sent property prices tumbling at their fastest pace since 1991. Northern Rock effectively closed its doors to new mortgages when it was nationalized 12 months ago. The government is unhappy that institutions are rationing credit and holding back from customers the benefits of lower Bank of England interest rates after receiving 37 billion pounds in recapitalization funds. Towards the end of the week, Darling will detail a program to guarantee hundreds of billions of pounds in loans. New capital will be beneficial for the U.K. as a whole because it will put less strain on the banks. Last year was a difficult year for Northern Rock. But the Company has been substantially restructured and now are in a much better shape to move forward from here. Banks approved 31,000 new mortgages in December, close to the lowest in a decade and below the 104,000 monthly average in 2007 before credit markets seized up. A dearth of credit quelled activity in the property market. This is a huge U-turn for Northern Rock and the government, but is it going to make a massive difference? . Until we get credit flowing in this economy, nothing else is going to work. Northern Rock, which became the first British institution to tap government funds after a run on its deposits in 2007, has been paying off Treasury loans since it was nationalized. Last month, Darling asked the bank to slow repayments until the industry is able to provide more mortgages. Now, the government is directing Northern Rock to expand the value of its mortgage portfolio by 5 billion pounds this year and about 9 billion in 2010, depending on demand, according to a person with knowledge of the plan. The existing mortgage book will be siphoned off into a separate business, allowing new lending to take place unhampered. The government loaned the Newcastle-based lender 3 billion pounds in July. Northern Rock will be able to delay repayments of that loan and channel that money, along with any other profit from its existing mortgage book, to fund new mortgages. It would be good to see the reinvention of the traditional savings and mortgage bank in Britain, for loans to be made on prudent and careful terms, not just to people with large deposits, but to first-time buyers and those on middle and modest incomes Northern Rock was among the banks offering mortgages without a deposit from the borrower. Darling said Northern Rock would offer loans of up to 90 percent of property prices. Today’s measures will allow banks to fund their activity by creating a new class of non-voting share, the Telegraph said. This would allow for dividend payments without diluting the value of stakes held by existing shareholders. 2009-02-24 http://www.londonmortgageadvice.co.uk/news/article/242 With house prices continuing to fall by a further one per cent in January, many of the UK's mortgage holders are very concerned about negative equity. This is because a large proportion boughtthier home at the height of the property boom, which is why as prices fall they are becoming increasingly concerned over the value of their home. In addition there are those with negative equity on an interest only mortgage and were hoping that their property would be worth more than they borrowed. the other concerns relate to those who wanted to use their hame as a pension and those that wanted to use the equity in their home for retirement purposes. House prices continue to fall, a large number of mortgage holders are becoming worried about their position. Mortgage rates are slow to fall and repossessions are on the up. The Government has tried to relieve this added stress for homeowners, but it is clear that more needs to be done before house prices fall further and push more people to worry about negative equity.However, for those considering equity release to supplement their retirement, negative equity is unlikely to be a real issue in practical terms as most people considering this option are likely to be mortgage free. But as long as they can pay the mortgage people may not concerned about negative equity, and homeowners are right to focus on paying the mortgage. The prevailing economic conditions also mean that many people are getting next to nothing on their savings and investments and with potential job losses meaning that further debt, or at least the prospect of it, is looming in the background, negative equity is just one more issue for people to worry about. 2009-02-20 http://www.londonmortgageadvice.co.uk/news/article/241 The state of the housing market is still dire as mortgage lending fell to a record low in January. The figures are down 8.4 per cent from Ł13.5 billion in December and down 52.1 per cent year on year according to figures from the Council of Mortgage Lenders. And the situation is unlikely to improve soon. Mortgage lending activity continues to be very weak and people are searching eagerly for some signs of recovery.But it is unrealistic to expect a meaningful revival in lending in coming months. Some estate agents report that interest is coming from cash buyers who do not need mortgages. And while some cash buyers scent rich pickings in property first-timers are being left behind by bargain-hunters Separate surveys have shown a rise in buyer inquiries as bargain-hunters look for plum properties at rock-bottom prices, but analysts said it was unlikely that this would be enough to turn the tide. Many people are likely to be looking at houses pretty casually and will probably be very cautious about committing to buying a house in the current economic environment. Consequently, only a major bargain is likely to tempt them into actually buying a house. The lack of activity in the housing market has dragged prices down by 20 per cent since the market peaked in Autumn 2007, but economists expect prices to continue to fall. 2009-02-19 http://www.londonmortgageadvice.co.uk/news/article/240 Due to misplaced optimism and a shortage of property among those marketing their properties property prices have shown a sudden increase. This lack has prompted sellers and agents to become more aggressive by raising asking prices, despite predictions that house prices have a further 10 per cent to fall. A shortage of property leads some agents to suggest a more optimistic initial asking price, influencing a seller to give the most bullish estate agent the instruction to sell. This is a traditional tactic employed at the start of every year to attract fresh stock, but is a shortsighted move for both parties in a falling market. However, many keen buyers are not able to take advantage of lower prices because of a lack of mortgage finance. 2009-02-18 http://www.londonmortgageadvice.co.uk/news/article/239 Have interest rates bottomed out and may they even begin to climb? This is the question following the decision by Halifax to increase the cost of two-year fixed-rate home loans. So should you sit on a lender's standard variable rate (SVR), lock in to a fix or opt for a tracker. Interest rates are likely to remain low for the next year, meaning that most homeowners can sit on their SVR quite comfortably. Waiting to see is best for homeowners with Nationwide or Lloyds TSB, which have SVRs of only 3 per cent. But some lenders still punish borrowers with SVRs of up to 6.75 per cent. But the waiting game could be a risky strategy. If the value of yur property keeps going down the loan-to-value ratio could creep up while you sit on an SVR, closing the door to the most competitive deals and potentially locking you out of a new mortgage completely. Maybe, you should lock into a fixed rate. The rates on the wholesale money markets that banks use to fund new fixed-rate mortgages, known as swaps, have fallen from 5.52 per cent in September to 2.01 per cent this week, but lenders have not matched these falls. Halifax, Britain's biggest mortgage lender, raised rates across a third of its fixes, less than a week after Cheltenham & Gloucester (C&G) did the same. Both high street lenders are controlled by Lloyds Banking Group, which is 43 per cent owned by the Government. The group's mortgage brands controls 30 per cent of the UK market for home loans. If this means that the bottom of the market has been reached then now is the time to fix But yesterday Abbey and Alliance & Leicester, owned by Santander, and Northern Rock, the state-owned lender, announced a new round of cuts to fixed-rate deals. Homeowners with a 40 per cent equity stake in their home can remortgage to a rate of only 2.29 per cent with Woolwich. However, the one-year “fix and track” deal reverts to 2.29 percentage points above base rate after 12 months and locks in borrowers with an early repayment charge for three years. NatWest is offering a two-year fix of 3.49 per cent on loans up to 75 per cent of a property's value, with a fee of Ł799, while Yorkshire Building Society has a three-year fix at 5.29 per cent for borrowers with a 15 per cent equity stake. The deal carries fees of Ł495. What about trackers The rates continue to climb as lenders protect profits in the face of a tumbling Bank of England base rate. A base rate at 1 per cent offers limited gains for new borrowers and high margins could hurt in the future when the base rate starts to climb. The best compromise could be a drop-lock deal, which allows borrowers to switch from a tracker to a fix, without an early repayment charge (ERC), when the base rate begins to move upwards. Trackers from C&G, Nationwide, Woolwich and Royal Bank of Scotland offer the option to switch to a fix, but the best-buy deals are lifetime trackers 2009-02-17 http://www.londonmortgageadvice.co.uk/news/article/238 Just as the cost of funding mortgages fell sharply last week and with the Bank of England signalling that their interest rates could soon come down to zero, so Britain’s biggest lenders came under fire for raising mortgage rates on Friday, shortly after promising MPs they would try to boost lending. Halifax, increased rates on a third of new deals by 0.20 percentage points, and Cheltenham & Gloucester (C&G), which is also owned by Lloyds, which also owns Halifax and Nationwide raised trackers by up to 0.25% — the fourth move in a row since Bank rate began falling in October. All this is very disconcerting especially since Halifax and Lloyds have been bailed out with billions of pounds of taxpayers’ money. They should not be cutting back on choice choice for new borrowers by increasing rates when many other lenders are cutting theirs. Luckily, Nationwide cut two, three and five-year fixes by 0.20 points last week — its cheapest two-year fix is now 3.99%. Abbey and Northern Rock have also cut fixes. 2009-02-16 http://www.londonmortgageadvice.co.uk/news/article/236 House sales fell to 9.9 per agent in the three months to the end of January, down from 10.0 in the three months to December and the lowest figure since the survey began in 1978 inspite of increased interest from bargain-hunters which failed to boost the housing market last month. And this was despite interest from potential buyers increasing in January for the third consecutive month. This can be blamed on the continuing mortgage drought for preventing keen buyers from taking advantage of lower prices. Poor returns on savings are encouraging those who sold months ago to come out of rented accommodation. The property market has been hit harder hit than any index has yet shown and many buyers now perceive better value. Faced with an alternative of negative savings returns (after tax and inflation) elsewhere, property could look like a much more interesting longer term investment again. But, while there had been an increase in viewings, there is only a sale when buyers had a big deposit. Borrowers with smaller deposits face mortgage rates of more than 6 per cent, and only if a lender then accepts theme. Depressed house prices can be blamed the large stock of property on estate agents' books relative to the pool of able buyers. 2009-02-12 http://www.londonmortgageadvice.co.uk/news/article/235 Lloyds Banking Group, incorporating Halifax and Lloyds TSB, HSBC, and the Royal Bank of Scotland have signed up to the initiative to identify borrowers who are about to slip into arrears on a credit commitment, about to go into bad credit and therefore should not be given new credit. Lending institutions are taking on this new early warning system to assess the chances of borrowers defaulting on their repayments They are doing this to crack down on new lending to previously good customers who are credit worthy by using an early warning system, which assesses their chances of defaulting on loan repayments in the future. The system, developed by Callcredit, the third biggest credit reference agency,assigns consumers an over-indebtedness score between 1 and 1,000, based on their credit history and current commitments, the change in the level of debt over the last 12 months and the ratio of debt commitments to monthly income. Callcredit have been working with high street banks and building societies since 2004 to share current account data as a way of identifying consumers who appear to be on the cusp of over-indebtedness, in order to gain a true understanding of their customers’ affordability. Under the new system, even prime borrowers with no history of defaulting could be rejected for a loan if their credit commitments take up too much of their income and if lenders are going to make wise decisions they need to access as much information as possible. Banks and building societies are tightening lending criteria because of fears of a sharp rise in mortgage and loan defaults in the coming year. There is a reduced appetite for risk so having reliable details about credit applicants enables lenders to make informed decisions about consumers. 2009-02-11 http://www.londonmortgageadvice.co.uk/news/article/256 Our biggest banks are still refusing to lend money to homebuyers, small businesses and consumers. Us taxpayers, own the majority share of some of our biggest banks, including Royal Bank of Scotland/NatWest, Lloyds Banking Group, Northern Rock and part of Bradford & Bingley.The Government has insured Ł210billion of toxic assets at Lloyds, which has taken over HBOS. Other banks will benefit from other government initiatives.These measures were designed to encourage them to start lending again, for unless they do so, the economy willstagnate. Yet even people with a good credit record are struggling to borrow. If you can get a loan, you are likely to receive a smaller amount than you requested, face onerous conditions and the rate of interest charged is likely to be far higher than you expected.Small businesses are among the hardest hit, with 120 of them collapsing a day. Yet the Government's Enterprise Finance Guarantee, launched in January, is supposed to guarantee 75% of loans worth between Ł1,000 and Ł1million to small businesses. 2009-02-11 http://www.londonmortgageadvice.co.uk/news/article/233 There may be signs of an increase in activity in the housing market, although at rather a low level, with figures showing that the number of mortgages approved to finance property purchase increasing by 15% in December. And according to the monthly Halifax house price index house prices increased in January, reversing December's fall of 1.6%, and may be an early indication that prices are beginning to steady. The National Association of Estate Agents also reported this week that its members saw an increase in registrations and activity in December, usually a month with low business levels. Additionally, there have been one or two instances of gazumping, always a sign that the market is becoming more buoyant. A drop in interest rates in recent months have made mortgages more affordable, falling from an estimated 31% of gross earnings last January to 21% in January this year. However, rising unemployment and the limited availability of mortgage finance mean 2009 will be a difficult year for the housing market, and so not too much should be read into one month's figures. 2009-02-10 http://www.londonmortgageadvice.co.uk/news/article/232 Sale and rent-back has grown with increasing household debt and repossessions, and has attracted negative publicity. Owners who have often failed to sell their properties through estate agents in the slow market, sell quickly and at a large discount, and continue to live in them as tenants: however, they can find that they have no security of tenure, as an Assured Shorthold Tenancy can end after only six months. So the FSA have said that they will definitely to be regulated by the Financial Services Authority. They are suggesting a two-stage approach which suggests that it regards the situation with extreme urgency. And, so under under the proposals, an interim regime would be brought in from July, followed by a full policing regime in the second quarter of next year. Until the crackdown starts this summer, consumers are being urged to stay away At the moment, tenants of sale and rent-back landlords have no redress – something which the FSA plans to put right. Other proposals are that sale and rent-back firms would have to be run by ‘fit and proper’ people It has been known that some sale and rent-back landlords raise rents sharply and there have also been cases of tenants being evicted because the landlord has failed to pay the mortgage. A number of tenants involved in sale and rent-back schemes were sold mortgages before the credit crunch ended the era of lavish lending practices. The clampdown is important with growing numbers of people worried about their ability to keep up their mortgage payments. There is the capacity for rogue companies to exploit people when they are vulnerable with dodgy deals that end up with people losing home. 2009-02-09 http://www.londonmortgageadvice.co.uk/news/article/231 The Bank of England rate cut may only help a few borrowers and definately will not help savers and pensioners. Unfortunately the base rate is confusing potential borrowers into thinking that the rate they should expect is something close to the Bank rate. It is clearly not the case. And the thing that affects the market is not the mortgage rate but the availability rather than affordability of lending that is the issue. In addition the lower rate is discouraging people from saving. However, on the flip side the cut will beef up consumer and business confidence at a difficult time in the economy. 2009-02-06 http://www.londonmortgageadvice.co.uk/news/article/230 It is expected by the Bank of England that banks and building societies will pull back still further in their lending in the coming months, as mortgage lenders are continuing to demand larger deposits as they ration home loans to their customers. Whilst in the past month the proportion of new mortgage deals requiring at least a 25% deposit has risen, from 54% to 60%. Not only that but over 25% of all deals available require a 40% deposit. lenders are looking to cherry pick the best customers as worries over falling house prices and the potential of customers getting into negative equity has caused the number of deals for customers with just a 10% deposit or less to fall to an all-time low. Someone with a small deposit has to pay a much bigger premium on their interest rate and they are also shut out from some of the most attractive deals. Life had become much tougher for people who could only put down a small deposit. The spread between the interest rate you pay if you have a small or a big deposit has widened considerably. the UK property market shrivelled in an unprecedented fashion during 2008, as the dearth of mortgage funds shut off the flow of buyers and pushed down sales and prices. As such they it is expected that sales will fall further in the coming months and will also keep on falling for the time being, possibly even into 2010. So far there is no evidence that any recent government attempts to inject fresh funds into the banking system have yet fed through to mortgage lending. 2009-02-05 http://www.londonmortgageadvice.co.uk/news/article/244 When it comes, the recovery in house prices could be sharper and swifter than people expect, according to property experts. While mortgage lending and house prices continue to fall, cash-rich investors are tentatively returning to the market in the hope that the trough is in sight. The Council of Mortgage Lenders said last week that gross mortgage lending dropped 8% in January to just Ł12.4 billion — less than half last year’s levels. However, investors who do not need mortgages are looking for bargains, with inquiries from new buyers rising for the third successive month, said the Royal Institution for Chartered Surveyors (Rics). So it may be smart to get in before the bottom, because house prices could eventually rebound sharply. Affordability is improving more rapidly than in the 1990s, which could precipitate an earlier than forecast recovery. Mortgage payments as a proportion of take-home pay have fallen 9.4% in the past year, compared with 7.4% over the same period in the 1990s, according to Nationwide. However, buyers who bought at the peak in November 2007 may have to wait several more years for property values to get back to where they were — even with a sharp rebound. And it might take until at least 2013 for prices to return to their peak. It is too early to say prices have stopped falling. There may be some slowing in the overall rate of decline, but as affordability improves, there will be people who can move back into the market in 2009 and 2010. There is interest from cash buyers. There is more of a buzz this year because there is this expectation that bargains are out there. People are saying we are close enough to the bottom, if we take a 10-year view on house prices. It is hope at least that the rate of decline in house prices will start to ease. We have seen a big increase in the number of buyer inquiries over the last few weeks. And because of the depreciation of sterling, on top of the 25% or so drop in prices, overseas buyers are getting a further 25% discount compared with a year ago. We are seeing cash-rich UK investors and overseas buyers beginning to look at some of the traditional investment markets. They are looking at prime central London such as Kensington and Notting Hill and then in Richmond. They are looking for a market which has traditionally bounced a bit quicker and a bit further. First-time buyers are going to be some of the last to enter the market purely because you’ve got these issues of accessibility to finance that we talked about. There is no doubt we’ll see a return of high loan-to-value (LTV) mortgages. The question is how long is it going to take? Banks have got such a limited amount of money to lend, they are focusing on the lowest risk. There is big competition for people with 40% deposits, and reasonable competition at 75%, but until banks have more money to lend, they’re not going to go into the higher LTV market. So the key is to get more money in the system. First-time buyers need to save 15% of the average house price, or about Ł18,000. When prices peaked, they were raising half that — but the arithmetic will continue to get better as mortgage rates, as well as criteria come down. Also, the cost of keeping a mortgage has fallen sharply owing to lower interest rates — this could help to lessen the effect of the slump. I 2009-02-05 http://www.londonmortgageadvice.co.uk/news/article/229 Equity release plans allow you client to release tax-free cash from your home to boost your finances in retirement. The two main types of equity release plans available are lifetime mortgages and home reversion plans. Both types of equity release plan allow you to: Safely release equity from your home Spend the cash as you wish Make no monthly repayments Stay in your home for life A lifetime mortgage is a form of equity release plan where a loan is secured against your property to provide you with a tax free cash lump sum or a regular income to spend as you wish, usually with no monthly repayments to meet. Interest is added to the lifetime mortgage loan throughout your lifetime, accruing at a fixed or variable rate. The loan plus interest is eventually paid back when the home is sold, usually when you move into long term care, or when you die. You can typically release between 18-50% of the value of your property with a lifetime mortgage, depending on your age. Releasing cash from your home with any type of equity release plan will decrease the value of your estate and it could affect entitlement to state benefits. An adviser can talk you through all of the advantages and disadvantages. Reversion Plans With a home reversion plan your can sell part or all of your home to a reversion plan company in exchange for a tax-free cash lump sum or income and a guaranteed lifetime lease with no monthly repayments to meet, or pay a peppercorn rent which may be as little as Ł1 per year. You stays in your home rent free for as long as you choose and are able to guarantee an inheritance to your beneficiaries. Both you and the reversion plan company share in any increase in your property's value, providing you have not exchanged 100% of its value. There are currently over 40 equity release plans to choose from, and you can save thousands of pounds if you choose the right one. 2009-02-04 http://www.londonmortgageadvice.co.uk/news/article/228 Householders who are in difficulty with mortgage payments should look to downsize. If you extend the term of your mortgage and downsize from a Ł200,000 mortgage on a Ł250,000 property to a Ł144,000 mortgage on a Ł180,000 property, this could save as much as Ł555 per month on your monthly repayments, and free up some additional capital as well. Also many could look to make the most of falling prices and buy a property. For those currently renting the price of an average first-time buyer property, monthly repayments can come in much lower, making this an affordable opportunity. People should not close their eyes to the opportunities and risks. There are still plenty of deals to choose from and significant savings can be made from downsizing. People who are struggling with their outgoings need to act. Those looking to downsize now are making the right decision - move before you get into any serious difficulty to avoid the danger of repossession. 2009-02-03 http://www.londonmortgageadvice.co.uk/news/article/226 Here is an announcement for Arian Coles, Director General or the Building Societies Association. Falling interest rates have been of benefit to variable rate mortgage borrowers, but now mortgage availability is now of more concern to borrowers than costs. “The cuts in interest rates have had a severe impact on savers. The reductions, from 5.75% prior to the run on Northern Rock in 2007 to 1.5% have seen incomes from savings drop by almost 75%, although the full impact of the base rate cuts has not actually been passed on to many savers. “This drop in income is particularly serious for pensioners who have saved all their lives and now face a sharp reduction in their income and living standards. For pensioners dependent upon their interest income from their savings rather than their pension, prices would have to fall by an unimaginable 75% for them to maintain their living standards.” “The BSA’s Property Tracker survey found that affording the monthly mortgage payments was considered a barrier to home purchase by 37% of respondents in December, down from 70% in June 2008 as interest rates fell. However, concerns over getting a large enough mortgage or getting a mortgage altogether increased from 49% to 56% over the same period. “So mortgage availability, rather than the cost of mortgages, has become a more pressing issue over the last few months. This suggests that what is important to potential borrowers is maintaining the flow of mortgage funds to the market rather than reducing interest rates further. “Building societies and their subsidiaries were responsible for 62% of net lending in the fourth quarter of 2008 - a further reduction in interest rates now will make people even less likely to save and disrupt further the flow of funds into the mortgage market, which is already significantly short of lending potential. “We need to ensure that those with at least some capacity to supply funds for mortgage lending - personal savers - are encouraged to do just that, and that requires the MPC to refrain from making further cuts to the Bank Rate at least until the impact of recent reductions becomes clearer.” 2009-02-02 http://www.londonmortgageadvice.co.uk/news/article/243 In the past month the proportion of new mortgage deals requiring at least a 25% deposit has risen, from 54% to 60%. Mortgage lenders are continuing to demand larger deposits as they ration home loans to their customers. And 25% of all deals on offer in fact require a 40% deposit, according to the information service Moneyfacts. The Bank of England revealed last week that banks and building societies expect to rein in their lending even more in the coming months. "The number of deals available for those with a deposit of 25% or more continues to increase as the lenders are looking to cherry pick the best customers, said Michelle Slade of Moneyfacts. "Worries over falling house prices and the potential of customers getting into negative equity has caused the number of deals for customers with just a 10% deposit or less to fall to an all-time low." Bigger premiums There are now just 21 mortgages available with a deposit of 5% or less, compared with the position at the beginning of last February when there were more than 1,200 on offer. Someone with a small deposit has to pay a much bigger premium on their interest rate and they are also shut out from some of the most attractive deals Ray Boulger, John Charcol The credit crunch and subsequent shortage of mortgage funds has produced a similar collapse in the number of home loans where lenders ask for a 10% deposit, once the traditional down payment. These have fallen from nearly 1,200 at the start of February 2008 to just 148 now. At the other end of the scale, the number of deals that need a minimum 40% deposit has shot up from just 24 to 341. Ray Boulger, of mortgage brokers John Charcol, said life had become much tougher for people who could only put down a small deposit. "The spread between the interest rate you pay if you have a small or a big deposit has widened considerably," he said. "Someone with a small deposit has to pay a much bigger premium on their interest rate and they are also shut out from some of the most attractive deals, such as tracker deals," he added. Falling prices The UK property market shrivelled in an unprecedented fashion during 2008, as the dearth of mortgage funds shut off the flow of buyers and pushed down sales and prices. MORTGAGE DEPOSITS NEEDED: FEBRUARY 08 VS. JANUARY 09 0% deposit - down from 182 to 10 5% - down from 1,023 to 11 10% - down from 1,197 to 148 15% - down from 245 to 227 20% - down from 243 to 158 25% - down from 669 to 447 40% - up from 24 to 341 UK mortgage market in graphics Sales volumes are currently about 60% lower than a year ago while prices, according to the latest Halifax survey, fell by 16% in the course of last year. And the number of new mortgages approved for house buying in November was 67% lower than a year ago, according to the Bank of England's latest figures. As such they suggest that sales will fall further in the coming months. And all experts and commentators are united in their view that prices will also keep on falling for the time being, possibly even into 2010. So far there is no evidence that any recent government attempts to inject fresh funds into the banking system have yet fed through to mortgage lending. The chancellor Alistair Darling is considering a proposal put forward by Sir James Crosby, the former boss of HBOS, that the government should agree to guarantee Ł100bn of fresh mortgage lending by the banking industry. But no decision on that plan is expected until the next budget. 2009-02-01 http://www.londonmortgageadvice.co.uk/news/article/225 With the Bank of England base rate at a very low point, tracker deals have become increasingly popular but the margins on tracker mortgages are increasing. Lenders have been increased their margins on trackers by threefold over recent months. However, because they are so low they are still attractive. However, mortgage holders should proceed with caution as rates may rise in the future. They should make sure they can afford higher mortgage payments should they come along. So, it may be worth thinking about taking out fixed rates to give long term security even if in the short term you are paying more monthly right now. 2009-01-30 http://www.londonmortgageadvice.co.uk/news/article/222 The Financial Services Authority (FSA) has increased its fight against mortgage fraud and says it recognises the social harm caused by such activity. It is is working on mortgage fraud inquiries with national agencies and regional police forces across the UK and will continue to exchange intelligence with City of London Police, the National Lead Force for fraud. While the amount of mortgage fraud remains a very small percentage of the overall mortgage market, it is important that it is stamped out to give homeowners and investors confidence in this key area of the economy. The FSA has regulated the mortgage industry since 2004 and after a relatively low-key start to its stewardship, it has started to get tough with those not playing by the rules. There are different classifications of mortgage fraud. Some serious and some less so, but no less important. It may pay to use a regulated broker rather than going direct to a lender as they are likely to be more experienced and more versed in what exactly is required in regulatory terms. While mortgage fraud has hit the headlines recently, it still represents a drop in the ocean. So there is no need to be unduly concerned or wary of seeking mortgage advice. However, as with any financial service, be vigilant and ask for a second opinion if you feel that something may not be above board. 2009-01-28 http://www.londonmortgageadvice.co.uk/news/article/220 Getting a mortgage these days is not impossible. It is just slightly harder than it was a year or so ago. If you have got a good credit history, a good job and a deposit of at least 10% you can get a mortgage. Lenders have not shut up shop OK, the number of mortgages being taken out has fallen hugely, but this is no surprise given the credit crunch. Lenders have tightened up their criteria considerably and are only lending to people they deem to be low, or certainly lower, risk. But most people can still get a home loan. We are now back to how the mortgage market was 10-15 years ago but there is still an adequate number to choose from, but with less choice. There are fewer lenders, some have gone away or decided to merge with others. Even though the numbers of products have fallen from around 15,000 to barely 5,000, there is still enough to choose from. Those who will struggle are are first time buyers, struggle to find the deposit and those with poor credit histories or people who, for whatever reason, are deemed a higher risk. What can you do? Talk to a mortgage broker. 2009-01-26 http://www.londonmortgageadvice.co.uk/news/article/218 Thousands of pounds worth of interest can be saved by tracker customers if they choose to overpay their mortgage. Householders who own their property should use recent cuts in the Bank of England's rate to overpay on mortgage payments. Consumers on decreasing tracker mortgages and standard variable rate mortgage have seen their repayments fall dramatically over the past fews. However if they keep repaying their mortgage at the same rate as before this would potentially take years off their mortgage term. In addition those approaching retirement would especially benefit from overpaying their mortgage rather than saving, because of low interest rates. If rates remain at 1.5% throughout 2009, then consumers who continue to pay off their mortgage at the same amount since interest rates starting dropping in December 2007 will end up taking many years off their mortgage term. 2009-01-25 http://www.londonmortgageadvice.co.uk/news/article/215 It is reported by The FSA, which oversees mortgage lenders, that homeowners are increasingly struggling to keep up mortgage payments, with the number of loan accounts in serious arrears in the third quarter of 2008 rising by nearly a quarter over the same period the previous year. The number of homes repossessed for non-payment have grown significantly with the total rising 92 per cent to 13,161 in the third quarter from under 7,000 the year before. This increase comes in spite of government efforts to pursuade lenders not to evict homeowners in financial difficulty and a voluntary code among lenders to limit such cases. However, while the Council of Mortgage Lenders has said it will work with owner occupiers to modify loan terms, the code does not apply to investors in buy-to-let property or in cases where fraud has occurred. In addition data show that banks are struggling to rid themselves of homes once they have taken them back from borrowers. Lenders were increasingly cautious about lending to buyers with a patchy credit history. Sub-prime borrowers accounted for only 1.5 per cent of new lending in the third quarter of 2008, down from 3.5 per cent the year before. And, lenders are also showing greater caution both in the percentage of each home’s value they are prepared to lend and the size of the mortgage relative to income. 2009-01-23 http://www.londonmortgageadvice.co.uk/news/article/216 There is speculation that this latest bout of reality could see UK mortgage lenders change the landscape of the mortgage industry forever as the ongoing impact of the UK recession continues to hit all areas of finance and business with the mortgage market in particular under serious pressure. As with the boom and bust cycle of the general economy this particular template can be transferred to the mortgage industry whereby in the good times offers and discounts are available to everybody but in the bad times cost creep higher and promotions are few and far between.We could see less and less discount mortgages, higher rates to protect profit margins and other similar protections introduced to ensure the sector does not experience another similar downturn. But will this really happen? However, as the general economy recovers UK consumers and homeowners have very short memories as do the financial companies in the UK.It is highly likely that once the UK economy is on a firmer footing we will see a return of various discounts and promotions to the mortgage market which could again store up future problems for the industry. However, it must be highlighted that the current economic climate is literally a once in a lifetime event and unlikely to re-occur for many many decades, if at all. 2009-01-22 http://www.londonmortgageadvice.co.uk/news/article/214 For investors, the question right now is: where do I put my money? The economic downturn has affected everyone. Brokers are struggling, retailers are closing, companies are shaving off staff at an alarming rate and even Manchester United has just lost its main sponsor. Confidence in the banking sector has been severely damaged; the base rate has been slashed so low that the interest on savings deposits barely amounts to more than small change; and the stock market is looking riskier than ever, with no one knowing when prices are going to bottom out, or what company will collapse next. For investors keen to put their money down somewhere, but simply unsure of where, investing in bridging finance could prove to be an attractive option. The advantage of putting money behind short term lending is that investors get their returns back incredibly quickly, as the loans, plus interest, are paid back in less than nine months. It is also seen as a relatively safe market. Lending large sums of money over short periods of time requires a certain expertise; therefore bridging lenders are renowned for their caution and good judgement. As Adrian Bloomfield, the chief executive of the Association of Short Term Lenders explains: “Investment opportunities are few and far between at present. If you’re sitting on a very large amount of money that you want to invest, where would you invest it today? Making funds available for short term lenders could turn out to be a wise investment. Short term lenders are very focused on profit. After all, there’s no point in lending anyone money unless you can make a margin on the fund.” 2009-01-22 http://www.londonmortgageadvice.co.uk/news/article/213 House prices are falling faster in London than anywhere else in the country. According to the Centre for Economics and Business Research (CEBR) house price poll-of-polls, property prices in the capital tumbled 13.3 per cent last year, compared with an average across the UK of 12.8 per cent, The house price fall in London has narrowed the gap between prices in the capital and prices elsewhere in the UK The monthly decline was the sixteenth successive drop in house prices. Prices fell across the UK last month, with the exception of Scotland, which experienced marginal growth,. All types of property have suffered.But terraced housing has been hit the hardest. The average value of a terraced property has tumbled 13.2 per cent in the past year. Detached houses have proved the most resilient, with a year-on-year drop of 10.8 per cent. New measures might be needed to curb the drop in house prices. 2009-01-21 http://www.londonmortgageadvice.co.uk/news/article/234 The spread today may have set a record – the spread was .75% at day’s end! I have read that part of what causes the spread is the FNMA MBS pool requirement that a maximum of 10% It seems that on good MBS days, the spread between conforming and conforming jumbo narrows to about .125% in rate. On bad MBS days, it widens to .25, .375 and worse. (or is it 15%?) can be comprised of conforming jumbo loans. But I don’t understand why the spread seems to narrow and widen depending on the day’s trading. One of the lender’s I work with sent this out: Delinquencies of non-jumbo prime loans that qualify for government backing increased to 2.1% from 0.8%. Defaults on jumbo mortgages tend to result in outsized losses for lenders given that expensive Citing data from LPS Applied Analytics, a mortgage-data research firm, the Wall Street Journal reports that about 6.9% of prime, jumbo loans were at least 90 days delinquent in December, up from 2.6% in the year earlier period.homes are much more difficult to sell when the real-estate market sours. According to the article, three lenders accounted for nearly half of all jumbo loans made in the first nine months of 2008. The top two originators, Chase and WaMu, made more than 25% of all jumbo loans. In addition, BofA and Wells Fargo each accounted for 11% of the jumbo market.Do you think that this may have caused the spread to have widened? If so, this will be really bad for high-priced areas such as Southern CA. 2009-01-21 http://www.londonmortgageadvice.co.uk/news/article/212 Fears of redundancy and higher bills mean more than 700,000 people have already asked their lenders for a mortgage payment holiday. And up to three million struggling homeowners are thinking about freezing their mortgage payments or not paying at all while they struggle through the recession. But experts warn such breaks could push up overall monthly repayments and increase total interest once the payments resume. A 12-month break on a Ł150,000 home loan would add more than Ł10,000 to the debt and increase the monthly repayments by Ł80 when they start again. This could leave property owners with low levels of equity in their homes or worse, push them into negative equity if house prices continue to fall. They could also find themselves struggling to raise a deposit when they need to remortgage. For consumers with anything less than 25 per cent equity in their property, the costs incurred from the payment holiday coupled with falling property prices could leave them with a mortgage worth more than their home. 2009-01-20 http://www.londonmortgageadvice.co.uk/news/article/217 The Bank of England’s Monetary Policy Committee voted 9-0 to cut interest rates further from 3% to 2% this month, in a bid to halt the economy slipping into recession; the minutes show that the committee considered a larger reduction. This is the lowest rate since 1951 and it is hoped that the low rate will be passed on to borrowers. Some of the major mortgage lenders made the immediate decision to pass on the full 1% cut, whereas others have only made a fraction of the cut, for example HBOS, the country’s biggest lender, only made a 0.25% cut. At the end of the month, the Nationwide Building Society said that it would not pass on any further cuts in UK interest rates to the majority of its tracker mortgage customers. The Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI) annual rate is down to 4.1% in November from 4.5% in October. It is reported that the decline in the annual rate is due in part to transport costs where fuels and lubricant prices fell this year but rose last year. Between October and November this year average petrol prices were down by 9.3 pence per litre to 95.2 pence in comparison to a rise of 3.5 pence last year. The price of diesel also fell this year, by 7.5 pence compared to the rise of 5 pence per litre last year. The Retail Prices Index (RPI), where mortgage interest payments and house depreciation are taken into account, also fell, to 3% from 4.2% in October. Because the CPI rate of inflation is more than one percentage point above the government target of 2%, the governor of the Bank of England has written a letter of explanation to the Chancellor. Read the governor’s letter in full. New figures from the ONS show that the rate of unemployment in the UK rose to 6% in the three months to October, from 5.8%. The number of people out of work within the UK stands at 1.86 million, the highest since 1997, after increasing by 137,000. It is expected that unemployment figures will rise even further as the downturn in the economy continues. In November, the UK job market weakened as permanent job placements reduced rapidly, according to a survey from Markit Economics. With an eight-month decline in permanent job placements, it is thought that this contraction is accelerating and has resulted in a survey record. The number of temporary and contract positions have also fallen to record lows as the demand for these types of placements has declined. Nursing and medical care was the only sector to avoid this decline. The Council of Mortgage Lenders (CML) has estimated that the number of homes being repossessed will rise to at least 75,000 next year, after hitting 45,000 by the end of 2008. This is largely due to the increase in people losing their jobs as a result of the economy falling further into recession. With around 168,000 people who have borrowed money for mortgages, already behind with repayments, it is anticipated that the number of repossessions with rise even further. The Treasury has announced a support scheme for around 9,000 homeowners experiencing financial difficulties following a significant drop in their income. The scheme stipulates a number of criteria that would qualify a homeowner for help, which includes if they have savings below ÂŁ16,000 and have taken out a mortgage of up to ÂŁ400,000. The Society of Motor Manufacturers and Traders reported that new car registrations in November fell by 37%, compared with November 2007, despite lower lending rates and large industry discounts; in the year to date, new car registrations are down by 10.7%. As a result of the decline, production and staff cuts have been announced at some carmakers, in a bid to survive the reduction in sales. Government aid, to include an “emergency loan facility”, is being called for by the UK car industry, in order to relieve the strain of the economic slow down on the industry, as well as provide support to consumers to boost sales. Official figures from the ONS show that UK retail sales had unexpectedly risen by 0.3% in November, despite predictions that sales would decline. One of the main contributors to this rise was the increase in sales of household goods by 3.9%, the biggest growth within one month since July 2007. Figures for internet sales also show an increase to 3.8% in November from 3.2% the previous month. It is believed that the increase in UK retail sales is largely due to considerable price cuts and promotions, in spite of the rise in the country’s unemployed. The Confederation of British Industry (CBI) has predicted that the next three months will see further contraction in manufacturing, despite the fall in the value of the sterling. It is expected that production will remain at the lowest it has been since the recession in 1980, with manufacturers confirming the biggest drop in export orders since October 2003. The survey conducted by the CBI, showed lower than normal export orders for 33% of firms as well as 35% of firms reporting that overall orders were down and as a knock on effect, many of the larger firms confirming price drops over the next three months. A new set of “fair principles” has been agreed upon by credit card companies, to help consumers struggling to pay off credit card debts. This agreement has come after government pressure on the lenders to help customers that have gone into arrears with repayments, by not raising interest rates any further. The principles include giving the option of freezing the account at the current interest rates and providing a transfer deal option, which should help tackle risk-based pricing that companies use to raise interest based on the risk of people defaulting on repayments. Although the principles, due to come into effect on 1 January 2009, include a commitment to borrowers not to raise interest rates for the first 12 months and then no more regularly than six monthly, they do not include passing on the cut in the Bank of England’s interest rate. Sterling continued to hit record lows against the euro throughout December. UK unemployment figures and the expectation of further interest rate cuts helped to put the pound under pressure. Global The US key interest rate has been cut from 1% to 0.25% by the US Federal Reserve to help with the country’s current financial crisis. This is the lowest key rate since 1954, and is predicted to continue at this low level for the foreseeable future. Analysts however, are concerned about where further financial aid will come from, as the Federal Reserve has already used billions of dollars to help the US banking system and to buy debt based on home loans. Plans to buy a large amount of mortgage-based debt are in the pipeline and the Federal Reserve is also considering buying long-term US government bonds, which would mirror the “quantitative easing” used by the Japanese Government during the 1990s and early 2000s. For a third consecutive month the European Central Bank (ECB) has lowered the key interest rate for those countries that use the euro, to a record 2.5%. The ECB president has however hinted that there will be no further cut in January. Sweden’s central bank has also decided to reduce interest rates from 3.75% to a record 2%, in a bid to slow the fall in production and employment as a result of the global financial crisis. The US Labor Department has confirmed that 533,000 jobs in the US were cut in November, the biggest loss in one month for 34 years. The jobless rate rose from 6.5% in October to 6.7% in November, which has fuelled concerns that the world’s biggest economy will continue the steep decline into recession. These figures show that November was the eleventh consecutive month that the economy had lost jobs and analysts believe that this trend is set to continue further. The Institute for Supply and Management (ISM) have reported that US manufacturing activity fell to a 26-year low in November. Figures show that for the second consecutive month, activity had fallen from 38.9 in October to 36.2 for November. It was also confirmed that US manufacturing output had contracted for four months running, which suggests that the US Economy will shrink for the fourth quarter of the year. The United Nations as well as the World Bank have stated that the world economy will face its biggest decline since the Great Depression on the 1930s, and world economic growth is expected to be negative in 2009. As a result of the economic slump suffered in developed countries such as US and Europe, the world economic output is expected to shrink by as much as 0.4% next year. The impact of this on the world’s poorer countries has meant that they are facing higher borrowing costs coupled with lower export growth, which in turn highlights the failures in the international financial system. The World Bank is expected to increase its support of developing countries by providing aid for infrastructure projects as well as helping local banks recapitalise. According to the Organisation for Economic Co-operation and Development (OECD), the weakness in the US Economy will continue into 2010. The OECD also confirms that household wealth declined by around 20% due to the fall in housing and stock markets, which is likely to have an affect on spending and household consumption. The organisation also highlights the need for a further fiscal stimulus package as well as calling for mortgage brokers, credit agencies and underwriters to provide more protection for borrowers and investors. The bill to provide a ÂŁ9.5bn bail out for the US car industry was rejected by the Senate, despite the vote in favour of the plan of 237 to 170 at the House of Representatives. The package, amended to include encouragement for banks to increase lending in an effort to augment support for the legislation, was rejected after the United Auto Workers (UAW) refused the demands by Republicans to cut wages.In light of the decision made by the Senate, President Bush agreed to provide $17.4bn of the $700bn originally earmarked for US Banks, to help bail out the troubled US carmakers. The financial support was welcomed by General Motors and Chrysler however; Ford has stated that it hopes no aid from the government will be needed. For the other two carmakers, the package will help secure millions of jobs as well as prevent them from becoming insolvent. Nicolas Sarkozy, President of France, has proposed a ÂŁ23bn fiscal stimulus plan to assist with the country’s current financial crisis. The financial package amounts to 1.3% of the gross domestic product for the country and is expected to boost economic growth by at least 0.6% in 2009. It has been forecast by the Japanese government, that the country’s economic growth will be zero in the year ending March 2010. This follows the Bank of Japan’s cut in key interest rates from 0.3% to 0.1%, lower than US rate of 0.25%, as well as its agreement to purchase around ÂŁ10.5bn of government bonds per month, in order to provide fiscal stimulus into the failing economy. Growing fears that Russia’s economy was going into recession were intensified by the latest figures for November, showing industrial output down by 10.8%, a drop of 8.7% on last year’s figures. As with the UK’s drop in new car sales, European sales declined by 25.8% in November, the biggest fall since 1999. The worst hit by the downturn in output, and its knock-on effects on the car industry, were Ireland, with a fall in sales of 55.9% and Spain with 49.6%. A poll of 7,000 German firms conducted by the Ifo research Institute showed German business confidence at a record low, as the business climate index dropped from 84.0 in November to 82.6 in December. Although this less than favourable outlook had been widely anticipated, the institute said that it had not seen such a low level for business sentiment since German reunification in 1990. In a bid to boost oil prices, OPEC agreed to make further cuts to output by 2.2 million barrels per day (bpd), making the total decrease in output since September at 4.2 million bpd. There is a possibility that this will fail to push prices up as it is not certain that all of the member states will make the agreed cuts. Oil prices have been falling rapidly, by over a total of $100 per barrel, due to countries experiencing recession. The gas dispute between Russia and Ukraine is causing concern to European Union Countries; E.U. officials are meeting in Brussels to discuss the potential impact. 2009-01-20 http://www.londonmortgageadvice.co.uk/news/article/211 The housing market has slumped. It is difficult for first-time buyers to get a foothold on the property ladder. First-time buyer mortgages are down some 57 per cent on one year ago. This is according to data from the Council of Mortgage Lenders,where abot 12,000 mortgages were approved during November for first-time buyers, a record low since data started being gathered in 2002. Homeowners have watched house prices slump by as much as 20 per cent, according to figures from Halifax, throwing many into negative equity . This is looking bleak with concerns mounting about rising unemployment and lenders further restricting mortgage borrowing. With house prices down and interest rates at historic lows the conditions are almost exactly right for first-time buyers to come back into the market. But the lenders are asking for huge deposits and this is making it very difficult for them to get a mortgage. 2009-01-19 http://www.londonmortgageadvice.co.uk/news/article/210 Those able to get a mortgage are stretching themselves less financially and beginning to benefit from reductions in bank rate according to the Council of Mortgage Lenders Lenders have cautiously tightened their lending criteria as a result of the shortage of funding and falling house prices. The improvement in affordability is largely due to the fact that borrowers who are able to obtain credit are lower risk and less stretched. Limited mortgage funding and reduced consumer demand will weaken lending activity further in coming months. The flow of funds to the mortgage market will not improve this year without further intervention by the Government. Lenders are currently juggling attempts to help existing borrowers and savers, and maintain new lending and deposits. And the Government too is facing the difficult decision of how to share out limited resources to help small businesses as well as the mortgage market’s existing borrowers in difficulty and prospective borrowers shut out of the market. Affordability is improving for those who are able to access a mortgage, but saving for a deposit will still be a constraint for many would be first-time buyers. Borrowers who are benefiting from lower mortgage rates should over-pay if they can afford it to reduce their mortgage balance and protect themselves against falling house prices. And now is also a good opportunity for borrowers on interest only mortgages to switch to repayment mortgages to use this period of low interest rates to start to pay down their loans. 2009-01-16 http://www.londonmortgageadvice.co.uk/news/article/209 House sales have falledn to another record low awith estate agents predicting worse to come. The latest survey from the Royal Institution of Chartered Surveyors (Rics) has shown that the rate at which properties were sold fell in December to the lowest since its survey began in 1978. The average estate agent is selling less than one home per week, while in London practices sold on average just seven homes in three months. New buyer enquiries increased for the second month, while the number of agents reporting falling prices rose slightly While buyers were interested in picking up cheaper property, the inability to secure mortgage finance had left most unable to fulfil their ambition to move. Without mortgage finance the housing market is at a standstill and transaction levels at an all time low. Without help there is a real danger that homebuyers will be frozen out of the market, transaction levels and prices will fall to new lows, repossessions will increase and negative equity will become common place. Together this has the potential to push the country deeper into recession. New buyer enquiries increased for the second month in a row and at the fastest pace since August 2006, when the property market was booming and Halifax figures showed prices rising at 8.2% per year. It is still very difficult for many people to get a mortgage or find the required larger deposit. Even if government measures to get banks to step up their lending increasingly take effect, it will clearly take time for confidence to improve and mortgage lending to pick up significantly. 2009-01-15 http://www.londonmortgageadvice.co.uk/news/article/208 With the cust in interest rates to 1.5% there is no guarantee that all mortgages will be cheaper. In the boom years, anyone with any sense would remortgage to a better mortgage deal. To stay on your mortgage lenders standard variable rate was an expensive mistake to make. What will happen now is that banks will reduce the number of offers and special mortgage deals. The days of tracker mortgages 1% below the base rate are over. It will be harder for people negotiating a new mortgage contract to get a deal which offers any discount on the standard variable rate. The number of tracker mortages on offer has also nearly halved. Therefore, although the banks standard variable rates will be falling, many will not see the equivalent reduction in mortgage payments they might expect. With the credit crunch the banks don’t want to lend because they are desperately trying to improve their balance sheets. Therefore, although loans may appear cheaper, banks will not be in a rush to lend. With property prices falling, banks will be requiring large deposits to protect themselves against negative equity. Therefore, although mortgages may look cheaper, many first time buyers may still be unable to get a mortgage - even if they would like to get one. - Reducing the cost of borrowing is not really the problem; the problem is a shortage of funds, liquidity and confidence for lending. Even people on tracker mortgages may not necessarily find themselves with lower rates. This is because some tracker mortgages have what is known as a collar clause. What this means is that your rate follows the base rate upto a certain point. But, if base rates fall any further the bank does not have to pass the lower rates on. 2009-01-14 http://www.londonmortgageadvice.co.uk/news/article/237 Mortgage and House News Energy and Climate Change Secretary Ed Miliband is to to unveil a new heat and energy-saving strategy aimed at cutting emissions from homes by 30 per cent by 2020. As part of the measures, home owners will be offered low-interest loans to give their property an environmentally friendly makeover. He will call on homeowners to install water meters and insulation on the grounds that it could save people hundreds of pounds. The Local Government Association has also called on energy companies to set up a fund to pay for a mass insulation project. Ministers believe that many property owners are willing to introduce green technologies, but have so far been put off by the prohibitive cost of making their homes more environmentally friendly. As a result, the package includes proposals for giving families help with financing, with low-interest loans being repaid over a long period of time and the payments taken over by the new owner if the house is sold. Miliband said: "We need a great British refurb to get every home and every street fit for a 21st century greener way of life. We've achieved a lot so far - four million homes already insulated - and more and more people want to do their bit to save money and cut down on carbon. "We must find new ways of slashing energy use and feeding cleaner energy into our streets and neighbourhood. But it's too much to ask home owners to face the full extent of this challenge on their own. We've got to think big and make sure people get the help they need." 2009-01-14 http://www.londonmortgageadvice.co.uk/news/article/207 For homeowners who are struggling to make their mortgage payments after becoming unemployed the Government has announced that it will provide more help. Thousands more households will qualify for state help with [mortgage] interest payments after the threshold for qualification was raised and the waiting period slashed by two thirds to 13 weeks. Income support for mortgage interest (ISMI) will now be available to people with mortgages of up to Ł200,000 – rather than Ł100,000, as had been the case. The rules are there to make sure even more people can get help with their mortgage payments if they lose their job. The Government have said that they will do everything they can to give people the real help they need. That is why they will give financial help towards mortgage payments for someone while they are looking for a job. Maintaining mortgage payments will be a prime worry in the current climate. It is predicted we’ll see around 75,000 repossessions this year and around half a million mortgages over three months in arrears. 2009-01-13 http://www.londonmortgageadvice.co.uk/news/article/206 The proportion of new mortgage deals requiring at least a 25% is rising. A quarter of all deals on offer in fact require a 40% deposit, according to the information service Moneyfacts as mortgage lenders are continuing to demand larger deposits as they ration home loans to their customers. . The number of deals available for those with a deposit of 25% or more continues to increase as the lenders are looking to cherry pick the best customers. People are worried about falling house prices and the potential for getting into negative equity This has caused the number of deals for customers with just a 10% deposit or less to fall to an all-time low. Someone with a small deposit has to pay a much bigger premium on their interest rate and they are also shut out from some of the most attractive deals The credit crunch and subsequent shortage of mortgage funds has produced a similar collapse in the number of home loans where lenders ask for a 10% deposit, once the traditional down payment. At the other end of the scale, the number of deals that need a minimum 40% deposit has shot up. Life has become much tougher for people who could only put down a small deposit. The dearth of mortgage funds has shut off the flow of buyers and pushed down sales and prices. There is no evidence that any recent government attempts to inject fresh funds into the banking system have yet fed through to mortgage lending. 2009-01-12 http://www.londonmortgageadvice.co.uk/news/article/205 Low risk borrowers are best placed to get mortgages. the average price for a two-year mortgage deal was 5.90 per cent, down from 6.38 per cent in the previous quarter. For three-year fixed-rate deals in the same period, the average rate went from 7.41 per cent to 6.30 per cent. Low-risk borrowers have a competitive market and but borrowers needing higher LTVs are having to pay much higher rates or not get a mortgage at all. The government must not neglect the issue of liquidity needed in the mortgage market as bringing more liquidity to the market was more important than a base rate cut. 2009-01-09 http://www.londonmortgageadvice.co.uk/news/article/204 Interest rate has been cut buy the Bank of England by 0.5% to 1.5%, the lowest level in the Bank's 315-year history. The decision has been met with mixed reviews however, with some commentators claiming borrowers won’t feel any benefit. The reduction follows a 1% cut a month ago and a huge 1.5% cut in November. It is being said that the vast majority homeowners will never feel the benefit of this cut. Banks simply aren’t passing these cuts on. While it will have a positive impact on sentiment, vital at the moment, interest rates mean very little if you don’t have a large deposit – in London, house prices are still high enough that a 25% deposit is a fortune for a first-time buyer. In addition, the Bank Base Rate cut is a further step in the right direction, but if we’re to see even a mild improvement in the number of people able to afford to move home – the Government must start acting to thaw the mortgage freeze. Banks can’t lend because they have no money to lend – the Government promised us action in November. The action we’ve seen to date is simply not enough. It is a particularly difficult and confusing time for those looking to buy or remortgage. Deals are being repriced and terms and conditions revised almost daily, with some lenders relaxing criteria while others continue to toughen them. Borrowers should make sure they consult a whole of market mortgage adviser to have access to all the available deals for their needs and ensure they are getting the best mortgage deal possible. 2009-01-08 http://www.londonmortgageadvice.co.uk/news/article/203 As the value of sterling plummets along with house prices and transaction levels so dollar-rich buyers are getting ready to swoop in prime central London,. They are mainly from the Middle East, Russia and parts of mainland Europe. Reductions in London property prices are near 30%. With sterling effectively devalued by 25-30%, then in reality, buyers will be paying up to 60% less than a year ago. There is a significant rise in interest from Middle Eastern buyers. The situation is similar to what happened after Black Wednesday in the early 90s. Then, almost overnight, the devaluation of sterling and the reduction in property prices made London a cheaper place to buy: cash-rich international buyers are now looking for bargains at all levels and in all the prime areas. 2009-01-07 http://www.londonmortgageadvice.co.uk/news/article/202 Applicants for homeloans are being turned down for mortgage finance for "the most spurious reasons", it has been claimed. A Daily Mail investigation has revealed that applications are being rejected after customers' credit histories are being subjected to close scrutiny. The paper states that one buyer had their application rejected for going beyond their overdraft limit by just Ł30 and another was denied a loan because they had failed to pay a parking fine. It would seem that lenders are weighing up credit files more closely than ever and rejecting applications for mortgages for what seem to be the trivial reasons. This is despite government action to increase the amount of lending in the market. Meanwhile mortgage lending continues for fall. 2009-01-06 http://www.londonmortgageadvice.co.uk/news/article/227 The research looks at how homeowners believe they would cope financially if put out of work for a long period of time through illness or injury. 61% of respondents said they would not be able to survive financially if unable to work because of injury or illness. Those aged 34 and under were most concerned, with three quarters admitting that they would not be able to pay all their bills. This compares to 43% of people aged 55 and over. If they were unable to work due to injury or illness three out of five homeowners could not survive financially. So says a survey from Nationwide. To survive financially, it shows that homeowners need on average Ł298.66 per week -an amount which will be increasingly difficult to achieve in the current economic climate without a regular income and any form of protection insurance in place. Nearly a third (32%) of people said they would rely on State benefits to survive financially if illness or injury forced them out of work for six months or more. These results clearly highlight the misconceptions people have about State benefits and serves to show how, for many, it does not provide adequate income to maintain their standard of living. It clearly shows that, should the unexpected happen, most people do not have any cover in place. Instead, most people believe they will find a way to survive should injury or illness force them out of work. However, in the current economic climate, we may not be able to rely on such things as the value of our house, or even friends and relatives in the way that we did a year ago. The message is clear: get a secure plan in place and make sure that you have sufficient cover to support your financial needs. 2009-01-03 http://www.londonmortgageadvice.co.uk/news/article/223 This is a bad recession The downturn has come upon us quickly and it will take a long time to go. The banks must take a huge amount of the blame for the current conditions. They let their greed lead them into temptation. They lend and they ought to invest their depositors’ money as if it were their own: cautiously and with their prime concern being the safety. Now the lender is seen in a bad light. However, the Government should also be held accountable for the downturn. This country is in a bad way if more cash is required to stimulate the economy. We have unprecedented levels of debt and little prospect of sustained economic growth. We may start to recover next year any revival will be a slow one. The situation is changing and has yet to finish changing and by the time it does stop, a lot of household names will no longer be there. However, by then the caution that has been so absent from our lending institutions will be there. . 2008-12-19 http://www.londonmortgageadvice.co.uk/news/article/201 Eligible first-time buyers will be able to apply for a new Government scheme from early 2009 by contacting a HomeBuy agent in their region. The Government has unveiled a deal worth more than Ł400m aimed at helping first-time buyers to purchase their own home. More than 130 developers have agreed to offer the HomeBuy Direct scheme, which the Government claims will help up to 18,000 first-time buyers to purchase a home at sites across England aided by an equity loan, part-funded by the Government and the developer. The equity loan, which will be free of charge for five years, can be used as a deposit and can cover up to 30% of the purchase price. As with other HomeBuy schemes, any first-time buyers whose household income is under Ł60,000 who cannot otherwise afford to buy will be able to apply. The Government also claimed the scheme will support the house building industry by identifying buyers for their new homes, helping them to weather the current difficult conditions in the market. The Government is determined to give families real help in the current economic climate. For many young families who aspire to own a home, the difficulties in the housing market have made the step on to the property ladder harder. This deal will give them more help and make their dream of becoming home owners achievable. At the same time, this scheme will also help developers to weather the tough times in the market, by protecting jobs and helping to keep business going. 2008-12-18 http://www.londonmortgageadvice.co.uk/news/article/200 “We are determined to give families real help in the current economic climate. For many young families who aspire to own a home, the difficulties in the housing market have made the step on to the property ladder that bit harder. This deal will give them more support and put their dream of becoming home owners within reach. At the same time, this scheme will also help developers to weather the tough times in the market, by protecting jobs and helping to keep business going.” With those words, Housing minister Margaret Beckett has unveiled a deal worth more than Ł400m aimed at helping first-time buyers to purchase their own home. More than 130 developers have agreed to offer the HomeBuy Direct scheme, which the Government claims will help up to 18,000 first-time buyers to purchase a home at sites across England aided by an equity loan, part-funded by the Government and the developer. The equity loan, which will be free of charge for five years, can be used as a deposit and can cover up to 30% of the purchase price. As with other HomeBuy schemes, any first-time buyers whose household income is under Ł60,000 who cannot otherwise afford to buy will be able to apply. The Government also claimed the scheme will support the house building industry by identifying buyers for their new homes, helping them to weather the current difficult conditions in the market. Eligible first-time buyers will be able to apply for the scheme from early 2009. 2008-12-16 http://www.londonmortgageadvice.co.uk/news/article/221 Abbey - We’ve got cover to suit you At Abbey, we think insurance should give you all the cover you need, and be straightforward to set up too. So we’ve made our options clear and simple with no unexpected hassles. Above all, we believe in giving you the freedom to choose. You can set your building insurance at a specific sum insured level and add contents for a fixed sum insured limit of Ł55,000 with our Additions Bedroom Plus option. 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Buildings – including cover for loss or damage caused by fire, flood, storm or escape of water Contents – including a fixed contents sum insured of Ł55,000 if you are unsure of the value of your belongings Easy quote and buy system with straight through processing - Register Here Quotes saved and fully editable before submission Dedicated IT and Sales support provided by Plus One Insurance Solutions Ltd Commission Table Product Initial Renewal Peace of Mind 25% 15% Paymentcare 25% 15% Abbey Bedroom plus 25% 15% Abbey Landlords 20% 20% Abbey New Build 25% 15% Additions MPPI 27.5% 27.5% 2008-12-15 http://www.londonmortgageadvice.co.uk/news/article/199 Many homeowner will be better off because their tracker mortgages have become much cheaper over the last few months. Many have used this time to pay back into their mortgage the savings they have made. This will result in their mortgage finishing years earlier which will result in saving them Ł1000s in mortgages payments. With the mortgage interest rates coming down by 3% for existing borrowers, households have been saving on average Ł250 per month. Those that plough this straight back into their mortgage can expect their loans to finish years earlier so saving Ł1000s in interest payments. However there are many who have had to use this saving to pay household bills. It is possible that rates will fall even lower. But many lenders a collar on the loan which means that the loan cannot fall below a preset rate. 2008-12-12 http://www.londonmortgageadvice.co.uk/news/article/198 The European Central Bank has lowered interest rates by 0.75% to 2.5% following the announcement that the Bank of England had reduced rates from 3% to 2%. Sweden slashed interest rates by 1.75% to 2% - the largest reduction for over 15 years. This cut was the most aggressive in a decade although it was the third time in as many months that interest rates had been lowered in the euro zone. More cuts are expected in the future since the recession seems to deteriorate by the day. But the cut was widely expected by analysts as official figures confirmed recently that the euro zone is in its first recession. Figures published by the EU’s statistics office revealed that unemployment in the euro zone has risen to 7.7% whilst inflation in the euro zone has fallen to 2.1% in November, from October’s annual rate of 3.2%. France, Italy, Germany, Belgium, the Irish Republic, the Netherlands, Luxembourg, Spain, Portugal, Slovenia, Malta, Greece, Austria, Finland and Cyprus make up the members of the eurozone. 2008-12-11 http://www.londonmortgageadvice.co.uk/news/article/219 There has been a shortage of liquidity in the banking system causing mortgages to be more expensive and difficult to get.Ever since US subprime mortgage companies had to write off bad mortgage debts, As people defaulted on mortgages, house prices (which had been booming) started to fall. Falling house prices compounded the bank’s losses because the resell value of the house was much less than the initial mortgage. A few US mortgage companies lost substantially because many of their mortgage advances were inappropriate. People couldn’t afford to pay them back so they defaulted on the mortgage, leaving the bank with losses. Because of the bad experience with mortgage companies going bankrupt, financial institutions became much more cautious about lending money for mortgages. Also, because they had lost money, they couldn’t afford to lend more. Therefore, mortgage finance was in short supply causing banks to ration mortgages by requiring large deposits and increasing the interest rates. The subprime mortgage companies had sold part of the loans onto other financial companies. The idea was to spread the risk. Therefore, even reputable banks became involved in the subprime mess (even though it was hard to know) Therefore, many banks such as Lehman Brothers had to write off bad debts (loans they had given to other mortgage companies, especially the US subprime companies.) The problem is that some big banks relied on financing a high % of their mortgage products through borrowing from intermediaries like Lehman Brothers. They were not financing mortgages from savings, but from interbank lending. This is what precipitated the crisis in Northern Rock, one day, they simply couldn’t raise enough finance on the money markets to keep their existing business going. The crisis continues because the losses are multiplying throughout the banking system. Now that Lehman Brothers has filed for bankruptcy, there will be an even greater shortage of mortgage funds, making it more difficult to get a mortgage (yesterday the interbank lending rate increased - the rank which banks charge each other to borrow. The Libor interbank lending rate rose to 5.89% yesterday) Falling House prices exacerbate the credit crunch. Although defaults are currently low, falling house prices magnify the problem because it leaves homeonwers with negative equity. Therefore, if a homeonwer defaults, it multiplies the losses of banks such as Halifax. It is a vicious cycle because the shortage of mortgage funds is causing a fall in demand for houses and therefore, house prices will fall further; this makes the mortgage industry more nervous. This is why the Bank of England has extended its emergency lending to the banking system. Confidence. The other problem is that people’s decision to buy a house is based on confidence. Given the unrelenting bad news, most homeowners will defer the decision to buy causing further falls in demand. 2008-12-01