The daily deal - Remortgage Blog for the UK

UK housing market measure worst since 1990-RICS 11/03/2008

Mr Mortgage — Tue, 18 Mar 2008 12:12:00 GMT

By Peter Graff
Quoted from the Guardian (link to article displayed below)

LONDON, March 11 (Reuters) - British surveyors are recording falling housing prices by the worst margin since the market crashed in 1990, the Royal Institute of Chartered Surveyors said on Tuesday.

During the past three months, only four percent of surveyors reported prices rising, while 57 percent said they were falling, a net balance of minus 53 percent.
When adjusted for seasonal factors, the net balance was minus 64.1 percent, the worst figure for the housing market that the RICS survey has recorded since June 1990 when house prices began a half-decade slump. January's figure was -54.8 percent.
"This is very soft indeed, reflecting the interplay between stretched valuations, tightening lending standards and widening lending spreads," said Michael Saunders at Citigroup.

"The further adverse effects of rising repossessions, weakening job growth and then probably a rise in unemployment still lie ahead."
The house price data were among a raft of mostly bad news on Tuesday suggesting the British economy is slowing sharply on the eve of finance minister Alistair Darling's first budget.

The National Institute of Economic and Social Research reported economic growth in the three months to the end of February was just 0.5 percent, and downwardly revised their figure from the previous month to just 0.4 percent. Britain's quarterly growth rate last year was close to 0.7 percent.

In one piece of more positive news, retail sales grew modestly in February after January's rebound from two-year lows.

But most analysts were focused on the house price data, a closely watched measure in a country where two thirds of houses are privately owned.
"Much weaker than expected, and in the wake of yesterday's indications of mounting cost pressures in the production sector reaffirming the case for lower UK rates from an activity perspective," said Richard McGuire, fixed income strategist at Royal Bank of Canada.

Stocks of unsold property jumped by more than 8.5 percent, the fifth consecutive monthly increase of more than 8 percent. The stock of unsold homes has now risen by 48.6 percent over the past 12 months, the steepest rise in unsold property since 1989.
Surveyors said they each had an average of 92 homes on their books, while recording an average of only 24.4 sales during the three month period on a seasonally adjusted basis.

British house prices have tripled over the last 10 years, but the market has slowed over the past year, with many first time buyers no longer able to afford a house and lenders tightening up requirements for mortgages.

With credit scarce on global markets, mortgage interest rates have not fallen despite a cut of half a percentage point in the Bank of England's lending rate since December.
Some lenders have raised the deposits they require for first-time buyers seeking the cheapest loans.

The Council of Mortgage Lenders said first time buyers were now lent on average 88 percent of their home's value in January, down from 90 percent in December. Home movers, who typically borrow less, borrowed just 70 percent, down from 73 percent.
Although prices have already begun falling month-to-month, Britain has yet to experience a year-on-year fall like the slump that has hit the United States.

Official government figures showed prices in January were 8.0 percent higher than a year earlier, down from an 8.4 percent increase in December. Those figures, based on completed sales, lag other indicators but show that inflation has slowed.
Finance minister Alistair Darling said last week that Britain's housing market was slowing but remains "fundamentally strong".

http://www.guardian.co.uk/feedarticle?id=7374775

How secured loans can prove beneficial

Mr Mortgage — Wed, 12 Mar 2008 12:37:00 GMT

March 12, 2008

Written by Peter

Quoted from thriftyScot (link to article displayed below)

In the past many people were afraid to touch secured loans, with fears that this sort of loan would plunge them into negative equity or result in them losing their home. However, over recent years this type of finance has become increasingly popular, with a rising number of homeowner realising that this could actually be the most sensible and affordable way to borrow money.

The massive rise in equity levels for most homeowners over recent years has meant that homeowner across the UK now have increased financial leverage when it comes to taking out finance, and this is something that many homeowners have taken advantage of.

Basically, a secured loan allows the homeowner to unlock the cash that is tied up in the value of the home without having to sell up and move on first.

These secured loans offer a number of benefits that do not come with unsecured finance, and this is what sways so many homeowners to opt for this type of loan.

One of the main attractions of the secured loan is that the borrowing power is so much greater than with an unsecured loan. With unsecured loans the maximum you can borrow is usually £25,000, and this depends on your financial status, credit, income, and various other factors.

However, the amount that you can borrow with a secured loan is way higher, but does depend on a variety of factors including your equity levels.

If you want to work out your equity levels in order to look into taking out a secured loan the first thing to do is get your property valued.

If you are using an estate agent to get a value on your home make sure that you contact around two or three local estate agents so that you get a better idea of the true value of the property – if you only contact one there is a danger that the estate agent will either undervalue the home thinking it will lead to a quicker sale or overvalue it to increase the commission that the estate agency gets should you sell it.

You will also need to contact your mortgage lender in order to get an accurate balance on your mortgage, as well as contacting any lenders that you have secured loans with already if applicable.

All you will need to do once you have all of this information is deduct the amounts that you owe on your home from the amount that the property is worth, and you will be left with the equity. You can then use this to make enquiries with lenders, and to help determine how much you may be eligible to borrow.

Another of the attractions of secured loans is that they offer far longer repayment periods than unsecured loans, and this can help borrowers to keep down their outgoings. You will be able to spread your loan over a longer term, and this means that you can reduce the amount you have to pay out each month.

If you have bad credit then the likelihood of getting an unsecured is slim to none, but if you are also a homeowner then there is a far better chance that you will be able to get finance in the form of a secured loan.

With secured loans the amount that you will be able to borrow will partly depend on your equity levels, but the lending practices of each individual lender can vary. You may find that some lenders will only allow you to borrow up to a certain percentage of your equity, and this is a good safeguard against falling into negative equity as you will not have financed your home to the hilt.

Some lenders will allow you to borrow up to the full amount of your equity, and there are also lenders that will allow you to borrow more than your equity. You will need to compare loans and lenders in order to determine which loan is best suited to you.

You will find some very competitive rates available on secured loans, but you do need to do your research first, as this will enable you to pick up on the best deals by comparing different secured loans from different lenders.

You can compare with ease and convenience simply by going online, where you will find a vast array of lenders offering secured loans for homeowners

Alternatively you can use a broker service, where the broker can use established links with a wide range of lenders to determine which lender and loan is going to best suit your needs.

You can use secured loans for all sorts of purposes, and one of the popular uses for these loans is to carry out home improvements such as extensions, conversions, and more.

This can actually further increase the value of your home and could enable you to recoup some or all of the value of the loan through increasing the value of your home by that amount.

http://www.thriftyscot.co.uk/032008/how-secured-loans-can-prove-beneficial.html

New mortgages slump to record low 12/03/2008

Mr Mortgage — Wed, 12 Mar 2008 11:18:00 GMT

By Rosemary Gallagher

Personal Finance Editor Quoted from business.scotsman (link displayed below)

THE number of new home loans fell to a record low in January, on the back of the credit crunch.

Only 50,300 mortgages were taken out by house buyers across the UK in January, the lowest number since the Council of Mortgage Lenders (CML) started its records in 2002. The figure represented a 19 per cent fall from 62,000 in December, and was 34 per cent lower than January last year. The value of mortgages for house purchase declined to £7.8 billion, a 17 per cent fall from £9.4bn in December and 31 per cent from £11.2bn from January 2007.

However, the number of remortgages in January stood at 85,000, a 43 per cent increase from December.

The figures also show that the average first-time buyer had to borrow 3.32 times their income, slightly up from 3.31 in January last year.

Michael Coogan, CML director-general, said: "The wholesale funding markets remain largely closed and mortgage funding still remains constrained.

"This is now having a discernible impact on lending criteria and the ability of first-time buyers to get into the market."

The CML found that first-time buyers were having to take out mortgages for 88 per cent of the property's value, while home movers typically borrowed 70 per cent.

The figures were taken as evidence that first-timers are struggling to save for a deposit, which would enable them to take out a smaller, less expensive mortgage.

Because of increasing house prices in recent years, only 39 per cent of first-time buyers in the UK avoided stamp duty in January. The numbers caught by the tax have increased substantially in the past two years. As recently as January 2006, 53 per cent of first-time buyers escaped stamp duty.

Coogan added: "The Budget presents a perfect opportunity for the government to do what it can to help first-time buyers by raising the stamp duty threshold."

Coogan said he was unconvinced that a proposed kitemark "gold standard" for mortgage securities – a possible proposal in today's Budget – was the solution to the problems in the wholesale funding market.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), said: "The CML data provides clear evidence that the credit crunch is now having a meaningful impact on the availability of finance for home purchases.

"First-time buyers are very much under the cosh in this more hostile environment. While any increase in the stamp duty threshold in today's Budget would provide

borrowers with some assistance, the scaling back of lending activity is likely to limit the extent of any benefit. "

The UK housing market survey for February, published yesterday by RICS, painted a more positive picture for Scotland than the rest of the UK.

The net balance of surveyors reporting price rises north of the Border surged from 7 per cent in January to 25 per cent. RICS said that was a significant jump in the current economic climate, indicating that Scotland still remained the most buoyant market in the UK.

http://business.scotsman.com/personal-finance/New-mortgages-slump-to-record.3867124.jp

Practical Guidelines on Retention Pricing for Mortgage Lenders

Mr Mortgage — Tue, 11 Mar 2008 17:06:00 GMT

Quoted from creditman (link displayed below)

With recent figures from the Council of Mortgage Lenders identifying that 1.4 million loans are due to mature and potentially reset to the standard variable rate (SVR) in 2008 , an unprecedented challenge for the UK mortgage industry lies ahead. The impact of the increased rates is already seeing mortgage payments increase by up to 60% a month for their clients. The burning question for mortgage lenders should be, how to profitably keep hold of these existing customers within their retention pricing strategy bearing in mind the challenging financial climate.

Traditional pricing techniques such as one price fits all, market based, index based, and risk based typically ignore a fundamental component, the consumer’s preferences and overall response to different prices and offers. Profit based pricing solutions provide valuable insights into how different pricing strategies impact customer response and the lender’s portfolio performance.

Nomis Solutions, a leading provider of profit based pricing solutions, enables mortgage lenders to better manage their pricing decisions with a robust and scalable software based platform which is vital in the current financial climate. The Nomis Price Optimiser provides a comprehensive business user focused solution that combines pricing analytics, optimisation and execution into a complete pricing strategy and process.

Lawrence Whittle, Managing Director, UK and Europe, Nomis Solutions confirms: “Working with the top banks and finance companies around the world, we have discovered that the pricing process is one of the most undervalued processes in the industry and better understanding customer response presents significant opportunity for profit and volume improvement in the order of 10-20%.”

The number and value of maturing fixed rate products is estimated to be much higher for the 2007-2009 period than that of previous few years, with almost 75% of borrowers opting for fixed rates, many of whom will not see the benefits of the recent base rate drops announced by the Bank of England.

“To really benefit from price optimisation mortgage lenders need to pay particular attention to how their customers respond to current pricing practices to make more informed product pricing decisions. The first step towards a more insight driven retention strategy is to understand at a detailed level the types of customer segments within your current portfolio and how they are likely to react when their rate resets. Customer segmentation needs to be continually updated to ensure that it is consistent with the most recent market conditions.”

Price optimisation incorporates a process of continuous updates and improvements to ensure that this takes place. The philosophy behind price optimisation is to calculate the trade offs explicitly for different customers segments and, based on that calculation, determine the right action set for each customer segment.

For any lender to obtain the required profit and volume from its retention pricing, it must establish a disciplined process that updates continually over time. Pricing decisions should be based on the best understanding of the profitability and responsiveness of different customer segments. There is no doubt that customer response changes over time thus, the parameters of all the underlying models need to be updated to reflect current reality. These will further change over time as the underlying cost of funds change, as competitors change their rates, and as the housing market changes.

Whittle concludes: “The next few years are going to be critical ones for British mortgage lenders in terms of profitability. There is going to be continued focus on retention and customers are likely to be shopping for the best rates. The mortgage lenders who will thrive in this environment will be those who understand how their different customers will respond to their offers and how to use that information to determine the best action and offer for each customer segment.”

About Nomis Solutions
Nomis Solutions is the recognized leader in Profit-based Pricing for banking and finance. Powered by price optimization technology, Profit-based pricing is an advanced approach that enables executives to strategically use pricing to achieve improved financial results, gain insight into customer preferences, and support compliance. The award-winning Nomis Price Optimizer™ Suite is a set of business solutions that combines pricing analytics, optimization, and execution into a comprehensive pricing strategy and process.

The suite includes specific solutions for auto finance, home equity lending, personal lending, mortgage, and deposits. Each solution delivers quick time-to-benefit, increases profits and market share by 10-20%, and provides valuable insights about how customer preferences impact product and portfolio performance, within a strong compliance framework. Select customers include Abbey, AmeriCredit, Ford Motor Credit Company, GE Money, HBOS plc, Royal Bank of Canada and Washington Mutual Bank. Headquartered in San Bruno, USA, Nomis Solutions has offices in Charlotte, NC and London, United Kingdom. Visit www.nomissolutions.com or contact us at info@nomissolutions.com or 650-588-9800

Nomis Solutions and Nomis Price Optimizer Suite are trademarks or registered trademarks of Nomis Solutions, in the United States and in other countries. Other product and company names herein may be the trademarks of their respective owners.

http://www.creditman.biz/uk/members/news-view.asp?newsviewID=8257&id=1&mylocation=News&chksrc=NNow4251

U.K. Banks Raise Cost of Riskier Mortgages to Most Since 2000

Mr Mortgage — Tue, 11 Mar 2008 14:55:00 GMT

By Jennifer Ryan Quoted from bloomberg (link displayed below)

March 11 (Bloomberg) -- U.K. banks raised the cost of borrowing for homebuyers with the smallest deposits to a seven- year high, declining to pass on two interest-rate cuts by the Bank of England.

The average rate offered by lenders on loans for 95 percent of the price of a property, fixed for 24 months, rose to 6.55 percent, the highest since September 2000, the central bank said today on its Web site. The cost fell for mortgages worth 75 percent of the value of a home.

Banks have been reassessing the credit risk of their loan books after reporting losses and writedowns totaling almost $190 billion stemming from the collapse of the U.S. subprime mortgage market. Today's data suggest that lenders are making it harder for consumers buying their first property, who typically have smaller savings to invest, to afford a home.

``Banks are clearly now engaged in more active risk- pricing,'' George Buckley, chief U.K. economist at Deutsche Bank AG in London, said in a note. ``Riskier borrowers are failing to benefit from the fall in policy rate expectations.''

While the Bank of England cut the benchmark interest rate twice since December to 5.25 percent, banks have been reluctant to pass on the reductions in full. They have also curbed the number of loans on offer, with mortgage approvals in January staying close to the lowest in nine years.

The average rate on a mortgage for 75 percent of the price of a property, fixed for two years, fell to 5.76 percent in February from 5.97 percent the previous month, still less than the quarter-point cut in the benchmark on Feb. 7, the central bank's data showed.

Separate data today show average first-time homebuyers had larger deposits and borrowed smaller loans in proportion to their incomes in January than in December, in another sign that banks are tightening lending standards.

First-time buyers took out mortgages at 88 percent of the property's value and 3.32 times their salary, compared with 90 percent of the price at an income multiple of 3.38 percent the previous month, the Council for Mortgage Lenders said today.

http://www.bloomberg.com/apps/news?pid=20601102&sid=aDr4CpwziB2o&refer=uk

Correspondence on the impact of the credit crunch

Mr Mortgage — Tue, 11 Mar 2008 11:38:00 GMT

11/03/08 Quoted from wsws (link displayed below)

The following letter was sent by a worker in the sub-prime credit industry in Britain

I would like to make some supplementary points to Chris Talbot’s very good article about the impact of the credit crunch on thousands of British workers.

The first point is that the latest rise in house repossessions started to happen before the credit crunch hit Britain. The Council of Mortgage Lenders has warned that more pain is on the way and this is confirmed by a look at the underlying trends.

Historically, mortgage repossessions have risen sharply when the housing market has been dormant for a long while—say over a year—and people who are looking to remortgage their debt to get better rates are unable to do so and have to sell their homes at a discount or have them repossessed. The difference in 2007 was that the market was not dormant, but house prices hit the roof. However, due to the credit crunch many people are being refused loans. The majority of lenders have been withdrawing products and turning down loans, as the article said. The new situation is that millions of people are using their credit cards or taking out unsecured loans to pay their mortgages.

The credit crunch has thrown the spotlight on the growing financial and social misery of many workers and growing sections of the middle class, who in the past could get cheaper loans because of good credit records. For many these days are gone.

This has contributed to personnel debt in Britain reaching £1.3 trillion (an average of £30,000 for every adult in the UK). More than eight million Britons are in serious debt—a quarter of whom are struggling to make their repayments.

According to Inside Housing, “almost one in ten of England’s most marginal homeowners are spending more than three quarters of their income on mortgages. More than 19,000 householders with a disposable income of £1,000 are using all of it to pay off their mortgage. Nearly 400,000 people spend 75 percent of their salary”. In 2007, 24,000 householders were classified as “homeless at home” because of their appalling living conditions—making a total of 143,000 households over the last four years.

The figures are an indictment of a Labour government that has presided over a financial and social disaster for hundreds of thousands of people. At the same time that it has rushed to rescue Northern Rock, pumping billions into the ailing bank the government will be giving sweeping new powers to bailiffs to confiscate possessions repossess houses. Under the new Tribunals, Courts and Enforcement Act, bailiffs will be able to break in to domestic premises and enforce consumer credit card debts which are the subject of a County Court Judgement. At the moment only certain enforcement officers have these powers. In the new bill it is not even clear if the householder has to be in the house for the bailiff to enter

A Ministry of Justice spokesperson tried to downplay the changes, saying that the new powers allowing forcible entry will be used only “as a last resort... in strictly controlled circumstances” and only “once full independent regulation of all private-sector bailiffs has been implemented”. Recently it has come out that, despite the fact that bailiffs remain unregulated, MoJ officials are suggesting that bailiffs be allowed “to use reasonable force, restraint or violence against debtors thwarting the bailiff’s seizure of their goods.”

A report in the Independent (February 17, 2008) revealed that under Labour debt collection has become one of the UK’s fastest-growing industries. It has been “slammed” as “legalised profiteering” by campaigners. County Court Judgments reached nearly 800,000 last year—a “staggering” increase of 48 percent since 2004—and bankruptcy orders “soared from fewer than 20,000 in 1998 to more than 62,000 in 2006.”

According to the Independent debt collection agencies pursue over 20 million cases a year worth £15 billion in total—three times the amount that they dealt with in 2000. The membership of the Credit Services Association, which represents the majority of debt collection agencies, has doubled over the last five years, from 134 in 2002 to 291 in 2007. The majority of this debt originated with high street lenders such as Marks & Spencer, the Co-operative Bank and Lloyds TSB who are desperate to get the large amounts of bad debt off their balance sheets.

Local Authorities are responsible for four million debt collection cases, with debt counsellor Sheila Hardy saying, “Council tax debts are a money-spinner for councils and it is an absolute scandal.”

Another growth area resulting from rising indebtedness is in agencies that manage the sale of repossessed houses. Residential auctioneer Allsops has been involved in selling over 400 repossessed properties in February this year alone, the majority of which belonged to people who have had sub-prime mortgages. The sub-prime lenders have sold the property on to debt agencies that in turn have put them up for auction.

http://www.wsws.org/articles/2008/mar2008/corr-m11.shtml

21% boom in Buy to Let, says UK's largest letting agent Your Move

Mr Mortgage — Mon, 10 Mar 2008 17:27:00 GMT

Monday 10th March 2008 Quoted from introducertoday (link displayed below)

Far from being hit by the Credit Crunch, buy-to-let is booming according to the UK’s largest letting agent, Your Move. The number of leases commencing in January and February 2008 rose 21% compared to 12 months ago. Your Move says not only has the Credit Crunch led to a pronounced rise in tenant demand, but that the trend is set to continue.

Managing director of Your Move estate agents, David Newnes, said: “The start of 2008 has seen considerable growth in the buy-to-let sector. Squeezed credit and volatile mortgage rates have contributed to an increased demand for rental accommodation. First Time Buyers with little or no deposit are finding it virtually impossible to secure high LTV mortgages – the days of 125% mortgage are long gone. But frustrated wannabe First Time Buyers still need a roof over their heads - and buy-to-let is filling the gap. The strong fundamentals are impossible to argue with.”

Your Move has seen a notable increase in the number of people looking to rent in the short term leaving landlords in a strong position to expand their portfolios.
David Newnes, said: “The demand is definitely there. The private rented sector is the out-and-out beneficiary of the liquidity squeeze. Not only do buyers have less access to credit, but those that can get it have been spooked by the negative sentiment surrounding house prices. Landlords are cleaning up.”

http://www.introducertoday.co.uk/News/Story/?storyid=733&title=21%_boom_in_Buy_To_Let%2C_says_UK's_largest_letting_agent_Your_Move&type=news_features

Banks cutting back on lending

Mr Mortgage — Mon, 10 Mar 2008 12:28:00 GMT

Written by Peter March 10, 2008
Quoted from thriftyscot (link displayed below)

The credit crunch has taken its toll in more or less every sector of the financial market over recent months, and the financial turmoil has resulted in a number of changes in the way that many lenders operate.

Inter-bank lending has become increasingly difficult to obtain and expensive to secure for lenders, and this means that the provision of funding is more limited, which in turn means that lenders have had to tighten their lending practices.

According to the Bank of England lending levels started to dwindle during the last few months of 2007, with the credit crunch having swept across the country in the late summer months.

Many consumers and businesses that would have normally found it fairly east to get credit found that they were now left out in the cold.

Those who would have faced some difficulties getting credit in the past quickly found more or less every door closed in their faced when it came to getting finance.

Despite high hopes the bad news is that many are expecting the credit crunch and financial turmoil to continue, at least for now. This has resulted in credit conditions getting tighter, and the fact that lenders are less willing to dole out credit has had a knock on effect on consumer spending, thus affecting the economy as well as affecting consumer confidence.

This is made worse by the fact that consumers are facing higher living costs such as increased petrol prices, higher mortgage repayments, higher energy costs, and rising food costs

One leading economist recently stated: ‘The Bank of England credit conditions survey for the fourth quarter indicated that lending to households had tightened and become more expensive.

Furthermore, the availability of credit for households was expected to diminish further over the first quarter of 2008, which will add to the growing downward pressures on consumer spending.’

Consumers have been finding it increasingly difficult to get all types of credit, from mortgages and home loans to unsecured loans and credit cards. But it is not just consumers that are suffering.

A recent report indicated that over 50% of lenders said that credit facilities to businesses had decreased significantly, and over 35% expected the situation to get worse during the first few months of this year.

The commercial division of Nationwide recently decided to halt lending to new customers as well as deciding not to take on new broker referrals, deciding instead to concentrate on existing borrowers.

An official from the commercial division of the building society said: “I am using market conditions to be very selective about the type of lending we do.

There is an enormous appetite out there for borrowing, half of my competitors have disappeared and a lot of people are looking for finance.” He also said: “We want meaningful relationships with customers and because of this we feel this is the time to stand by our existing customers rather than take on new customers.”

Another buy to let lender, Paragon, also recently said that it would have to cut back on lending to new customers, and would need to focus on existing customers at least until the money markets loosened up.

In the meantime recent months have seen the level of credit card rejections rise, the level of approved mortgages fall, and there have been many different indicators of tightening credit conditions facing both consumers and businesses across the UK.

With interest rates due to come down over the coming months many homeowner may be flocking to try and refinance their mortgages, but this may prove more difficult than they imagine, as a result of the current financial climate.

It is thought that some lenders will now be focusing on consumers with very good credit histories in order to keep the credit markets afloat, which means that many lenders may be flocking to lend to those with no debt, some savings put aside, and no repayment problems with bills and past debts.

However, when it comes to those with damaged credit – which is a group that has been rising in size over recent years – lenders will most likely be steering clear.

A number of lenders have taken some of their unsecured loans off the market altogether simply because they cannot afford to take the risk of defaults when the finance is not secured against anything that therefore they have no way of recouping the loss.

Of course, there are still loans and credit available but these days it is likely to be a far longer, harder process to get affordable finance as the credit boom comes to an end.

http://www.thriftyscot.co.uk/032008/banks-cutting-back-on-lending.html

Trustguard offers 90% self-cert range from Kensington

Mr Mortgage — Mon, 10 Mar 2008 12:16:00 GMT

10-Mar-2008 Quoted from mortgagestrategy (link displayed below)

Trustguard is offering a 90% LTV self-cert range funded by Kensington.

Rates range from Bank base rate plus 1.69% for a two-year self-cert tracker. The no-overhang range is available to prime first-time-buyers, the employed and self-employed and is for purchase and remortgage.

In addition to a two-year tracker, there is also the option of either a two-year fixed at 6.99% or a three-year fixed at 6.89%. The early repayment charge is 5% of the redeemed amount during the fixed or tracker period.

A completion fee of £1,999 can be added to the loan above the maximum LTV. There is no higher lending charge and the maximum loan size is £500,000.

Overpayments of up to 10% are allowed per year. Applicants should have no County Court judgements within the last three years, no arrears during the past 12 months and no defaults in the previous three years. They should also have no individual voluntary arrangements and must never have been a bankrupt. The reversion rate is BBR +2%.

Sian Brown, national sales manager at Trustguard, says: “There is a gigantic hole in the market where 90% LTV self-cert products used to be.

"Lenders have pulled out of this area in a big way leaving thousands of brokers’ clients high and dry. You can virtually count the competitive products on the fingers of one hand. This range is going to help a lot of brokers place their applications.”

http://www.mortgagestrategy.co.uk/cgi-bin/item.cgi?id=160667&d=403&h=401&f=402

Credit crunch hits UK buy-to-let sector

Mr Mortgage — Thu, 06 Mar 2008 11:27:00 GMT

Thursday March 6 2008
By Jennifer Hill Quoted from the Guardian (link displayed below)

LONDON, March 6 (Reuters) - Liquidity woes are starting to hit British buy-to-let property investors, as the availability of mortgage debt shrinks, a survey shows.

Instructions to let residential properties fell in the fourth quarter of 2007 -- the first decline since the Royal Institution of Chartered Surveyors (RICS) started its survey in 1998 -- as lenders tighten their criteria and the range of mortgage products narrows.

Mortgage hunters are facing increasingly tough times as the market shrinks and lenders re-assess risk in the wake of the credit crunch.

Cheap products have been pulled and rates on remaining ones hiked, maximum loan-to-values cut and lending criteria tightened, making it harder for people, especially those with a poor credit rating, to obtain a home loan.

However, the RICS survey also showed that demand for rental properties has continued to grow, and yields remain on an upward trend.
A total 16 percent more chartered surveyors reported a rise than a fall in tenant lettings, down from 20 percent in the last quarter.

Demand for family homes remains stronger than for flats due to an oversupply of new build properties, the data shows.

At the same time, gross yields in the three months to end-December increased at their fastest pace since the third quarter of 2005, a factor that might have helped to curb a sell-off.

The percentage of landlords selling their properties when tenant leases expire fell to 4.6 percent from 6.5 percent.

Barry Hall, a spokesman for RICS, said: "While banks remain cautious about offering loans, demand for rental property will continue to increase with many would-be-buyers unable to make the jump to home ownership.

"Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents, but new investors are struggling to get the necessary finance to enjoy this buoyant sector."

He said some small-time landlords might, however, desert the market following a cut in capital gains tax at the start of the new tax year on April 6. (Editing by Jeremy Lovell, editing by David Christian-Edwards)

http://www.guardian.co.uk/feedarticle?id=7361453

Mortgage crisis set to create new generation of savers

Mr Mortgage — Mon, 03 Mar 2008 17:51:00 GMT

Monday, 03 Mar 2008 (www.myfinances.co.uk)

Mortgage-lenders' reluctance to provide high-value loans to borrowers will see the UK revert to the old-fashioned culture of saving, experts predict.

Adverse credit conditions have prompted lenders to pull in their belts when it comes to helping riskier borrowers to remortgage or get a home loan.

Scores of banks and building societies have ditched products which provide loans equal to or more than the value of a property which has made it harder for people with no deposits to get buy a home.

Katie Tucker, technical manager of mortgage broker John Charcol, thinks tougher conditions will encourage people to save more money for deposits instead of relying on "easy-money" which mortgage firms have been happy to supply up until recently.

Nationwide recently announced it was raising the interest rate on mortgages with a 75 per cent loan-to-value (LTV) by 0.20 per cent.

Stuart Bernau, the firm's retail director, speaking to BBC Radio 4's Moneybox programme, said it had made the move because the cost of funding for banks and building societies had gone up, house prices were more neutral and so there was more risk.

"We don't like to try and make it more difficult for people to get on to the housing ladder," he told the show.

"But you're seeing a housing market at the moment where demand has gone right down, and we believe that we have to pay the price the extra risk that people who want to borrow a higher percentage actually have for the society."

Now Ms Tucker has predicted the moves by Nationwide and other lenders will mark a return to our parents' generation's philosophy of painstakingly putting money aside each month.

"It will have a knock-on effect for the whole economy as it takes spending money for those age groups out of the retail system."

http://www.myfinances.co.uk/news/mortgages/mortgage-advice-uk/mortgage-crisis-set-create-new-generation-savers-$1209011.htm

Over half of UK repossessions in sub-prime sector

Mr Mortgage — Mon, 03 Mar 2008 11:50:00 GMT

March 3, 2008 (www.thriftyscot.co.uk)

According to a recent report over half of repossession order that are brought in the UK come from sub-prime lenders, who are lenders that specialise in giving credit to those with bad credit or no proof of income.

Sub-prime lenders have come under fire in the past because of the high rates of interest that they charge on loans to consumers that already have financial problems.

A spokesperson from one sub-prime lender said: “It should come as no surprise that those lenders dealing with borrowers with past credit problems are likely to have to deal with more cases of default amongst their borrowers. Comparing lenders like GMAC-RFC with high street lenders is a bit like comparing apples and pears.”

However, the lenders are quick to point out that not all of the orders actually result in repossession, with one sub-prime official stating: “The figures are based on possession claims hearings and are therefore not representative of actual repossessions, which are a lot lower. Of proceedings started, where solicitors become involved, five out of six are resolved without having recourse to repossession.”

In a recent study of twelve hundred recent orders that went through the courts it was found that 10% of these were brought by two sub-prime lenders, GE Money and GMAC-RFC.

http://www.thriftyscot.co.uk/032008/over-half-of-uk-repossessions-in-sub-prime-sector.html

Credit Crunch Bites Borrowers

Mr Mortgage — Fri, 29 Feb 2008 11:44:00 GMT

29/02/2008 myvesta.org.uk

Higher Deposits Required For Home Loans

More UK banks are being forced to tighten their belts following the fallout from bad investing in the US subprime mortgage market and fear that lax lending standards could have brought problems elsewhere – including the UK. The warning came as Bank of England figures showed the number of new mortgages being approved had fallen to the lowest level since records began in 1999.

This means the relatively easy credit of the past five years is drying up and borrowers are being scrutinized much more closely. First-time buyers and overstretched borrowers have been warned easy financing has ended as lenders adopt a cautious approach and slash the availability of 100% loans

The credit crunch in the US and UK has made it harder for banks to find the money to lend. Because there is less money available, there is more competition from borrowers - and less need for lenders to offer cut-price deals.

The cutbacks are hitting first-time buyers and could lead to rate shocks for those with high percentage mortgages compared to their property value who will struggle to remortgage at the end of initial deal periods. Homeowners with these loans rely on being able to take out a new deal when the current one ends to avoid seeing monthly payments rise sharply.

Over recent months a number of mortgage lenders have begun to only offer top deals to those with lower loan to value ratios. The ‘loan to value’ ratio is ratio between the size of the loan you are seeking and the mortgage lender’s valuation of the property. So if you’re borrowing £55,000 on a property valued at £100,000, the LTV is 55% and the lender will feel comfortable you have enough equity in the property for it to be reassured if you stopped making your interest/capital repayments, it could sell your property and recoup the money you owe.

The new-found prudence among mortgage lenders follows a flood of easy-money mortgages over recent years, as banks and building societies loosened borrowing criteria.

Financial information specialist Moneyfacts says 10 lenders out of the 32 that offered them have stopped selling 100% loan-to-value mortgages typically targeted at first time buyers since June 2007. Meanwhile, 11 lenders have reduced their maximum borrowing since December.

The impact of a lender increasing their loan deposit requirement from 5% to 10% means that a first-time buyer would need £13,000 to purchase a £130,000 property rather than £6,500 previously.

Tougher borrowing rules have contributed to the cooling of the property market, by hampering the chances of first-time buyers purchasing a home without a deposit.

It is not hard to understand why this pattern has emerged. With mounting evidence that housing prices are cooling, combined with the increasing number of borrowers facing debt problems, it is not welcome news for those consumers with only a small amount of equity.

This more cautious approach by lenders starting to reduce their exposure to property price fluctuations shows they have a real concern over the future of the UK housing market. A case of negative equity (you are in negative equity if your property is worth less than the amount you still owe to your mortgage lender) is bad news for both the borrower and the lender.

Should this conservative approach continue, borrowers who come to the end of a deal but find themselves still borrowing at a high loan-to-value ratio could find the choice of deals limited, or may be forced to pay a much higher price.

http://myvesta.org.uk/articles/articles/4069/1/Credit-Crunch-Bites-Borrowers/Page1.html

Bad Credit Loans: Have Without Being Halved

Mr Mortgage — Wed, 27 Feb 2008 12:21:00 GMT

February 27, 2008 9 www.bestsyndication.com

Financial stability is the core value of smooth family and personal life. When you can give justice to your desires, you are a content man. When you present a beautiful teddy to your cute angel on her birthday, the scene is memorable for ever. The vacation, you both spent together on the bank of natural serenity is nothing but the strength of your intimate inseparable relation. The weekend with favorites is not only confined to socializing, it’s a never-ending bond called friendship. For all this you need money. Life without all these is nothing but a cold desert where emotions are on their long exile. Even the deadliest advocate of non-materialism will be disinclined to admit the importance of money in human life.

Bad credit is such a carcinogenic situation, where all gates of opportunity seem to be closed. You cannot do anything even if you have the complete awareness that your desires and needs exceed your present income. The loan you have taken has not been paid and there is bad credit, CCJs, arrears and misanthropic phone calls from the previous lenders. In such case what should you do? Are you thinking of filing suits for bankruptcy? It will only aggravate your miseries. By filing it, you will showcase your credit unworthiness. As a result, you will be debarred from other loan options for the next couple of years. Bankruptcy is never a solution, but a problem itself. The best option for you in such case is the bad credit loans. These loans will add to your financial stability and reinstate happiness in your life.

The amount borrowed under Bad credit personal loans can be conferred on any needs you wish. Lenders are not bothered about your way of spending. If you want a larger amount, you can pledge you residential property and get up to 250,000 pounds.

As your needs are urgent, it is better to apply for online bad credit loans. This will not only save time, but also help you to find a lender at competitive rate of interest. After getting a loan, you should try to maintain the regularity of repayment. The regularity will increase the longevity of your happiness.

http://www.bestsyndication.com/?q=20080227_mortgage_loans_for_people_with_bad_credit.htm

Remortgaging props up lending market

Mr Mortgage — Mon, 25 Feb 2008 17:43:00 GMT

Monday February 25 2008 www.guardian.co.uk

Approvals for remortgages made up a record 49% of home loans offered by banks in January, as total mortgage lending recovered slightly after a quiet end to last year, figures showed today.

The value of mortgages approved rose from £17.3bn in December to £19.6bn in January - a figure in excess of the previous six-month average of £18.1bn, the British Bankers' Association said.

The value of loans approved for house purchases rose to £7.2bn, with the number of loans up from a record low of 42,343 in December to 44,288.

However, this was still among the lowest monthly figures on record and down 31.3% on the figure for January 2007, suggesting potential buyers are still being deterred by an unsteady housing market and stricter lending criteria.

The BBA said remortgage activity propped up the market as borrowers coming off competitive fixed-term deals looked around to secure another good rate.

Over the month, 79,016 borrowers had new mortgages approved - up 39% on the same period last year

The BBA's statistics director, David Dooks, said: "Although house prices and new loans for house purchases appear to be subdued as the housing market slows, the strength of remortgaging would suggest competition for mortgage business and switching remains high."

The value of mortgages advanced to borrowers was also up over the month, from £15.5bn in December to £18bn.

However, this was roughly in line with the previous six-month average of £17.8bn, and 4.7% down on the figure in January last year.

Howard Archer, chief UK economist at Global Insight, said the rise in mortgage approvals did "little to dilute the impression that housing market activity remains muted and continues to be pressurised substantially by both stretched affordability and tightening lending practices."

Last week, the Council of Mortgage Lenders said it expected the mortgage market to remain subdued for some months to come, as the impact of the credit crunch reduced the amount of money available to borrowers

Lenders have already withdrawn mortgages of more than 100% of a properties purchase price, and today Nationwide building society said it would charge borrowers more if they had less than 25% of the value of a property to put down as a deposit.

Meanwhile, consumer credit also remained subdued, the BBA said, with annual growth in the amount borrowed on credit cards reaching 6.2%.

Spending of £7.3bn on credit was, however, outstripped by £7.6bn of repayments.

The amount borrowed through overdrafts fell slightly, but the outstanding debt remained around the two-year average of £10bn, while the value of personal loans taken out was 6.5% down on last January's figure at £2.6bn.

Dooks said: "Despite strong volumes of retail sales, card transaction volumes were little changed and spending was more than offset by repayments. Overall, consumer credit remained subdued."

http://www.guardian.co.uk/money/2008/feb/25/lendingfigures.mortgages

UK property market stabilising

Mr Mortgage — Mon, 25 Feb 2008 17:36:00 GMT

Feb 25, 2008

The property market showed signs of stabilising last month after figures revealed a surprise increase in January house purchase mortgage approvals and a hike in remortgaging activity.

The British Bankers' Association (BBA) said the number of mortgages approved for people buying a home by the major banks rose to 44,288 last month - higher than expected by analysts and an improvement on the record low seen in December.

The number of remortgage approvals also rose to 79,016, up 17% on December and up 39% year-on-year as a raft of borrowers came off two and three year fixed rate deals, according to the BBA.

Remortgaging activity hit its highest monthly share of all mortgage approvals since the BBA began collecting data in 1997, at 49%.

A total of £18 billion was advanced to consumers during the month, up from £15.5 billion in December, although the figure was down 4.7% on a year earlier.

"The rise provides some tentative signs that we may be close to the bottom of the current slowing in house purchase activity," he said. But he warned there could be further gloom for the housing market.

Figures from property information group Hometrack also showed that house prices fell for a fifth month in a row during February, suggesting that activity is still slowing.

Mr Monks said: "With credit conditions likely to continue tightening and the growing expectation that house prices will fall this year, we would still expect to see some further declines in house purchase activity looking forward.

Underlying mortgage lending rose to £5.2 billion in January from £4.9 billion in December, up 13% year-on-year, thanks in part to the remortgaging boost.

http://ukpress.google.com/article/ALeqM5hws6wP1B1a1cnshrfZDJj2sWCjVQ

Paaleads offers ‘unbundled’ mortgage leads

Mr Mortgage — Wed, 13 Feb 2008 18:00:00 GMT

Wednesday 13th February 2008

By John Bakie

The firm is withdrawing its bundled lead subscription model in favour of providing purchase and remortgage leads separately.

Paaleads.com will offer brokers the chance to subscribe to specific mortgage lead types, including purchase, remortgage, adverse purchase and adverse remortgage.

Simon Williams, head of business development at Paaleads.com, comments: “The changes to the system reflect our continued commitment to listening and responding to our brokers’ requirements. Many have specialist business needs only geared to a certain type of consumer. Splitting the products out into specific lead types, gives them more freedom of choice.”

Paaleads.com says it expects the change to be popular with brokers who will want to ensure they only receive leads relevant to their business.

Brokers who are happy with the leads they currently receive will not need to take any action and will continue to receive leads of all types.

http://www.ifaonline.co.uk/public/showPage.html?page=701288

Any-BuyToLet.com - resource centre for portfolio owners

Mr Mortgage — Sun, 15 Apr 2007 11:45:00 GMT

Looking to get in to the buy to let rat race?
Take a look at this site (I think its associated with ChaseUkCorpltd.com) a resource centre focusing on the most important factors when looking to buy a property to rent out. There's a wealth of resources and in particular a buy to let calculator, something I've not seen before. Relatively new, but hopefully if they keep it up to date it might help any porfolio holders save time.

Any BuyToLet.com

Majority of brokers not worried about 5 times income mortgages

Mr Mortgage — Mon, 13 Nov 2006 13:00:00 GMT

Yesterday - mortgage strategy released results of their monthly poll showing that 63% of brokers say 5 x income mortgage products are not a recipe for disaster.

Abbey last week received widespread criticism following the stretching of its income multiples to 5 x despite many within the mortgage industry stating that lenders had been stretching to similar levels for some time.

Source - Mortage Strategy - www.mortgagestrategy.co.uk

Wages Vs Interest Rate Rises

Mr Mortgage — Sat, 11 Nov 2006 15:52:00 GMT

There are two things have helped keep wages and prices in check.

Increasing immigration from Eastern Europe could have the effect of lowering inflationary pressures on wages despite relatively high employment rates.

Add this to cheap prices on imported goods, particularly from China and the other new markets, have kept the lid on High-Street prices despite the strong demand.

Both of these factors may have less significance in the future, if the rate of immigration slows, as the government wants, and if the new markets are forced to revalue its currencies and raise the price of its exports.

The Government may want a slow down on immigration, but is yet to slow down the current levels. This is without the impending inclusion of new members of the EU.

The Bank of England believes that, in the current uncertain world, it is better to err on the side of caution and raise interest rates. This it believes is preferable than embed inflation in the system, where it is extremely hard to get rid of later.

With Interest Rates potentially rising, whilst the projected surplus in the workforce, keeping wages at the current levels, there may be an uncertain future ahead.

Simon Robins is the Compliance Director for Chase UK Corporation Ltd