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Fri 31st Aug, 2007
Posted in Consumer Credit, Homeowner Loans, Banking, UK Finance, interest rates, mortgages, Consumer debt, Inflation, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Debt management at 1:19 pm by admin
The international community is watching as the UK balances on the brink of a mortgage crisis in the coming years. Mortgage payment arrears are increasing sharply as 18 million homeowners struggle under the burden of the fifth interest rate increase in less than a year.
This is compounded by the high-risk mortgage products the banks have been offering, and the fact that banks are offering home loans at five and six times people’s annual income.
The Council of Mortgage Lenders (CML) Michael Coogan said: “The record number of borrowers who are now paying stamp duty makes a difficult situation even worse, despite the financial windfall to the Treasury. This needs to be addressed urgently.”
First-time buyer income reached its highest level ever in May at 3.37 times the first-time buyer’s income. This is up from 3.33 times in April. Mortgage interest payments have hit 19.1 percent, their highest level since 1992.
CML expects 18,000 repossessions in 2007, one thousand more than 2006. Almost 77,000 home loan repayments are missed every month in the UK, according to MoneyExpert.com website,
The world is watching the housing boom with interest. While it has make the UK one of the world’s investment hotspots, and is turning it into a global community, it is creating a problem for residents.
The average property price in the UK has trebled to breach the 200,000 pound level, since Labour Party came into power in 1997.
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Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, Consumer debt, Inflation, Homeowners, House buying, Financial products, First time buyers, Spending, Property, Financial news, Housing news, Borrowing, Personal debt, Debt management at 1:14 pm by admin
According to two of the country’s largest home loan lenders, house prices will only rise by six percent this year. Halifax and Nationwide have announced that they expect the house price growth to slow between now and the end of December.
Because of the recent interest rate rises lenders are starting to see the effects that it is having on customers and are predicting the house price growth to slowly come to a halt especially if the Bank of England continues to rise the interest rates. Although the house price growth was still going strong in the early months of this year, the hikes in interest rates have made some effect, as there are now signs that the housing market is slowing. The slow growth in the housing market is expected to continue with the house price inflation easing up over the second half of this year.
If the house prices at the end of 2007 are just six percent higher than they started at in the beginning of the year, then this year will see one of the smallest increase in house prices since 1995. It will also be the below the long-term average of an eight percent growth a year. Nationwide is predicting the house price growth to fall from eleven percent to around five to eight percent. The house price growth is believed to have slowed due to the interest rate increases as well as the rising food prices and the lack of earnings growth, which in effect has caused many first-time buyers to find it almost impossible to find a foothold on the property ladder.
Debt charities are bracing themselves for another wave of enquiries from consumers at the end of the quarter when more fixed rate mortgages come to an end. This year has already seen a surge in the number of people defaulting on loans and other credit agreements due to an inability to meet repayments.
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Thu 30th Aug, 2007
Posted in Consumer Credit, Homeowner Loans, Banking, UK Finance, interest rates, mortgages, Remortgaging, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing, Secured loans, Debt management at 1:58 pm by admin
Many consumers are unaware of their home loan exit fees. When asked, they rarely know how much they will be forced to pay for the privilege of closing their mortgage. Many do not know if this is a fixed rate, or if it will be reduced as they remain with their mortgage lender. In many cases, the closing fees are so high, it is impossible to switch mortgages to take advantage of lower rates, or lower monthly payments, offered by another lender.
Mortgage lenders recently agreed to fix mortgage exit fees or dispose of the unnecessary fee, according to Britain’s financial watchdog The Financial Services Authority (FSA).
The FSA asked lenders to stop increasing exit fees after a borrower signed up to a new cheap loan deal, a practice that forced some borrowers to pay higher charges than in the original agreement.
A few lenders did discontinue their closing fee policy, but the FSA believes that a most will continue to vary the fees, or bury them in other fees the client incurs when they repay a homeowner loan early.
Some are concerned that this will have the same effect as the unwarranted overdraft fees, resulting in thousands of homeowners requesting a refund on what they consider “unfair” exit fees.
Independent mortgage broker John Charcol said that 10 million mortgages are effected by “excessive” increases in exit fees four years ago. Homeowners may collectively be entitled to claim compensation up to 100 million pounds ($202 million) in total. This will be a hard blow on banks who are already reeling from record bad debts and refunds on excessive charging.
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Posted in Consumer Credit, Personal loans, Banking, UK Finance, interest rates, Savings, Financial products, Financial news, Borrowing, Secured loans at 1:56 pm by admin
No matter who you are, when it comes to your personal finances, so much depends on the deals that you get from your bank. With just a few big high street banks out there dominating the market, you should really pay attention to the deals that they are offering you on your financial services.
A new report by the Daily Mail shows that most of the high street banks have some excellent deals out there on some of their products, they also have some really terrible deals that will be offering customers terrible value for money and will not be very good financial choices.
Whether you are looking for a personal loan, paying off your credit cards and looking for a better rate while you do so, or simply like to save a few pounds each month for rainy day, by carefully selecting what you say yes to and what you say no to, you will be able to take the good while avoiding the bad deals that are available from the banks.
For example, while the Abbey is paying 7.25% pre-tax on its fixed rate monthly saver account - an excellent rate in the current market - it recently reduced the rate that it pays on its instant access Isa at the end of May from 5.6% to 4.55% and 5.25%. This is a huge difference on what you will be paid from the same institution.
Meanwhile, other lenders are focusing their advertising on the great rates they are offering on loans and mortgages, whilst putting the high arrangement fees in the fine print.
It pays to look closely at what your bank is offering and not assume the your own bank offers exactly the same products as the others. It is fine to shop around. It is virtually certain that some of the offers they give you will be great, and some will be terrible, so read them, be a discerning consumer, and choose the options that suit your needs.
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Wed 29th Aug, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, mortgages, Consumer debt, Student debt, Homeowners, House buying, Financial products, First time buyers, Spending, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management at 12:53 pm by admin
Two million people will borrow mortgages that total four times their salaries to get on the property ladder, according to a survey of 2,200 adults, by mform.co.uk. They believe that 2 million individuals aged 34 or under will borrow four times their salaries.
Another 828,000 recipients will borrow over five times their income, while 290,000 will borrow over six times.
Francis Ghiloni, of mform.co.uk, says this is not good for some
“Around 36% of people aged 24 or under who intend to take out a mortgage over the next three years claim that they have will to borrow more than four times their salary,” he says.
“As property prices continue to rise and wage inflation fails to keep in line with this, many young people looking to get on to the property ladder will have to take on huge debt.
“Many will have interest only mortgages because they will not be able to afford to repay the capital they have borrowed, and they will be heavily exposed to any falls in property prices and increases in interest rates.”
That 56% of these home loan borrowers will be aged 34 or under compounds the younger generation’s debt burden, making it harder for them to pay their debts. Many of these will have students loans and other debts outstanding when they purchase their property.
This will become even more dangerous in the future as these people release equity from their home, increasing their risk rate, and the interest rates paid on subsequent mortgages.
Consumers are warned to carefully research their financial products before signing on the dotted line, especially on products that reduce their chances of borrowing in the future.
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Posted in Consumer Credit, Homeowner Loans, UK Finance, Homeowners, House buying, Property, Borrowing at 12:48 pm by admin
With the recent weather that Britain has been experiencing it comes as to no surprise that many UK residents are now flying abroad to enjoy warmer, sunnier weather for their holidays. Many holidaymakers who spend their holidays at a warm country often end up dreaming of a permanent spot in the sun and start searching for a property abroad. However, before making an impulsive buy it is important that you prepare yourself before making such a big financial decision.
Many prospective buyers for overseas properties are advised to apply the same checks to buying property abroad as they would if they were purchasing property at home. One important way of preparing yourself for your new purchase is to find out about the local laws as well as any taxes that may affect your purchase. One way to arm yourself is by obtaining legal advise from a bilingual solicitor who will check all documents and pay particular attention to the permission for building works and contracts that may be done on your property. You will also want to make sure that you will be eligible for a mortgage or be able to finance a purchase.
One of the main reasons why overseas buyers experience problems with holiday home purchases is due to the lack of research as well as their inability to hire the right legal advise or estate agent. So before heading out and purchasing your holiday home it is advised that you fully investigate the legal and planning situations in the local area and ensure you have the proper funding available to you. You may find that it is not possible to use a UK home loan to fund your property purchase but instead need to take out a loan abroad. This can have additional legal implications for buyers, increasing the need for local knowledge.
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Mon 13th Aug, 2007
Posted in Consumer Credit, Personal loans, UK Finance, mortgages, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Secured loans at 12:54 pm by admin
Prime Minister Gordon Brown has said that the government will consult on a new regime for covered bonds to assist mortgage lenders finance affordable 20-25 year fixed-rate mortgages. The objective is to make it easier for people to afford mortgages.
Chancellor Alistair Darling MP will report in spring next year ‘on how to overcome any barriers preventing lenders from offering people long-term mortgages’. It will include changes to the Debt Management Office.
The government is making it easier and less risky for UK consumers to afford personal loans and mortgage products.
Covered bonds are corporate bonds issued by credit institutions and secured against collateral, typically mortgages and public sector loans.
‘Credit institutions are already able to issue covered bonds in the UK, and are doing so. However, not as many bonds have been issued in the UK as elsewhere in the EU,’ the Treasury said in a statement.
‘The proposed legislation will mean that issuers can take advantage of the special status accorded to covered bonds under EU law, and adjust the risk weightings accordingly. This should help issuers to access the large EU market in covered bonds and issue more bonds. It will also help them match borrowing and lending over the longer term.’
Brown said this policy will ally to a house building programme that will increase the number of new home constructed annually from 200,000 to 240,000 by 2016.
The project is designed to keep the percentage of homeowners vs renters in the UK the highest in Europe, and, to put first time homeowners in homes.
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Posted in Bad Credit, Consumer Credit, Banking, UK Finance, interest rates, Consumer debt, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Bank charges, Debt management, Overdrafts at 12:08 pm by admin
According to a new study by Credit Suisse, Britain’s banks have paid back an estimated £200 million to customers who have reclaimed unfair bank charges. Many banks have been hit hard as several customers have lashed back against heavy charges that banks have charged them, such as fees for going overdrawn without permission and charging customers penalty fees. Some of the big banks have taken on extra staff to deal with the claims made by customers who have demanded reimbursements for unfair charges made by the banks. It is estimated that there are around 500 claims made each day at some banks, however as of today there have been no rulings which will clarify the situation. Big banks such as Barclay and HBOS have acknowledged that the charges have made a huge effect and are eating heavily into their profits. HBOS has even claimed that charges can cost the bank as much as £50 million, which will have to come off their retail banking profit.
There have been a large number of successful customers who have reclaimed thousands of pounds in penalty charges claiming that the charges were unfair under the consumer contract law that states that the amount charged must reflect the cost that the bank incurs, however many banks are charging much more than the costs incurred and making a profit from customer errors. Typically banks would charge customers £35 for overdrawing without permission, but it was revealed that the real cost to the bank was in fact only £2 to £5. Banks argue that the charges were not penalties but charges for services and when asked what the real cost of these penalties were many banks backed down and paid out claims.
Some clients claim that once their bank account was overdrawn, the successive bank charges mounted so heavily that they were forced by the bank to take out bad debt loans. These loans were at the high interest rates chosen by the bank, leaving the customer further in debt.
However, whilst the reclaiming of unlawful charges can be considered a victory by bank customers, in reality the free banking world is now probably over for all customers, even those who never went overdrawn. Banks will be looking to recoup their losses and make up their revenue in new ways. Economists are anticipating the end of free banking, with banks likely to charge all customers, good and bad alike.
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Thu 9th Aug, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, mortgages, Remortgaging, Consumer debt, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management, Missed payments, House repossession at 12:23 pm by admin
Thousands of homebuyers with credit problems take out mortgages using the sub-prime or ‘bad debt‘ mortgage industry. This industry should be regulated, to work in the consumer’s benefit. However, the UK sub-prime industry is as volatile as the US industry was.
Last year, the US sub-prime industry crashed, taking 70 large lending corporations with it. Many fear that the UK will suffer the same fate if the government does not step in and make the sub-prime lenders follow tighter regulations.
Many of the UK’s brokers let people borrow large loans from mortgage lenders and brokers without verifying their income and debt levels, according to an investigation The Financial Services Authority.
Many other watchdogs have echoed this information, some stating that they tried to alert the government to these problems several months ago. In fact, the FSA reported some of the same lending brokers two years ago.
Lenders offer special mortgages without making checks on the customer’s consumer credit information, their income, or their debts. In fact, many consumers are now using illegal forged pay slips to qualify for mortgages.
The watchdog said that mortgage brokers and advisers in the fast-growing bad debt sector are unable to prove whether a mortgage is a suitable product for customers with irregular or low incomes.
As a result the FSA has already started to take action against five firms of intermediaries that fail basic checks on record keeping and advice.
Billions of dollars of loans to US homebuyers are now worth a fraction of their face value, prompting fears that buoyant credit markets in the US and Europe face a downturn and losses which will total £250bn.
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Posted in Bad Credit, Consumer Credit, Personal loans, Banking, UK Finance, interest rates, Consumer debt, Student debt, Inflation, Homeowners, Property, Financial news, Borrowing, Personal debt, Secured loans, Debt management at 12:14 pm by admin
The financial community is always buzzing after the Bank of England’s monetary committee increases the interest rates. The analysts fall into two categories, those pro the move and those against. Most of the watchdogs belong to the ‘against’ category, claiming that the burden to societies’ vulnerable - the elderly, single parents, and low income categories - is far too high a price to pay to keep the cost of living down for the rich manufacturing industries.
However, many economists cite this as a necessary evil, claiming that the economy needs to follow international trends to keep the standard of living high.
The UK has enjoyed a decade of growth and strength on the global market. Some analysts believe that the economy is simply rebalancing. Others believe that the UK economy, and its unique form of capitalism, cannot be forced into standard patterns.
This view is echoed by economists who point to the fact that 50% of the country can repay their loans – excluding mortgages - within a year. The UK holds more personal debt than other European countries. However, much of the personal loan debt held in the UK is secured against property.
While there are dozens of factors that can be quoted for this anomaly, it has become a standard some economists are using to prove the Bank of England is acting irrationally when it repeatedly increases the base rate, especially as the preceding four increases did little to lower the inflation rate, but have done substantial damage to the average consumer’s budget.
As commentators express worries about future profit warnings from lenders, rising mortgage default rates, and increasing debt levels among students, many economists expect the Monetary Policy Committee (MPC) to halt rates until members can assess the impact of previous rate rises.
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