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Archive for August, 2007

Mortgage Crisis Looming?

Friday, August 31st, 2007

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.

Posted in Banking, Borrowing, Consumer Credit, Consumer debt, Debt management, Financial news, Financial products, First time buyers, Homeowner Loans, Homeowners, House buying, Housing news, Inflation, interest rates, mortgages, Property, UK Finance | No Comments »

House Price Rises

Friday, August 31st, 2007

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.

Posted in Borrowing, Consumer Credit, Consumer debt, Debt management, Financial news, Financial products, First time buyers, Homeowner Loans, Homeowners, House buying, Housing news, Inflation, interest rates, Personal debt, Property, Spending, UK Finance | No Comments »

Mortgage Exit Fees

Thursday, August 30th, 2007

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.

Posted in Banking, Borrowing, Consumer Credit, Debt management, Financial news, Financial products, Homeowner Loans, Homeowners, House buying, Housing news, interest rates, mortgages, Property, Remortgaging, Secured loans, UK Finance | No Comments »

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