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Archive for February, 2008

Fixed-rate borrowers warned to be ready for a shock

Wednesday, February 27th, 2008

Thousands of Britons have been warned to prepare for a shock as they face crippling mortgage repayments as a result of the global credit crunch which has been affecting the financial markets.

Some people on fixed rate mortgages could be facing repayment surges of up to 60% as the terms of their fixed rate mortgages come to an end in the coming months. This could result in the number of repossessions ballooning as there are more than two million homeowners who are facing the prospect of their cheap fixed rate deal coming to an end over the next 18 months.

Many of our banks have begun to tighten up on their lending criteria as a result of the credit crunch which finds its roots the US’s sub-prime sector, responsible for organising bad credit loans. The credit crunch was also responsible for the downfall of Britain’s fifth largest lender Northern Rock in September.

Almost everyone who is going to be coming off a fixed rate mortgage deal will be likely to have to pay more even if they do manage to get a new fixed rate deal it will not be as affordable as the one that will have just ended.

However those at biggest risk of facing massive increases in home loan repayments is anyone who has a black mark on their credit rating. Lenders have tightened up lending criteria considerable and are less likely to take on risk. As a result thousands of Britons are going to be forced to switch to their lenders standard variable rate once their fixed rate deal comes to an end. The standard variable rate can cost as much as 2.5% more than the fixed rate deal they are currently on.

Posted in Bad Credit, Borrowing, Consumer Credit, Consumer debt, Financial news, Financial products, Homeowner Loans, Homeowners, Housing news, interest rates, mortgages, Property, Remortgaging, Secured loans, UK Finance | No Comments »

Three-fold increase in number of £1m-plus houses

Tuesday, February 26th, 2008

Although there is lots of speculation out there that the property boom is finally coming to an end and we may even be heading for a crash its legacy will live on for a very long time. A new report released recently has shown that the number of properties on the market that are valued in excess of £1m has more than trebled in the past five years.

The report released by the Halifax estate agents shows that in June 2002 there were 2,250 sales of properties that exceeded £1m. However that figure has drastically increased in recent years and figures for June 2007 showed that almost 6,200 homes were sold for more that £1m.

The massive boom in the market has sent house prices soaring and it is estimated that there are more than 88,000 houses worth more than a million. This is in stark contrast with only 33,000 just five years ago and shows just how big of an impact the housing boom has really had.

The house price boom has helped increase the number of people who are now worth more than £1m but it has also had its downside. More and more people who are looking to get onto the property ladder find it increasingly difficult as the cost of housing is now so great and the cost of getting a home loan so high. As well as this many people who have bought their first home recently will have little hope of seeing the kind of returns from their investment that we witnessed through out the 90s and into the 2000s as their high loan repayments make moving an impossible dream.

Posted in Borrowing, Consumer Credit, Financial news, Financial products, First time buyers, Homeowner Loans, Homeowners, House buying, Housing news, mortgages, Property, Secured loans, UK Finance | No Comments »

Why the property market might not crash

Tuesday, February 26th, 2008

While there are signs everywhere that the housing market is heading towards a slowdown these signs increasingly show that we might not be heading towards a crash but far more likely a slow progressive decline.

However there are other factors that might work together to prevent us from having a house-price crash. Two main underlying factors have been identified by experts across the sector and generally enjoy widespread support.

First of all the UK economy is far stronger today than it was in the early 1990s when we last saw a house price crash. On the back of the strength of the broader UK economy we should be able to avoid going towards a full blown property crash.
Currently experts are advising that we have sound economic fundamentals as well as very strong employment which will both contribute to keeping demand for housing strong.

The second factor helping the UK economy avoid a full blow crash is the fact that there are now more households in the UK than homes available. Following the basic principles of economics while demand for housing is greater than supply prices won’t come down. This is tempered by the lower availability of home loans for households who cannot stretch to the monthly loan repayments.

It is currently estimated that there are around 180,000 new homes being build across the UK every year. However in order to meet demand for new homes the Government estimates that a figure more in the region of 230,000 would be necessary. This would only help keep up with annual growth however and not actually the total amount of people in Britain that want a home.

Posted in Borrowing, Consumer Credit, Financial news, Financial products, First time buyers, Homeowner Loans, Homeowners, House buying, Housing news, mortgages, Property, Secured loans, UK Finance | No Comments »

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