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Tue 27th May, 2008
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, mortgages, Homeowners, House buying, Buy to let, Financial products, Property, Financial news, Housing news, Borrowing, Secured loans, Rental property, Debt management at 1:04 pm by admin
It has been revealed by Paragon, the UK’s third largest buy-to-let lenders, that it is suffering from the impact of the global credit crunch and may follow in Northern Rocks footsteps by becoming its latest victim.
The company has said that it can no longer borrow the amount of money it needs in order to sustain its business. The company has decided to cut the number of buy-to-let loans it offers by roughly half in the coming year. Other banks are expected to follow a similar lead.
Other buy to let lenders have also had to take urgent measures to raise ready cash including Bradford & Bingley which is the UK’s biggest buy-to-let lender.
If there is a shortage of available home loans in the buy-to-let category buyers will be sucked out of the market. This will further decrease demand for housing amongst buy-to-let investors and send prices dropping further. Ironically, this raises the price of rental property, as fewer properties are available to rent.
The statements by both buy-to-let lenders provides yet further evidence that the global credit crunch will take down more victims in a similar manner to Northern Rock. At the moment many banks simply cannot raise any liquidity because inter-bank lending rates are so high.
As a result of a short supply of liquidity many home loan deals are being withdrawn by banks from the market as well as turning away an increasing number of borrows. Borrowers looking for credit cards, personal loans and mortgages will find it increasingly difficult in the coming months to get their hands on credit.
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Fri 2nd May, 2008
Posted in Consumer Credit, UK Finance, mortgages, Homeowners, House buying, Spending, Property, Financial news, Housing news, Borrowing, Equity release, Secured loans, Rental property at 4:49 pm by admin
Whilst it is still cheaper to buy a property and pay a mortgage over 25 years than it is to rent a property, the saving made by homeowners has gone down by 75% in the past year according to new research.
Figures show that over a traditional 25-year period of a mortgage, buying a property costs an average of £437,925. This figure is only slightly ahead of the average for renting a property for 25 years which cost an average of £443,736.
While in past years buyers could have expected to save somewhere in the region of £24,000 over 25 years, the impact of rising interest rates and rising house prices means now that the difference between buying and renting has fallen to just £5,811.
In some areas of the UK it is actually now cheaper to rent a property than it is to buy one.
Northern Ireland is a particularly bad area for buying when compared to renting. Property prices have gone up by 40% in the past year meaning that the average house buyer will now pay £572,814 for their property over 25 years while renters will only pay £392,097 for renting the property over the same period. This means by renting a property you will save a massive £180,717 over 25 years.
While the figures do include maintenance costs they do not include set-up costs for home loans. The figures also suggest that it would be cheaper to rent a property in Wales, the north-west of England, Greater London and Yorkshire.
Obviously these figures look at the matter solely from the view of payouts, and not from the security gained from home ownership. Additionally, equity grows as home loan repayments are made and as house prices rise, allowing homeowners to borrow secured loans against their property for both property improvement and equity release purposes.
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Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, Consumer debt, Buy to let, First time buyers, Credit record, Property, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Missed payments at 4:44 pm by admin
With the number of rejections for applications for credit cards on the rise it is becoming increasing difficult to secure credit.
As banks continue to tighten their belts when it comes to lending borrowers are being warned to prepare for rejection when they apply for a credit card. The people that are going to find themselves most likely to be refused are those with imperfect credit histories.
In the recent past it was assumed by most people that only those who had very bad credit histories, recent first time buyers and some buy-to-let investors were the ones who would find it difficult to secure credit. However times have changed in the wake of the credit crunch and more and more people are finding that they too are being rejected for credit.
Customers applying for cards and personal loans are finding that credit scoring has become tighter, with lenders giving more stringent reasons for turning down an applicant. Last year an applicant might have got away with making the odd late payment on a card or loan and it not affecting their credit score, but this year it’s a different story.
It has been revealed that the number of applications for credit cards that are being rejected has gone up by as much as 17% in the past six months. This means that roughly 3.27 million people across the UK have been refused credit in that period. This is a half a million more people than were rejects in the six months leading up to March 2007. Those of us who are most likely to see or application for credit rejected are people in the 25-34 year old age bracket.
Banks are also becoming increasing choosy over who they are willing to lend money to because the pool of money they have to disburse is so much smaller. With so many people looking for bad credit loans or low-deposit home loans, there are going to be a lot of disappointed borrowers.
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