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Archive for First time buyers

Heightened fears for UK housing market

Thursday, June 5th, 2008

More and more existing home owners are find it harder to sell their homes as fears of recession keep people from moving. But in an ironic twist, first time buyers are unable to take advantage of the new low house prices because of a lack of affordable home loans on the market.

The growing concern over the state of the economy is making many people more unwilling to overstretch themselves by buying a new home now. New figures published by the Halifax have shown that house prices fell by their sharpest rate in more than fifteen years in May.

Many buyers were hoping for a fall in borrowing costs when the Bank of England dropped the base rate to 5%. However, lenders have been unable to pass on the cut as the Libor rate remains high and liquidity low. Loans of all types have been affected.

The Bank of England is due to announce its latest interest rate today and is widely tipped to leave the rate at 5%. Consumers may feel this is a blow, but with the Government worried about inflation, the Bank is unlikely to cut the rate again yet.

Halifax’s chief economist, Martin Ellis, said: “The decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability,”

Halifax warn that house prices could continue to drop next year. This is potentially good news for those waiting to afford their first home, but may still not be enough to counteract the credit crunch.

Britons have seen their wages rise 4% in the past year, a stark contrast to the 9% rise in fuel prices seen and the 7% increase in food costs.

Sadly for many, property rental prices have also been increasing as more buy-to-let investors pull out of the market, leaving a diminishing pool of properties available for rent.

Posted in Bad Credit, Borrowing, Consumer Credit, Consumer debt, Debt management, Financial news, First time buyers, Homeowner Loans, Homeowners, House buying, Housing news, Inflation, interest rates, mortgages, Personal debt, Personal loans, Rental property, Secured loans, Spending, UK Finance, Unsecured loans | No Comments »

Mortgage approval rates at record low

Tuesday, June 3rd, 2008

It has been revealed that mortgage approval rates have plummeted to a record low recently, compounding fears that the slowdown in the housing market has spread to the wider economy.

The figures were released by the British Bankers Association (BBA) and show that just 44,105 home loans were lent by its members last month. This is the lowest level since they started recording home loan approval rates back in 1997. This figure is down by 37% on the same time last year.

The government has also released figures showing that the economy is beginning to hit a slow down as well. It had been predicted that the economy would grow by 0.8% in the third quarter of the year, however because of the impact of the credit crunch and the rise in interest rates gross domestic product only grew by 0.7%.

The chancellor Alistair Darling has a target of 3% growth in the economy this year and despite the slowdown the economy is still well on track to meet those growth targets. Growth is now expected to be 3.2% instead of the 3.3% that economists had been predicting.

One of the lead economists for the Royal Bank of Scotland (RBS), Geoffrey Dicks stated that “the third quarter market the slowest economic expansion for a year and serves to emphasis that the economy passed its cyclical peak even before the full impact of the credit squeeze.”

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

Credit Crunch versus Credit Cards

Friday, May 2nd, 2008

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.

Posted in Bad Credit, Borrowing, Buy to let, Consumer Credit, Consumer debt, Credit Card, Credit record, Debt management, Financial news, First time buyers, Homeowner Loans, Missed payments, Personal debt, Personal loans, Property, Secured loans, UK Finance, Unsecured loans | No Comments »

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