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Archive for Homeowners

Credit Crunch – Hope at last

Monday, September 8th, 2008

In surprise news this morning, the US government has announced that it will bail out America’s two largest lenders, Fannie Mae and Freddie Mac.

Whilst this may seem far removed from the daily grind of most people’s lives, the effect of this action will have far-reaching implications around the globe and already has seen a positive affect on global stock markets.

Most UK homeowners will have never heard of either company, but together they are the largest holders of home loans in the world and as the saying goes, ‘when America sneezes, the rest of the world catches a cold’. In the last year they had been suffering unsustainable losses, as the American home loans market went into freefall and this was a large part of the credit crunch being felt by all.

Once confidence was lost in America, Asian backers stopped investing funds and the resulting lack of liquidity on the loans market has meant that everything from business loans to small personal loans has been affected by a lack of funds to be lent.

With this move – long overdue according to finance pundits – investment into America is likely to restart from healthier financial markets which experts hope will begin to halt the recession which is threatening to sweep the world.

What does this mean to the average borrower? Well, funds are unlikely to rush into the market instantly, but finance is a fast moving beast and so hopes are high that relief will be imminent for Western business and individuals. Particularly in America where an estimated 9% of homeowners are behind in loan repayments, risking repossession, bankruptcy and long term bad credit.

Posted in Bad Credit, Banking, Bankruptcy, Borrowing, Consumer Credit, Consumer debt, Financial news, Homeowner Loans, Homeowners, House repossession, Housing news, Missed payments, mortgages, Personal debt, Personal loans, Property, Secured loans, UK Finance, Unsecured loans | No Comments »

Government housing measures encourage irresponsibility

Thursday, September 4th, 2008

Yesterday the government announced what were intended to be some sweeping measures designed to rescue both the housing market from its freefall.

The measures included helping out beleaguered homeowners who had fell behind on loan repayments; offering equity loans to buyers and giving a stamp duty holiday under a new threshold.

So far most commentators on the new schemes have been singularly unimpressed, particularly financial advice site, Moneysupermarket.com.

“The Government plans are certainly high on rhetoric, but lacking in fundamental help,” claimed Louise Cuming, head of mortgages at moneysupermarket.com.

Cuming states that some factors of the scheme are not just unworkable, they also encourage financial irresponsibility by bailing out homeowners who have dragged themselves into debt.

The view that the ‘British Debt Mountain’ is the fault of irresponsible lenders is a popular one in some quarters. Many have claimed that the vast amount of personal loan and credit card debt is due to lenders pushing ‘easy credit’ at borrowers who had little chance of repaying.

Cuming also points out that the plan for offering buyers 30% equity loans is also unrealistic: “this is simply a rehash of the tired old share equity story,” she says.

“This will inevitably only help a fortunate minority as it is co-funded by government and developers, and thus only available on an insignificant number of properties.”

Posted in Bad Credit, Borrowing, Consumer Credit, Consumer debt, Credit Card, Debt management, Financial news, Homeowner Loans, Homeowners, Housing news, Missed payments, mortgages, Personal debt, Personal loans, Property, Secured loans, UK Finance, Unsecured loans | No Comments »

Beware of hidden catches in your home loan

Monday, September 1st, 2008

In these days of the credit crunch many lenders are looking to ways to recoup on losses incurred in the last year. If you are looking to get a mortgage look out for the following catches that many lenders slap on in an effort to boost profits.

First of all many mortgages come with exit fees. If you decide to switch loans to another lender or even if you try to pay your home loan off early your lender will charge you an exit fee in order to cover the administrative costs of the mortgage.

These fees have been traditionally around £50 to £100 however many lenders have been including small print in the mortgage agreement which state that exit fees are variable. If you find you have been charged what seems an excessive fee, it is worth checking out. Use the documentation you have to make sure you are being charged the stated amount and if your lender refuses to co-operate go directly to the Financial Services Authority (FSA).

Another thing to consider when agreeing to a mortgage is the standard variable rate (SVR). The SVR is the lenders’ fluctuating rate for borrowing and in general is around 2% higher than the Bank of England base rate. If you are on a fixed rate mortgage for instance, once the deal expires you will automatically be moved onto the SVR.

It is always wise to be aware of when your loan rate is due to change well in advance to give yourself time to shop around. Although your lender should notify you to discuss your options, it is better for you if you are aware of the market, rather than accepting the first rate you are offered.

The financial climate is rather rocky right now, so it is better to have all your facts than to stumble along and find that you have switched from a great deal to one that leaves you considerably worse off each month.

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

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