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Archive for Remortgaging

Mixed feelings in the Housing Market

Tuesday, August 5th, 2008

It’s been a turbulent year so far on the housing market, with Nationwide reporting prices showing their biggest annual fall since 1991, the year of Nationwide’s first survey.

The average home has now dropped by £17,000 in the last year, according to Nationwide – bad news for anyone hoping to sell and re-buy using equity in their home: The equity may just not be there any more.

Homeowners who took out interest-only or 90% or greater home loan deals are particularly at risk of losing everything if they fall behind on loan repayments. Those who need to sell up and were banking on rising prices to give them equity for a new home are having to stay put or face negative equity.

Fionnuala Earley, Nationwide ‘s chief economist said: “The weakening economy and poor housing market sentiment do not suggest that the market will recover quickly.”

However, the National Housing Federation has said that it expects house prices to rise by 25% by 2013, due to the lack of new houses being built. Demand is expected to outstrip supply in a few years, pushing prices back up.

In the meantime, economists are predicting that the Bank of England will be forced to cut the base rate as a means of curbing inflation, as fuel and food prices continue to rise.

Posted in Borrowing, Consumer Credit, Equity release, Financial news, Homeowner Loans, Homeowners, House buying, mortgages, Negative equity, Property, Remortgaging, Secured loans, UK Finance | 1 Comment »

Chancellor calls for lengthier fixed rate mortgages

Friday, June 27th, 2008

The Chancellor of the Exchequer, Alistair Darling, has indicated that intervention may be needed in order to raise the amount of fixed-rate home loans available lasting up to 25 years.

Mortgage lenders have been accused of lending fixed rate home loans on only a short-term basis in order to maximise their profits. This might be good for the lender but is not good if you are looking for a new mortgage and now the government is considering intervening on the consumer’s behalf.

What lenders are currently doing is negotiating a fixed-rate deal to last only a short period of time and then giving us the option to renegotiate at the end of the period. We as the consumer are then left with the cost of footing the bill for the arrangement fees each time we have to renegotiate.

Although the typical home loan rate is high and still rising, more and more homeowners are looking to change to longer-term fixed-rate mortgages. This gives homeowners more financial stability as it is easier to budget for the future. So far most lenders have only increased the number of short-term fixed-fixed rate loans.

The rest of Europe offers many more fixed rate loans so why do we in Britain not have that option available to us? If the government does intervene homeowners could feel the benefit of much more financial stability as well as not having to face the hassle of going back to the lender every two or three years to renegotiate a new fixed-rate.

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

How vulnerable is the property market?

Wednesday, June 25th, 2008

While bad news about the property market is easy to come by these days, there must be some good news out there. We round up what economists and experts are saying about the property market.

First of all David Miles, chief UK economist for Morgan Stanley warned that house prices are going to drop by 10% in the coming 12 months. Mr Miles believes that house price growth was largely fuelled by speculation that prices would always continue to rise as well as the belief that the number of people buying properties would increase by 10% in each coming year.

However Mr. Miles also believed that falling house prices would not be such a bad thing for the economy since it would help redress the affordability issue in the market which has spiralled out of control in recent years.

Meanwhile, Capital Economics chief economist Roger Bootle predicted that prices in 2008 would drop by only 3% followed by the same amount in 2009, an optimism that many wish were true.

The reality is that thousands of pounds have alreeady been knocked off the price of the average house in the last six months and prices are set to fall further.

Mr. Bootle says that the drop in house prices has little to do with the credit crunch and more to do with a drop in interested buyers, the number of which have been falling for the past six months. Additionally, with home loan rates still high, despite the three base rate drops since last December, many borrowers are actually unable to get the loan they need to take advantage of lower house prices.

According to Mr. Bootle the two fundamental reasons for the house price slump is the 5 consecutive interest rate rises between August 2006 and July 2007 and the fact that the property market is now too expensive for most potential buyers.

Whatever the reason, there is no doubt that house prices are falling, and in what has been described as an over-inflated market, this is probably no bad thing.

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

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