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Wed 15th Oct, 2008
Posted in Consumer Credit, Homeowner Loans, UK Finance, mortgages, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing, Secured loans at 12:58 pm by admin
A report into home information packs (HIPs) by Birmingham Trading Standards has reached pretty damning results.
The packs have not only been slammed as useless, misleading and uninformative, they have also been credited with worsening the housing market situation. Many believe that the added cost of the packs is putting off both buyers and sellers in a market already rocked by the credit crunch.
Many of the packs examined had fundamental errors which could lead to house sales falling through or purchasers only discovering too late down the line that they had been misled.
Omissions were made in areas such as planning permissions and planning history and whether houses were in conservation areas. Whether these errors were made by poor training of HIPs officers or by fundamental flaws in the system was not explained by the report, but neither makes comfortable reading for homeowners or potential buyers.
In a market already suffering due to the lack of home loan availability and with many worried about falling house prices, lack of confidence in HIPs creates a further burden for those buying and selling.
It is unfair to homeowners who are trying to sell that they are unwittingly attempting to sell their home on a false basis and equally wrong that those who are both investing equity and saddling themselves with a massive loan for are buying something that is not what they were led to believe.
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Thu 9th Oct, 2008
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Credit Card, mortgages, Remortgaging, Homeowners, House buying, Financial products, First time buyers, Credit record, Property, Financial news, Housing news, Borrowing, Secured loans at 1:27 pm by admin
The house price crash is proving to be a boon for many potential first time buyers. Those who have waited for years, ever-frustrated as house prices have rocketed beyond their reach are at last seeing a chance to buy.
With house prices having fallen eleven months in a row (according to figures from Nationwide), buyers poised to step on that first rung are waiting in the wings. So what are market conditions really like?
Well, according to the financial papers, prices are set to still fall, which is why many potential buyers are still holding back.
This may be bad news for those desperate to sell, but for those looking to finally be handed the keys to their own home, the news is great.
Many of these would-be purchasers have been saving up for years, watching prices soar further and further beyond their reach. Provided that they haven’t given up and dipped into their funds, they could be on track to buying their dream home in the next year.
One of the only dampeners that buyers should be aware of is the difficulty right now in getting a loan. Existing home loan borrowers have an easier time, should they find a buyer, as they have a proven credit record on their side and probably a chunk of equity in their property.
Lenders are now asking for as much as 25% deposit - compared to the 100% or even 125% loans that were being offered when prices were still rocketing. Unless you have a good credit record and a hefty chunk of savings, your dream property might not be as close as you think.
So, potential buyers could be wise to use their credit cards and take out cheap personal loans - provided always that they make repayments promptly. By building up a good credit record before they look at getting their home loan, they stand a great chance of getting that mortgage approval they need.
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Tue 5th Aug, 2008
Posted in Consumer Credit, Homeowner Loans, UK Finance, mortgages, Remortgaging, Homeowners, House buying, Property, Financial news, Borrowing, Equity release, Secured loans, Negative equity at 12:59 pm by admin
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.
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Wed 25th Jun, 2008
Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Remortgaging, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Secured loans at 1:10 pm by admin
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.
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Mon 16th Jun, 2008
Posted in Consumer Credit, Personal loans, Debt Consolidation, UK Finance, interest rates, mortgages, Consumer debt, Inflation, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management at 1:21 pm by admin
There are mounting fears that the Bank of England is losing its grip on the economy. A combination of rising food costs, fuel hikes and other price rises are stoking inflation which should mean raising interest rates for the Bank.
However as a result of the global credit crunch, banks are starting to hoard money instead of lending which is putting downward pressure on house prices and pushing the monetary policy committee (MPC) towards actually cutting the base rate. Even in this atmosphere of falling house prices, would-be buyers are finding it hard to secure a home loan to make a purchase they can now afford.
The credit squeeze has created much uncertainty in the economy and the nine MPC members seem very reluctant to actually cut interest rates. The members are facing a dilemma in that domestic inflation is heading in one direction while at the same time the international money market is actually going in the opposite direction.
When the Consumer Prices Index went up by 2.1% - which is above the government target of 2% - it would, under any other circumstances, signal an increase in interest rates in order to bring about higher borrowing costs. The interest rate at 5% is still an expansionary rate which will only fuel higher inflation, putting inflation up again to a more neutral level will hopefully neither dampen nor stoke the economy.
However the credit crunch is pulling for interest rates to come down. Uncertainty in the banking sector has prompted banks to cut lending to other institutions and instead hoard cash. Customers are reporting difficulty in securing personal loans, especially for debt consolidation, as lenders are either unable to access the funds, or simply unwilling.
Bank of England governor Mervyn King has warned the MPC that the credit crunch could get even worse in the coming year unless interest rates are cut.
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Fri 13th Jun, 2008
Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Remortgaging, Homeowners, House buying, Financial products, First time buyers, Property, Borrowing, Secured loans at 12:48 pm by admin
Five interest rate rises in a row last year really hit us hard and despite the subsequent drops, many of us are still left struggling to find the right mortgage. The base rate may have dropped, but lenders are still struggling with liquidity issues – meaning they just cannot access the funds to offer as loans – and so the LIBOR (inter-bank lending) rate remains high.
There are a number of options available to anyone seeking a new home loan however, because finding the right mortgage product is very important. The fixed rate mortgage could avoid the risk of further rate rises in the future, but lenders are also aware of this and increasingly fixed rate home loans come with shorter and shorter renegotiation periods as well as increasing renegotiation charges. So whilst taking out a fixed rate mortgage is always an option worth considering it may not necessarily be your best one.
There is no avoiding the fact that as interest rates stay high, our loan repayments will be steep. Add to this the increasing fuel and food costs and many people are worried. So what are we supposed to do to protect ourselves from getting out of our depth and falling into financial difficulties?
Some lenders have introduced a new option that while slightly unorthodox could be worth some serious consideration. Lenders such as Barclays are allowing borrowers to split their mortgage into two and have half on a fixed term basis and the other half of the loan on a tracker basis. This takes out some of the risk for the borrower but will mean taking extra time in searching to find a lender who is willing to make the deal with you.
The arrangement fee could be higher than with a non-split mortgage and the time in finding the mortgage could take twice as long, however you are splitting the risks involved and if you don’t like to take chances with your money than this could be the option for you. With inflation still running high, cost of living rising sharply but no matching rise in wages, it is wisest to play a cautious game when it comes to your mortgage.
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Mon 9th Jun, 2008
Posted in Bad Credit, Consumer Credit, Homeowner Loans, UK Finance, interest rates, Remortgaging, Consumer debt, Homeowners, House buying, Financial products, Credit record, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Missed payments at 1:07 pm by admin
Banks are getting increasingly tough on borrowers, and with high interest rates, mortgages are becoming increasingly expensive to service. So what options have you when looking for a new mortgage deal?
With lending rates so high at the moment and not expected to come down for a while, a tracker mortgage would probably not be the right option for anyone who cannot afford increased payments in the short term. Instead, taking out a short-term fixed rate loan would be a wise choice, to avoid being stung by higher repayments in the coming months.
If you have been in arrears recently then switching might be a bit more of a tricky issue since most lenders are now getting a lot tougher on borrowers with blemished credit records. Bad credit mortgages are available, but after last year’s sub-prime losses in America, these tend to be offered at very high rates.
You might not be able to take advantage of the cheap deals out there if you have recently gone into arrears or missed a payment, however there are still some sympathetic lenders out there who are willing to ignore the odd blemish on your credit history so make sure you shop around when you are looking for a good deal.
HSBC is currently offering something called a “RateMatcher” policy, which allows mortgage customers about to come to the end of fixed-rate mortgage to extend their loan for another one to five years at their current rate. This will prevent customers from switching out of an existing good deal to a higher rate elsewhere and should come as welcome relief to anyone whose cheap-rate home loan ends this year.
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Thu 5th Jun, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, mortgages, Consumer debt, Inflation, Homeowners, House buying, First time buyers, Spending, Unsecured loans, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Rental property, Debt management at 12:02 pm by admin
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.
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Wed 4th Jun, 2008
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, mortgages, Consumer debt, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing, Car finance, Car loans, Secured loans, Debt management at 11:59 am by admin
Almost everywhere you go these days you can hear people obsessing over the same big question, which way are house prices going to go?
It should not come as such a big surprise however that almost everyone is so concerned over this one question. First of all with the massive year on year growth that we have seen for the past decade many people were simply assuming that there was no safer investment than in property. At the same time many people genuinely thought that property investment would be a great cushion for retirement. The events of the past few months have really shaken peoples’ confidence in the property market, and have now got everyone asking if property investment is really the way forward.
So are Britons right to be so nervous about the property market now? Judging by what many experts are saying, the answer would seem to be yes. First of all there was the Nationwide Building Society forecasts that house price inflation was going to fall from a current level of 10% all the way down to 0%. That prediction was on the more optimistic side of the scale with other institutions predicting that in one year’s time the price of the average house would actually be 3% lower than it is today and dropping by another 3% in 2009.
However despite these predictions we are probably far more likely to have a drawn out decline in house prices rather than a crash. The country is no doubt in the grip of the credit crunch, but the type of recession seen in the early 90’s is unlikely, according to experts.
Whilst borrowing in the form of home loans and personal credit has become much harder, employment levels have not yet dipped. This means that would-be house buyers and those looking to finance cars or holidays may have trouble getting the cheap loans on offer a few years ago, credit is still available, unlike 15 years ago.
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Tue 3rd Jun, 2008
Posted in Consumer Credit, Homeowner Loans, UK Finance, mortgages, Consumer debt, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Secured loans at 12:53 pm by admin
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.”
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