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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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Mon 1st Sep, 2008
Posted in Consumer Credit, Homeowner Loans, Banking, UK Finance, interest rates, mortgages, Remortgaging, Homeowners, Financial products, Property, Borrowing, Secured loans at 11:52 am by admin
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.
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Thu 28th Aug, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, Homeowner Loans, UK Finance, mortgages, Remortgaging, Consumer debt, Homeowners, Financial products, Property, Unsecured loans, Financial news, Housing news, Borrowing, Secured loans, Debt management, Missed payments, House repossession at 12:29 pm by admin
An increasing number of households owned on bad credit mortgages are facing repossession as they make late loan repayments.
According to figures out from Standard & Poor, nearly a quarter of all bad credit home loans are now in arrears - many by as much as 90 days. This is up from 22% in the last quarter surveyed and now officially at a record level.
Comparison website Moneysupermarket have commented that this situation is of course attributable to the credit crunch, as nearly all homeowners have been faced with increased interest rates. For families who were already on a higher than average rate, a price rise can make it impossible for repayments to be met.
Additionally, the tighter lender criteria now in place across the loans market has made it nearly impossible for families to find cheap loans when a fixed rate deal comes to an end.
With fewer loan products on the market and many lenders pulling out of the sub-prime loans market, borrowers are having real difficulty in finding a bad credit loan at a price they can afford.
With reports on an increasing number of repossessions taking place and uncertainty in the jobs market, UK debt charties are bracing themselves for floods of enquiries. As colder weather sets in and fuel requirements rise, more families are likely to be plunged into the cyle of bad debt.
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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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Fri 27th Jun, 2008
Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Remortgaging, Homeowners, Financial products, Property, Financial news, Housing news, Borrowing, Secured loans, Bank charges at 1:06 pm by admin
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.
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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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Fri 20th Jun, 2008
Posted in Consumer Credit, UK Finance, mortgages, Remortgaging, Homeowners, Property, Financial news, Housing news, Borrowing, Secured loans at 12:05 pm by admin
The Financial Services Authority (FSA) has warned mortgage lenders that the credit crisis is going to get worse and there may be more Northern Rock type fiascos to come.
The FSA is urging lenders to cut back on new lending in a bid to strengthen their financial positions as well as not to rush into repossessing borrowers’ homes who are struggling with their loan repayments.
The FSA has found a significant rise in arrears and repossessions in the past few months and bad times are yet to come since there are still 1.4 million borrowers out there on cheap fixed rate home loans that are set to come to an end in the coming year.
The FSA has found that most lenders are taking a blanket approach to customers in difficulty and that this has to stop. The announcements were made by the FSA in a speech delivered to the Council for Mortgage Lenders (CML). The CML called on the FSA to support their calls for the Bank of England to pour more money into the financial system, which has dried up in recent months.
The FSA requires lenders to treat customers fairly and considerer customers on an individual basis. However the FSA has told the CML that there is a consistent picture emerging of many lenders now unwilling to consider cases on an individual basis as well as being unwilling to agree to tailored solutions to borrowers’ individual circumstances and are taking a one size fits all approach to recover arrears.
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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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Mon 21st Apr, 2008
Posted in Bad Credit, Consumer Credit, Homeowner Loans, Banking, UK Finance, mortgages, Remortgaging, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Secured loans at 2:54 pm by admin
The Bank of England has announced today that it will be offering £50bn in government bonds to banks and home loan lenders. This is aimed at softening the credit crunch throughout the UK.
Currently banks and lenders are reluctant to take on mortgage debt, but this BoE scheme will allow them to use government bonds, enabling them to operate normally during the credit crisis and rumoured world recession.
BoE Governor, Mervyn King, is confident that this move will raise liquidity on the money market and improve financial confidence.
The scheme allows lenders to swap current mortgage debts for the bonds, and whilst it is only applicable for existing loan business on lender books, it will still free up funds for first time buyers who are currently unable to secure a mortgage.
The scheme has the full approval of Gordon Brown, who said: “We can get markets working again in a way that we can ensure that jobs can be continued, and of course businesses can have the finance they need.”
Since the American sub-prime mortgage crash, worldwide investors have been reluctant to allow their funds to be invested in the UK home loan market. This has left a shortage of funds available for mortgages, with even banks being reluctant to lend to each other.
The Council of Mortgage Lenders warned, however, that this move would not necessarily see cheap loans reappearing on the market.
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