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Building Society Mortgages
2008-05-05 12:10:00
Research by the Council of Mortgage lending shows that lending by Britain's building societies has slumped in the past few months. Total mortgage lending in March was down by £1 billion on the same level last year. It also shows that building socities have been hit harder by the credit crunch that the big banks.Building societies typically fund their mortgage lending mostly from savings. (about 70%) in the current climate they have had difficulty raising additional funds for mortgages. Instead building societies have been focusing on attracting saving deposits.Ironically, the mortgage market has changed so much that building societies no longer want to appear at the top of the 'best buys for mortgages' because they then struggle to deal with the demand coming in.Top 10 Building Societies
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Best Value Nationwide Mortgages
2008-04-28 17:06:00
The Nationwide recently moved to increase the deposit ratio on all but 2 of its mortgage products. New customers are now required to have a deposit of 10%. For an average house price of £200,000 this means new first time buyers must find an extra £10,000.However, the Nationwide did cut its standard variable rate, in line with the Bank of England. It's standard variable rate, with no costs for signing up presents one of its most attractive mortgage deals. This is unusual for a mortgage market where the best deals are usually found in fixed rate or tracker mortgage deals.The increase in the deposit ratio, is a sign that the Bank of England's recent injection of liquidity into the money markets may be insufficient to boost mortgage liquidity.It also came on a day when house prices showed their first annual year on year fall, for many years
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Should I Get a Fixed or Variable Mortgage?
2008-04-15 11:43:00
A fixed mortgage prevents security against rising interest rates. At the moment, interest rate increases are mainly driven by a rise in interbank lending, rather than an increase in the base rate.Predictions for Interest Rates in UKWith house prices falling and the economy slowing, the Bank of England will be looking to cut rates. If house prices continue to fall at a very quick rate, we could see the UK face the prospect of a recession. IF the UK enters a recession, interest rates could fall as low as 3.5%. However, a recession is unlikely at the moment. Also the interest rate predictions are complicated by the impact of cost push inflation. Driven primarily by rising oil prices, manufacturers are experiencing unprecedented rises in the cost of production. Therefore, the Bank has to be more cautious in cutting rates.Prediction for beginning of 2009, interest rates 4.25%.Therefore, with the prospect of lower interest rates, current fixed rates may not offer good value. However, with...
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Finding Best Mortgage Deals
2008-04-03 11:01:00
Finding the best mortgage deals has become alot more difficult recently with many big mortgage lenders withdrawing mortgage products and increasing the cost of mortgages. within the past month the number of mortgages on offer has fallen by 40%, with big names like first Direct, Co-op Bank and others restricting the number of new mortgages.The difficulty of getting a mortgage has encouraged many customers to borrow through alternative means such as credit cards and unsecured loans.Finding the best mortgage deals has become a lot more difficult because the gap between the bank's commercial rates and the bank of England Base rate has risen. For example, at the moment the 3 month libor rate is 6%, whearas the Base rate is 5.25%. The gap between the base rate and the 3 month libor rate has increased due to the shortage of funds in credit markets. With the increased difficult of getting a mortgage it is harder to find a cheap mortgage. However, there are still some things worth trying.Se...
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What Factors Affect Interest Rates?
2008-03-19 12:58:00
Interest rates are the main tool for influencing economic activity and therefore affecting the inflation rate. In the UK, interest rates are set by the Bank of England Monetary Policy Committee MPC. In the US, interest rates are set by the federal Reserve.In the UK, the MPC have been set an inflation target of CPI 2% +/- 1. Therefore, the most important factor affecting interest rates are the prospects for inflation.Generally, a rise in inflation will cause interest rates to rise. A fall in inflation will enable lower interest rates.Inflation Predictions.The MPC produce an inflation report. This tries to predict inflation in the coming months and is important for determining interest rate movements. These are the kind of factors that can cause inflationary pressures to increase and therefore cause an increase in interest ratesHigh economic growth. If growth is above the average sustainable growth rate, inflation is likelyDepreciation of Exchange Rate. When exchange rate fall, import...
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Mortgages and the Credit Crunch
2008-03-18 13:39:00
The credit crunch refers to the difficulties of borrowing money in the financial sector.There is a detailed explanation of the Credit crunch hereThis is a simple step by step guide to how the credit crunch is likely to affect UK mortgages.Rapid increase in mortgage defaults in US mean that many mortgage lenders have to write off bad debts. These Bad debts were often rebundled and sold onto other finance insitutions and banks. This means many investment banks and commercial banks have also had to write off bad debts, sometimes totalling billions of pounds. These bad debts have overwhelmed banks such as Bear Sterns and threatens Lehman brothers.Because so much debt has had to be written off there has been a drop in banking confidence. Banks are hesitant to lend to each other because they fear they could lose it.This means there has been a shortgage of lending and money on the money markets and in particular the interbank lending markets.Therefore, it has become difficult to finance re...
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Best Variable Mortgage Deals
2008-03-13 09:08:00
In my opinion, variable mortgages offer better value at the moment. The state of the economy makes it more likely that interest rates will fall over the coming year. The credit crunch and declining housing market have caused the government to reduce their growth forecasts; lower growth should cause lower inflation and therefore enable the MPC to cut rates.Tracker mortgages may be a particularly good choice because with a standard variable mortgage there is no guarantee that banks will base the base rate on to consumers. However, with a tracker mortgage they have to. (tracker mortgages offer best deal)Although the chancellor, Alistair Darling announced plans for fixed rate mortgages to be encouraged many British homeowners prefer taking out variable mortgages. This is because often initially they are cheaper; you have to pay a premium for the security of a fixed rate mortgage. With interest rates low, a fixed rate may not offer a good return in the short term. However, it is always d...
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Darling Introduces Rating scheme for Mortgages
2008-03-10 09:16:00
In a bid to make the UK housing market less volatile. Alastair Darling has introduced plans to encourage 25 year fixed rate mortgages. The plan also involves giving kite markets to mortgages depending on how risky they are. Fixed rate mortgages will attract a better rating and so it is hope easier for the mortgage lender to raise money on the capital markets.However, groups such as the Council of Mortgage Lenders have criticised the plan saying that it could create a two tier mortgage market, with some first time buyers finding it very difficult to get a mortgage because they do not have sufficient income for the 'reliable mortgages'Also it is not clear whether homebuyers will actually want to take out 25 year fixed rate mortgages. In the past there has been little demand for long term fixed rate mortgages. Typically the best fixed rates on long term mortgages are 6% compared to 5.25% on shorter rate mortgages
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Housing Market Facts
2008-03-07 09:10:00
Housing Market Terms explainedHow Much Can I borrow for a mortgage? A look at the various factors which determine how much you can borrow for buying a houseRatio of House Prices to IncomeThe ratio of house prices to income is important for determining the affordability of housing. The ratio of house prices to income is currently at an all time highHow Do Interest rates affect the Housing Market? Interest rates set by the Bank of England are a key tool for determining the state of the UK housing market.What is subprime and what caused the subprime crisis?Why are house prices so expensive in the UK? - A look at the factors behind expensive house pricesHouse price inflation 2006-2008Guide to Getting Your first mortgage - tips for the first time buyer
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Cheap Mortgages still available
2008-03-04 12:31:00
Despite all the adverse newspaper headlines about the housing market and withdrawal of 100% mortgages, there are still plenty of good mortgage deals around.In the past few years, there were some exceptionally cheap mortgages. This was because it was easy for lenders to resell mortgage debt in the form of CDO - collateralised Debt obligations. This meant mortgage lenders could parcel up and sell on mortgage debt to other financial institutions. Now with the credit crunch this is no longer so easy to do. Therefore, mortgage companies have greater difficulty financing mortgage lending but although, some of the most extreme types of mortgages 125% e.t.c have been pulled off the market, it would be easy to exaggerate any malaise in the housing market.The market for mortgages still remains very competitive. We are unlikely to go back to the days of the bank and building society cartel. With the advent of the internet it will always be relatively easy to search online for the best mortgage...
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Benefits of Remortgaging Your Home
2008-02-29 10:20:00
For most homeowners your monthly mortgage payments will be your biggest regular outgoing expenditure. Statistics suggest mortgage payments take on average 22% of disposable income. However, for young first time buyers this % can be as much as 50%. (Before remortgaging I paid £890 a month out of a monthly salary of £2,000. These are some of the reasons to remortgage your home.Benefits of RemortgagingMortgage lenders charge a higher interest rate to customers who don't wish to bother remortgaging. Customers who are happy to stay with their current lender will typically pay the SVR of the lender. This is much cheaper than deals available for remortgaging and new customers. Don't lose out on savings of £200 a month, just because it requires some effort.Switch to a more appropriate mortgage. When I remortgaged I took the opportunity to extend my mortgage term and switch to interest only. This was because I wanted to work part time to invest in a business. Your best option may be to ...
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Difficulties in Getting Mortgage Increase
2008-02-29 09:10:00
Cheltenham & Gloucester, part of Lloyds TSB has announced that it will be requiring homeowners to save a deposit of 10% before buying a house. This follows the news that mortgage lenders will no longer be offering 125% mortgages.The move is sparked by problems in the capital markets. Since the American subprime crisis it has been more difficult to sell on mortgage debt. Furthermore, with the threat of falling house prices, there is an increased chance of negative equity amongst homeowners. When prices are rising rapidly (as they have been in the UK) a 100% mortgage soon become a 90% LTV. However, in the current climate mortgage lenders have been increasing the cost of mortgages and tightening the lending criteria.Mortgage experts fear that if this trend continues it will be difficult for people to get on the property ladder. Also people who currently have a 95% or 100% mortgage will be faced with a much more expensive mortgage when they need to remortgage at the end of their mor...

Interest vs Repayment Mortgage
2008-02-25 12:45:00
Repayment Mortgage .With a repayment mortgage, your mortgage payments are made up of both interest and capital. This means your mortgage is gradually paid off over the mortgage term. Usually repayment mortgages are weighted to mainly interest at the beginning of the repayments.Interest OnlyOn an interest only mortgage, you only pay interest to your lender throughout the mortgage term so your mortgage balance will not reduce. At the same time it is your responsibility to put money into a separate investment which should grow to be able to pay off your mortgage balance at the end of your mortgage term.Which is Better - Interest only or Repayment?The advantage of a repayment mortgage is that you don't have to worry and think about a separate investment programme. Also, there have been some poorly performing endowment policies which have failed to deliver the necessary investment. The stock market is also quite volatile an inexperience investor (and even experienced investor) can end ...

Taking Mortgage Payment Holidays
2008-02-25 12:25:00
Mortgage Payment Holidays . With a mortgage payment holiday you agree with your mortgage lender to stop all payments for upto 6 months. Usually, this requires at least 6 months of mortgage payments to have been made already. During the period of a mortgage payment holiday, interest will continue to accumulate and the overall final total cost of the mortgage will be greater. During this period you will continue to accumulate interest but do nothing to pay off the mortgage capital. A payment holiday could be invaluable during a period of temporary unemployment. But, there is a definite limit to how much you can make use of payment holidays. Ideally they should be seen as a fall back option, rather than a desirable feature.If you are having difficulties with making your mortgage payments there are also options, less severe than taking a mortgage payment holiday. These include:Extend Mortgage Term. Reduced monthly repayments in return for longer period of repayment. Will increase total c...
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Reverse Mortgage Schemes
2008-02-19 17:35:00
A reverse mortgage scheme is way to make use of the equity locked up in your existing home. It can be particularly beneficial for those who have reached retirement, but, want to continue living in their home for as long as they live.Basically, a reverse mortgage plan involves selling your house to a equity release firm. They then give you a lump sum or annual payment and also allow you to live in the house for as long as you want. After your death, the equity release firm will sell the house and keep the proceeds. Usually they only buy a 90% stake in the house so the remaining 10% will be distributed to your heirs.THe main disadvantages of reverse mortgage schemes are thatYou will have a lot less to leave in your will. It depends how important this is to you.If the house appreciates in value, you will miss out on the capital gains.However, if you don't mind the above 2, a reverse mortgage plan can give you a much more comfortable retirement. The value of your house is only use to y...
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Best 100% Mortgages in UK
2008-02-19 09:23:00
Getting a 100% mortgage is a risky step to take in the current climate of the UK Housing Market. With some analysts predicting price falls, a 100% mortgage could leave you with negative equity. (house value worth less than mortgage)However, if you are aware of the dangers in a 100% mortgage, it might still be the best option; for example, if you do not have a deposit or you need to borrow money to spend on renovation. 100% mortgages are becoming less common because banks are becoming wary about lending in the current climate. Nevertheless, these are some of the best 100% mortgage deals on offer at the moment.Royal Bank of Scotland 100% Mortgage - Product fee of £399. 100%. OVerall cost for comparison 7.4%. Includes flexible offsetting mortgage. LTV linkBristol and West 100% mortgage. For professionals. Mortgage products upto 4.5 or 5 times income. Product fee £399, early repayment charges may apply. Overall cost for comparison 7.5%. LinkAbbey National 100% plus Mortgage. This mort...
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Discounted vs Tracker Mortgage - Which is Best
2008-02-07 08:16:00
Discounted and tracker mortgages are both types of variable mortgages. Changes in the Bank of England Base rate will therefore change your cost of mortgage. If you don't like the idea of a variable mortgage choose a fixed rate deal that gives you security of knowing how much to pay.Discounted Mortgage . A discounted mortgage is a mortgage where the interest rate is set a certain amount below the lenders Standard Variable Mortgage rate. e.g. Some of the best discounted rates at the moment would give a rate of 5.64% for 3 years. (e.g at Principality although has a £ £1,349. If the lenders standard variable rate falls, then the discounted mortgage rate will also decline.Tracker Mortgage. A tracker mortgage is tied directly to the Bank of England's Base rate. Therefore, if the MPC cut base rates, it will cause a corresponding decrease in your tracker rate.Difference between Tracker and Discounted MortgageThe essential difference between a tracker and a discounted mortgage is that ...

Principality Building Society Enters Top 10
2008-02-06 13:51:00
Principality is the biggest mortgage lender in Wales. 2007 saw a good performance from the Welsh building society, moving them in to the top 10 building societiesPrincipality claims that it is in a strong position to whether the global credit crunch. Over 85% of its mortgages are financed by internal savings, rather than borrowing from other financial institutions.Principality reported assets of over £5bn for the first time and a pre-tax profit of £30.6m.Northern Rock by contrast raised nearly 60% of its mortgage loans by reselling in capital markets.How Credit crunch could undermine Housing MarketLargest Mortgage LendersPrincipality.co.ukIs Housing Panic Justified?
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Insurance for Mortgage Payments
2008-02-05 17:07:00
To avoid the risk of defaulting on your mortgage, you can take out a variety of insurance schemes to offer protection in case of an unexpected difficulty in earning money.Payment Protection Insurance PPIThis insurance is specifically linked to a personal loan or credit card. For a monthly premium your repayments can be covered in the case of illness which prevents work. However, in recent weeks there have been concerns raised over PPI; it is argued that they are very expensive for the protection they offer. Furthermore borrowers may not be covered in all circumstances. See misselling of PPI loan insuranceMortgage Payment Protection Insurance MPPIThis will pay your mortgage for upto 2 years, if you become too ill to work. Only about 20% of mortgages are currently covered by this type of insurance. They usually cost about £5 a month for every £100 of cover. They are seen as quite an expensive way to insure your mortgage although buying independently maybe cheaper than with your exis...

Tracker Mortgages Offer Less Value as Banks increase Margin
2008-02-05 16:55:00
The global credit crunch is causing many of the top mortgage lenders to raise their standard variable rates and also raise the premium on tracker mortgages.A Tracker mortgage is a mortgage product which is tied to the base rate. If the base rate changes a tracker mortgage will automatically lead to a change in the interest rate. For example, a tracker mortgage may offer a rate equivalent to the Bank of England's Base rate plus 1%.In recent months, many banks have been increasing the margin on tracker mortgages. 10 lenders have increased the margins on tracker mortgages by up to 0.5%. This means for new people taking out mortgages they face less competitive deals. However, it is worth bearing in mind that many mortgage products are becoming less competitive as banks find it more expensive to borrow money. There are even concerns that in 2008, banks will struggle to raise sufficient funds to finance the UK Mortgage market.Banks lost money over the subprime crisis in US.Therefore, fi...
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Cost of Mortgage Arrears
2008-02-05 16:45:00
Mortgage companies, are in many cases, charging very high penalites for those customers who fall into arrears. However, the penalties and charges vary considerably from company to company. It is worth finding out what your mortgage lender will charge if you miss, even one month's penalty. If you become aware of how much they charge, you will be motivated to either change lender or make sure you never miss a mortgage payment.One of the Highest Mortgage arrears Penalties is theCheltenham & Gloucester charge £372 for 3 months arrears and a debt counselling session.Halifax charge a higher interest rate on mortgage arrears.Royal Bank of Scotalnd and Bradford & Bingley charge £35 for a returned cheque.For those customers who go into arrears, these extra penalty charges and higher interest rates only serve to make their financial situation more difficult.Best Mortgage Lender.The best mortgage lender in the field of charging for mortgage arrears is HSBC, they don't charge for ei...
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Recent Mortgage Links
2008-01-22 19:48:00
Ratio of House prices to incomes for first time buyers have increased. This has increased the popularity of unconventional mortgages. In particular interest only mortgages, self certification and 40 year mortgages have become more common. This is probably the 10 most common types of mortgagesHow To Write A Letter of Complaint to your bank. May be useful if you have been missold loan insurance.How the falling stock market may affect the economyOffset mortgages
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How to Claim Money Back from Bank for PPI
2008-01-17 10:14:00
Recently the FSA has fined many banks for the misselling of PPI (Payment Protection Insurance) for taking out of new loans.Investigations have found that these very profitable services have been sold without proper explanation of their terms and conditions.It is estimated that only 20% of the money paid in insurance is ever returned to customers. The market for loan insurance is said to be £4billion a year.If you feel that you have been missold a financial product, you can have a look at this checklist which shows whether you might have been missold. - Have You Been Missold Loan Insurance?If you think that you may have been missold, then it is worth writing a letter to your bank. A free template of a letter is available hereIf the letter fails then it is worth making a complaint with the Financial Services Ombudsman - Making a complaintThis particular financial scandal could be bigger than the last one related to Mortgage exit feesRelatedWarning over loan insurance cost at BBC
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Largest Mortgage Lenders in UK
2008-01-10 16:56:00
The largest mortgage lenders in the UK, according to the Council of Mortgage Lenders statisticsTop 10 Largest Mortgage LendersHBOS - Mortgage Balances - £220bn - Market Share 20.4%Abbey National - £101bn - 9.4%Lloyds TSB - £95.3 bn - 8.8%Nationwide - £89.6bn - 8,3%Northern Rock - £77.3 - 7.2%Royal Bank of Scotland - £67.4 - 6.2%Barclays - £61.6 - 5.7%HSBC Bank £39.1 - 3.6%Alliance & Leicester £38bn - 3.5%Bradford & Bingley - £31.1b - 2.9%Top 20 Mortgage Lenders11. Bristol and West12. Britannia13. Portman14. Yorkshire Building Society15. GE Money Home Lending16. GMAC - RFC17. Standard Life18. Coventry Building Society19. Clydesdale Bank20. Chelsea.Statistics from the Council of Mortgage Lenders, based on year 2006Top 10 British BanksTop 10 Mortgage CompaniesInterest Rate Predictions 2008Mortgage Blog

Length of Time for Buing a House and other links
2008-01-10 16:48:00
This weeks selected articles include recent developments in the UK Housing Market, plus a look at how long it takes to buy a house.How long does it take to buy a house - why it can take several weeks to buy a house - Unsuprisingly moving houses is one of the most stressful things in life.Predicitions for Pound Sterling. Falling interest rates is good news for homeowners but bad news for Pound Sterling. If your planning a foreign holiday you may want to get your Euros and Dollars now.Ratio of House Prices to Income - Why rising house prices to income ratio might be a prelude to a housing crashWhy Have House Prices increased faster than inflationWhy UK House Prices are so expensiveSimple Ways to Cut Your Bills - How to save money on gas, electricity and insuranceA Humorous Look at the Sub Prime Crisis at Economics Blogs
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