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Banks Take 16.3% Share Of Mortgage Business

[ Posted July 31st, 2009 ]

Two different banks, Abbey and Alliance & Leicester are claiming to be the United Kingdom’s second largest mortgage lenders when you combine their businesses together. Both of the banks became a subsidiary of the Spanish group, Santander.

This week, both companies announced their half-year results of business and it did indeed show that they have a large chunk of the business. According to their statistics, they were responsible for covering some 16.3% of the UK mortgage business for the time period of January through June of 2009.

The combination of businesses also turned in a fine profit margin for this same time for the parent company with a rise of 30%. This was mainly due to it’s buying of the Bradford & Bingley’s Savings and Loan. This makes Santander the third largest in the UK for retail deposits.

It was also noted that Abbey’s lending strategy was recognized as being prudent for the time period as they were able to keep their writedowns to a minimum during this time period avoiding any losses during this time of economic slowdown. The bank was also noted for having new mortgages that had a 60% loan-to-value ratio.

Fixed or Tracker Mortgage Question

[ Posted July 31st, 2009 ]

Positive signs have been showing when it comes to the mortgage and housing market. The Nationwide Building Society’s figures on the house price index shows that these prices have risen again and have done it again for the third time in June. Additional, according to the Bank of England, mortgage approvals have risen for five month in a row ending in June.

One of the problems, however, is that there seems to be a shortage in product choice at the moment. Tracker products have seen a reduction in over 80% during the past 12 month period. According to Moneysupermarket, wholesale borrowing costs have been lower with a 20-year low in the basic wholesale rate, the one that the Bank of England charges as it its base rate.

The mortgage expert at Moneysupermarket.com, Louise Cuming states, "The fall in the number of mortgages, highlights how the last 12 to 18 months have seen a complete meltdown in the market. Coupled with that, we’ve got mortgage rates that are completely divorced from the wholesale borrowing rate and to add insult to injury, mortgage rates are at their highest level for months. It’s a stark reminder that lenders call the tune and competition is no longer the name of the game."

Do you want a tracker rate right now? They’re not a bad shot as long as the base rate stays as low as it currently is, at 0.5%, but if that rate sees an increase anytime soon, you’ll likely want to make the changed to a fixed rate. Sure it may be higher, but the chances of fluctuation isn’t there to contend with.

Bank Of England Shows Increase

[ Posted July 30th, 2009 ]

The Bank of England shows new statistics that are enlightening for the mortgage industry. The number of mortgages approved between May and June of 2009 were up from 44,169 to 47,584, according to their records. This is the highest level they’ve recorded since April of 2008.

June also displayed statistics that proved that remortgages improved as well to 35,011 however the amount of these types of loans was below average for the last six months.

The bank showed that June’s net lending total was 343-million pounds which was barely ahead of May’s figures, which had shown to be the lowest on the record books.

The Council of Mortgage Lenders made comments on the data saying that it was effectively stagnant.

Paul Samter, a CML economist said that this outlook was positive than it was earlier however he said that it was still somewhat sluggish.

He continued by saying, “Overall, these numbers are consistent with our outlook for a gradual improvement from historic lows following the financial system turmoil last year, but for any recovery to be slow and drawn out.”

Bank Of China Gets Into Lending

[ Posted July 30th, 2009 ]

There are many banks and lenders to choose from in the United Kingdom and many of them are highly competitive in rates.

It was recently announced that the Bank of China will get involved into making loans to British homeowners and landlords to extend their base of business.

In the past, the Bank has granted loans to some in the UK but many of these were focused on lending to those who actually lived in the Chinese communities.

To start off with, mortgages from the Bank of China will be offered via four different brokers and will have a starting rate that is 2.5% above the base rate.

The folks that borrow money from the bank will have to attend a face-to-face meeting with company personnel if they wish to receive the mortgage from the bank. Current UK mortgage lending is not as great as it used to be and is approximately one-half of the level it use one year ago this month.

“While I do not believe it will re-shape the whole mortgage market in the UK, if it works here, it is a bank with sufficient scale and could potentially deliver big volumes”, said Mark Harris, managing director at Savills Private Finance, one of the four brokers offering the Bank of China mortgages.

Smartlandlord.co.uk said the Bank of China’s decision “demonstrates confidence in the UK housing market”.

“Contrary to media reports, the private rented sector is buoyant”, the buy-to-let specialist added.

Scotland Shows Falling Rents

[ Posted July 30th, 2009 ]





The online letting portlet, Citylets, recently announced that rents in Scotland are beginning to fall and there could be many reasons behind that figure.

The recession is likely one of the factors that is behind that drop and not to exclude the unemployment rate in the area.

The latest figures from the organization shows that rents fell for the second consecutive quarter and for the period of April though June of 2009, dropped by approximately 3.3%.

High stock levels have also had a point to play in this drop as landlords are forced to secure leases at lower values. Cheaper mortgages may assist some landlords who are purchasing new properties to let in turn helping them with their bottom line.

There are certain areas that are being hit harder than others with the one most notable, being the student sector. There is also a high availability of apartments and houses that are rentable making the choice much more advantageous for the renter to select what they want. Another factor that is notable is that the average to to let a property is about 14 days longer than what it has been at its peak time.

Thomas Ashdown, spokesman for the Citylets Network, said “that while rental levels are falling, which will be pleasing to tenants, it is not all bad news for landlords.”

He continued by saying, “Although the continued decline may be of concern, the fact that rents have fallen by only 3.3% year-on-year during the sharpest recession in living memory and with other business sectors experiencing catastrophic collapses, I’d say this is by no means a disaster for the vast majority of landlords."

He finalized with , “That said, the full impact of fast-rising unemployment may yet to be felt, but there are positives to be taken out of this report for both landlords and tenants.”

Moneysupermarket Likes Abbey’s Lending

[ Posted July 29th, 2009 ]




Different lenders take alternative approaches when it comes to lending money for mortgages. First time buyers are usually the group that comes with some risk because they’ve never handled a mortgage out before. Moneysupermarket was quick to note that Abbey has a unique approach when it comes to handling this group of individuals.

According to Moneysupermarket’s Louise Cuming, the head of mortgages at the group had some unique comments about the way Abbey was handling mortgages with this group, Taking a more conservative approach to mortgages into retirement is a sensible move from Abbey, and one which we expect other providers to follow as lenders move to ensure the long term affordability of mortgage debts.”

She continued by saying, “Abbey has reduced the maximum age at the end of the mortgage term from 85 to 75 years, and borrowers should take this as a wake up call to make changes now to ensure their mortgage is repaid before retirement. This is increasingly important as a growing number of people are facing a significant drop in income with inadequate pension provisions.”

She added, “These days first-time buyers are older when they take out their first mortgage, with a typical first-time buyer being around 33. If they stay in the same house, they’ll have reached 58 by the time they finish their 25-year mortgage term. But if they move home a couple of times taking the mortgage back to a 25-year term each time, quite soon the end will be nearer 70.”

And made the final comment, “Homeowners should take advantage of current low mortgage rates and put some sorely needed extra equity into their homes and think about shortening the requested term if they can afford to. By reducing repayments from 25 to 20 years, homeowners could save £32,000 in interest and in addition it means borrowers are more likely to be able to clear their mortgage before retirement.”

Land Registry Shows Prices Rising

[ Posted July 29th, 2009 ]




The Land Registry compiles its information on a monthly basis to provide indicators as to how the housing market is moving. It often can be used to base mortgage rates by lenders that use this type of information.

Monthly figures for the time period ending in June 2009 showed that overall housing prices showed a small increase over the same period for the period ending in May. The increase was reported at 0.1% with an average cost of a home in England just roughly over 153-thousand pounds.

When comparing it to a 12-month average between 2008 and 2009, there was a different story to be told where housing prices dropped around 14%. The Registry states however, that it doesn’t signal a return to solid growth but rather a flattening process.

The five regions in the London area showed a 2% increase, while the East as near flat at 0.2%. The South East showed a growth of 0.3%, South West 0.4% and the West Midlands rose 0.5%.

Land Registry information also had some other breakdowns that showed modest decreases such as in Humber by 1.2%, Wales 1.1%, East Midlands 1.1%, the North West by 0.9% and only 0.1% in the North East.

The research also showed some other figures that were based on property types which also showed declines and they were “detached homes 12.2%; semi-detached homes 14.3%; terraced homes 14.6% and flats or maisonettes 14.8%.”

These numbers are somewhat representative of what some lenders are seeing in their research as well however there are some subtle differences. Additionally, these figures could be delay due to the nature in which they are compiled.

Zoopla Releases Statistics On Market

[ Posted July 29th, 2009 ]




Zoopla Limited recently released some statistics on where some of the hotspots are for pricing of homes in England.

There were many locations that saw an upward trend in their figures while others didn’t fare as well. As a whole, however, prices in England did show a downward spiral that was approximately a little over 3-percent. This is when comparing prices for the last twelve months over the same period ending in 2008.

So far this year, the average cost of a home, country-wide, was approximately 207-thousand pounds and if you live in London, the price was higher, coming in 362-thousand pounds. Home values fell by roughly 11-percent in London when you compare them to the previous year.

Some of the areas that marked an upward trend included Oxfordshire, Bath, Plymouth, Wiltshire and North Somerset showed a gain of 1.4%.

There were areas such as Northumberland which showed a loss in price by nearly 10%, followed by Suffolk, Shropshire, Cheshire and Herfordshire.

There are many reasons for the drop in some of these areas that include unemployment, the recession and the variation in mortgage rates.

The Chief Executive of Zoopla, Alex Chesterman had a comment on these new statistics, “While optimism around a full market recovery may well be somewhat premature, there are clearly some bright spots emerging in the market and the overall pace of house price decline has slowed noticeably compared to last year which is good news for homeowners.”

PropertyEarth Says To Put Cash In Real Estate

[ Posted July 27th, 2009 ]




Over a third (35%) of finance professionals would have the temptation to invest a redundancy payout in a buy to let property, this according to new research from PropertyEarth.net, the chain free property portal.

According to the research, around 30% of finance professionals would use a redundancy payout to cover everyday living costs. Property is the preferred outlet for those looking to invest their lump sum of the money that they have. This would be followed by a savings account (14.6%), gold (10.7%), FTSE 100 stock market shares (7.8%) and oil (1.5%).

The average severance package received by banking, finance and insurance professionals on redundancy is £21,300. This would be enough to cover the cost of a 25% deposit on a chain free one-bedroom flat listed on PropertyEarth.net. The cost of the flat would be on average £84,208.

The average PropertyEarth.net net rental yield at 6.59%. With that in mind, an investor could generate a rental return of £14,037 over ten years after costs. This would not take into account potential capital growth. In comparison, the 14.6% who would prefer to invest their lump sum in a savings account won’t account for the same payout.

The research also revealed that prospective investors are generally in it for the long haul. Almost 72% considering property as a long term investment. This is quite a bit difference in thinking from the pre-recession ‘get rich quick’ property investment mentality.

Dominic Toller, Managing Director, commented: “This research shows that property is still viewed as a strong long term investment, despite the recent volatility. Savvy finance professionals are taking a long term view and are attracted by the returns currently offered by the buy to let market, due to the low prices and high yields of chain-free property in particular.”

LSL Property Services Says Rent Is High

[ Posted July 27th, 2009 ]





According to the company, LSL Property Services, they indicate that in June rents are running higher than ever, up over 1% compared to the month of April. They put the average figure at 649-pounds per rental. There is a difference though over the previous year when it ran upwards to 7-percent and that mainly due to inflation..

The biggest increase over the last year was in Wales where landlords have increased the rents by almost 5%.

Those falling in arrears when it comes to paying their rents seems to have fallen over the past months with the figures jumping from 557,000 to 529,000 in June which shows a much better outlook.

LSL’s David Brown had comments about the situation, “Rent arrears are second only to leaving a house lying empty for the financial pain they cause landlords. Most of the improvement in June was among those only a few days late, but there has also been a small drop in those more than a month behind too.”

He continued by saying, “Those who suffered first from the recession were those in lower-paid jobs, often the most disposable workers when employers look to cut. But the downturn is progressively affecting tenants on higher incomes as they begin to fall behind with their rent. Landlords are learning the lessons of the recession, and are quicker to act when their tenants fall behind. Opening up communication quickly with tenants is key. Landlords want to keep people in their homes – they rely on the rental income and would rather tackle arrears quickly and constructively. Using professional management services can really help in this respect.”

 
 
 
 
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