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Mortgage rates spike after reports that GDP dropped last quarter

[ Posted January 30th, 2011 ]

Although there are signs that the costs of lending are starting to lessen for banks, many home owners are dismayed to look that mortgages as they a constant increase in interest mortgage rates and banks refusing to renegotiate with them over their mortgages.  Even scarier, for new home owners the cheap deals that were supposed to make first time home buying affordable seem to have all but disappeared from the major banking lenders frustrating a large amount of people.  Many are questioning why banks are trying to squeeze the last penny out of their pockets when consumer confidence is down and the property market in general is already sitting uneasily.

Many in the property industry believe that last week’s news that the Britain GDP went down over the last quarter of 2010, in other words placing the UK a quarter away from a double dip recession, is the real reason why banks hastily started to increase their interest rates and pulled their best mortgage rates off the market.  However, disheartened, a day after the news banks dropped their own inter banking loans between other banks down to interest rates that were .2% less even though they jumped back up the next day.

Analysts predict that while they may have recovered by the end of the week, they fear that over the course of the next week the inter loan interest rates will fall again as consumers confidence in the rebounding economy continues to drop.  As a result of the dropping wholesale rates which is what they are known between banks, lenders such as Halifax pushed up mortgage rates repeatedly causing the average fixed mortgages to come in at about 4.34% by the end of this week on a two year bases.  Considering the fact that just a few weeks ago the rate was sitting at about 3.8% this is stunning news for most, especially those with variable mortgages under their belt.

Parents penalized with lower mortgage capital

[ Posted January 28th, 2011 ]

As the criteria for mortgages continues to increase against the equally crushing power of rising mortgage rates families that consist of children are facing the blow as lenders are handing out reduced mortgages to those with kids versus couples without.  This could cause parents to be prevented from acquiring a cheaper deal on their mortgage once the interest rates start to skyrocket since they will not be able to find a lower mortgage rate unless they choose to downscale which depending on the size of the family may not be an actually possibility.  However, those with fixed mortgages should be counting their lucky stars as the increase in mortgage interest rates will not affect them.

After the FSA released its review of the current mortgage market many building societies and banks responded by tightening their criteria for loaning; in particular the criteria that judges a family’s budget to award them a lending amount.  However, this unfortunately has hit those with children even harder as the reduction in the mortgage amount offered could be as high as twenty percent although most families will notice that it sits at about ten percent.  Many parents are now worried that they will not be able to acquire a fixed rate mortgage before the interest rates soar.

In the past children were not counted as full dependents that would affect the amount of money that is awarded in a mortgage, however now that it is a factor it has caused a large uproar as people are saying they should not be penalized for choosing to have children.  While this is not a problem for families in home at the present, once interest rates start to double it will prevent them from changing their rate and may in some cases lead to foreclosure and the loss of a family home which in turn would lead the market cycling back to the same dead end its been stuck in for the last few years.

Halifax leads the end of fixed-rate mortgages

[ Posted January 23rd, 2011 ]

Competitive fixed-rate mortgages are being withdrawn from the market quickly, with Halifax leading the way. This is due to anticipated hikes in the interest rates in the near future months.

One spokesperson of Halifax commented, “As we continue to be watchful of our rates, we have reset prices on select mortgage products, due to changes in their funding costs.”

Barclays Wealth seconded the motion by withdrawing its offer of the ten-year fixed-rate loan and raising the points on the fixed-rate mortgage by 0.5pc. First Direct followed suit in its move to yank many of the five and two-year fixed-rate loans, previously offered at a max of 65pc LTV (loan-to-value). In the meantime, Yorkshire Building Society is jacking up the rates on the ten, five, and three-year fixed-rate mortgages 0.20pc.

The advice now is to move lightning quick to fix your mortgage interest rate before it’s too late. You might miss out on the opportunity. The trend is expected to continue all the way across the board.

What we are seeing is a domino effect. Once one is taken out, the others collapse on each other in a cascade. They all want to adjust to remain competitive.

There are so few five-year contracts left at fixed-rates under 4pc that these must be feeling the pressure to withdraw as well.

The Council of Mortgage Lenders (CML) published stats today that indicate gross mortgage lending dropped 6pcin the past two months and an entire 18pc over the past year, which yielded the lowest performing December in the past ten years. Some experts blame the bad weather.

Swap rates, which are the whole sale rates banks base mortgage funding offers on, have been pushed higher this week as well. This has in turn forced the overall price to borrow money higher too.

Money markets have changed their colours to follow everyone else, rising out of prediction of an increase in the base rate. Even now we are seeing various lenders factoring these changes into their products’ prices. Considering these aspects, the demand of the public is still lower than was anticipated.

Mortgage lending heading for new lows

[ Posted January 21st, 2011 ]

It is predicted that mortgage lending rates are likely to drop down to the lowest level seen in the housing market in the past 30 years as banks are facing problems attempting to pay back bail-outs from the government.

The Council of Mortgage Lenders expects to see net lending dip down to only £6b over the course of 2011 which will be the lowest the figure has set at since 1980.  Before the economic downturn and the ensuing credit crunch became a reality in 2006 net lending was sitting at almost 100% more weighing in at £110b.

Due to the fact that banks have to pay back around £130 in government lending by the close of 2011 the figure may even worse as there simply is not enough money to lend to potential mortgagers.  Experts believe that those looking for home mortgages will be forced to pay the upfront price for the careless banking habits of the largest banking institutes.

Ray Boulger from John Charcol the mortgage advising group stated that the figures are astounding and represent how the banking crisis affects anyone that is hoping to purchase a property over the next year.  He added that the crisis is the product of the banks irresponsible lending habits before the credit crunch and will continue to hunt home owners and prospective home owners for quite some time.

The predictions of the lending rates do not reflect inflation and are built on the hope that the UK will not slip back into a second recession.

Given the reduction in mortgage lending, it is predicted that property sales will remain flat down a total of £1.6m before the economic crisis hit the UK.

 
 
 
 
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