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Property Market Forecast for 2012

[ Posted December 30th, 2011 ]

House prices are expected to continue to fall throughout 2012 as a result of the poor economic state and the fact that the eurozone crisis will place tighter restrictions on banks as they choose who to lend to.  Many different estate agency groups are already predicting that there will be declines across the housing market next year, with Knight Frank estimating that overall house prices will fall by about 5%.

Hamptons International, however, is a bit more optimistic predicting a 2% fall. As mortgage rates continue to increase this will also hurt the housing market as less people will be heading to their lenders for remortgages, which was the backbone of the mortgage lending activity this year.

Property experts are expecting the overall demand from homebuyers to also fall during the coming year which will decrease the amount of housing transactions that are completed. Nigel Bedford from largemortgageloans.com stated that the underlining message to be heard about the property market this year, and the state of the average mortgage rate is that the uncertainty that is effecting the economy in the UK, and globally, is going to be reflected in an uncertain housing market as more people are concerned about acquiring any more debt.

Outside of the average home owner, mortgage brokers are also worried about how the sovereign debt crisis from the eurozone is going to affect financing for those who are interested in acquiring a commercial mortgage, or those who are concerned about buy to let investments.

Overall, the higher costs of wholesale lending known as the Libor, is expected to continue to increase which will cause rates in turn to also continue to increase.  As most budgets are already quite tight, the jump in mortgage rates could cause problems for homeowners that did not switch to a fixed deal while the rates were down.

John Charcol mortgage broker Ray Boulger stated that he thinks that the lending costs for banks will continue to increase over the year until some type of resolution is found for the eurozone debt crisis. Until this point is reached he stated that banks will be forced to reduce the amount of new loans they make over the course of 2012 and will have to attach higher lending rates to those that they do complete, hurting both the average consumer and the housing market.

Leeds Building Society announces new fixed mortgages

[ Posted December 30th, 2011 ]

Even though many people are noticing that the mortgage rates are starting to increase as a result of the Euro zone crisis and other factors, there are still some great deals out there for those that can afford a deposit on a home.

Therefore, even though the same flat rate deals may no longer be on the market now is still a great time to take advantage of a deal that can help make owning a home cheaper in the long run. However, now is the time to act as prices will only continue to increase as time continues to pass.

One of the newest deals to hit the market this week is from Leeds Building Society which just announced new deals for those in search of fixed mortgages that are tied to a three year term.  As part of their new deal the lender announced that it will take off its £800 closing fee and offer consumers a free valuation of a home that is worth up to £335 for any lender that is taking out a loan.

The building society will also offer those that work with it free legal services for all remortgages, making it an attractive time to stop in and see what they can do for you. Homebuyers will be pleased to see that the three year fixed mortgages come attached with rates as low as 3.04% and increase upwards to 3.99% depending on the LTV that an interested consumer is able to afford, along with their credit worthiness.

Sales and marketing director for the Building Society, Kim Rebecchi, stated that they are happy to start 2012 off on the right foot with deals for those who want to buy a home or help for those who want to refinance their home at a better rate. Rebecchi also said that the products that have their fees reduced or removed are great choices for both those in the market to remortgage and for those who want to purchase a home for the first time.

At the beginning of the month Leeds Building Society also announced a new shared ownership deal for first time home buyers that need help getting out there on the property market which can be an excellent option for those struggling to meet the high demands of a standard LTV in today’s housing market.

Housing market outlook for 2012

[ Posted December 21st, 2011 ]

With 2012 fast approaching, many experts in the housing market are now taking a look at what will happen over the course of next year . Earlier analysis was not positive, and now with the eurozone debt crisis and the reality of inflation setting in the market outlook is starting to look even more negative.

Overall, most analysts are now not expecting the Bank of England to increase its base rate, but the added pressure of the above mentioned elements will likely cause mortgage rates to continue to rise putting many homeowners in a perilous situation.

Homeowners and first time buyers shy away from talking about the mortgage market anymore because the prices of the average home can be depressing. In fact, Knight Frank revealed estimates that the average UK home price had increased by about 1.3%, but when you factor inflation into the equation, in reality property values have fallen by about 5% overall.

Therefore, even though 2011 offered some of the best mortgage rates that have been seen this decade; the overall values of property kept many people from actually rejoicing in the relief that the temporary decline brought with it.

Experts are now predicting that 2012 will not be any better, with predictions that house prices are going to decrease by another 5% during the first two quarters of the year and then remain flat and static for the last two quarters.

Depending on if the economic recession returns, and the non-resolution of the eurozone crisis, the housing market is could possibly be under the threat of falling by up to 10% over the course of 2012, which is not great news for those looking to get into the property game because even with a reasonable mortgage rate any investment will be lost by the close of the year.

Analysts and brokers are also warning that tightened budgets for most households, the poor labour market with threats of increased redundancy, and overall uncertainty about the future will continue to cause house prices to decrease as many potential buyers will decide that now is not the time to invest in a mortgage.

In addition, depending on wholesale funding, many banks may not even be able to continue to lend to home buyers at a reasonable rate or even at all, causing the housing market to break down teven more.

Mortgage rates expected to increase as house prices decrease

[ Posted December 21st, 2011 ]

This year has been a pretty good year for mortgage holders compared to last year as 2011 brought with it some of the best mortgage rates that have been seen since the economic crisis in 2007, but this seems to have come to an end as mortgage rates continue to rise.

Even more so, most experts are expecting that house prices are going to start to fall again, ruining the little growth that the lending market experienced this year for the mortgage lenders and those seeking mortgages in the tough economic climate.

The best outlook for the year would be that house prices would remain static, but the risk is higher that the house prices will decline especially if the eurozone does collapse. This will also affect the mortgage rates due to the fact that if the eurozone collapses the rates will be increased by most lenders since their interbank loan costs will increase.

Even if the base rate does not increase most banks will increase their SVR’s to cover costs and add more fees to mortgages, making them even more expensive for those who have not yet been able to get into the property market. Apart from all this, there will unlikely be much change because of the very few houses that have been sold and bought over the past year.

In fact, although 2011 saw a great deal of mortgage activity, most of it was people remortgaging their homes in an effort to take advantage of low fixed mortgages to buy them some security while the rates were still low. Although at the time trackers seemed more attractive, these homeowners may find themselves appeased this year as they will be the only group unaffected by the upcoming mortgage crunch.

Mike Bessell from Evolution Securities stated that at the moment the housing market is barely moving along at rock bottom and that in the future most transactions are going to be ‘forced sales’ which will not help the situation. First time home buyers can also not expect to see much improvement as LTV’s are expected to stay high, keeping deposits out of most people’s reach.

However, economic uncertainty looming over most people’s heads and the threat of another recession in the near future may be the main reasons that most people are staying out of the home market.

Co-Operative Bank reduces their mortgage offers

[ Posted December 15th, 2011 ]

Even though many banks are increasing their mortgage rates this month as a result of the rising costs of interbank lending and the tighter economic outlook, Co-Operative Bank has decided to take a step towards helping out its consumers by reintroducing their fixed mortgages so that rates can be dropped.

Some of the rates offered by the bank will be slashed by as much as .6% helping to make it easier for first time buyers to get their feet on the property ladder for the first time. This will also be helpful for those who need to remortgage their homes. To make it easier for those seeking a remortgage and for those who are just starting out on the property ladder, the Co-Operative bank will also offer many of their low mortgage rates without any fees attached.

The no fee options should help those who may be struggling to get together a high LTV as they can put their savings toward the LTV instead of towards the fees that are associated with applying for and getting approved for a mortgage. This is the aim of the new project according to the Bank.

James Hillon of the Co-Operative Bank stated that as the crisis in the eurozone is causing many lenders to sharply increase their mortgage rates the bank is committed to offering consumers another choice by ignoring the trend and instead keeping rates low so that there continues to be some movement within the unstable housing market.

Last year the bank also offered two new products to help buy to let mortgage owners including one product that offered cashback and another product that allowed for options as part of the mortgage deal.

Consumers simply looking for housing products will enjoy the new offer by the Co-Op Bank that offers a LTV set as low as 85% with an attached mortgage fee of just 3.79% which for a fixed mortgage is very reasonable this month. On the other hand, a customer that can only afford a 90% LTV but is willing to take a five year fixed deal can enjoy a mortgage rate of 5.09% which is slightly higher but may be the push needed to get on the property ladder without having to find such a large deposit.

FSA scrapes plan to requires mortgage rejection explanations

[ Posted December 10th, 2011 ]

This week, the Financial Services Authority took an opposite stance to the one made earlier in the year in which they said that they would require intermediaries to find out why any mortgage application was rejected. The FSA first stated at the start of the year that if one of the low rate mortgage rate applications was rejected intermediaries would be required to find out why the application was not approved, but a new 168 page guide that came out today said that this is not a requirement anymore.

The guide is focused on financial crime which has been on the rise this year with end of the year surveys showing that mortgage fraud is on the rise along with the fall in mortgage rates. The watchdog organisation stated that that it is not possible for lenders to publish this information to all intermediaries because in some instances they may question the good will of the intermediary and need to withhold this type of information.

Therefore, it is not possible to mandate that all mortgage rejections be explained fully to the intermediaries that are acting on a mortgage applicant’s behalf. In regards to the explanation of why fixed mortgages may be rejected, the FSA stated that they realise that finding out the reason for mortgage rejection may be a good tool in preventing fraud, but there are many problems that intermediaries can get into by using this small piece of good practice.

Therefore, the organisation decided that it is in everyone’s best interests simply to remove the stipulation from the law. The FSA did add that they do still believe that intermediaries and lenders should work together to change the way that they share information but a mandate in this case is the not the best way to proceed.

Mortgage approvals have actually increased this year compared to last year’s year end average, due partially to the sharp decrease that mortgage rates took over the past year and the banks’ competitive pricing plans. However, as the market becomes unstable again the rates are beginning to inch back up and it is expected that the next year may return to previous harsher standards for those seeking out a first time home mortgage or other type of mortgage approval.

Mervyn King concerned mortgage rates will soar

[ Posted December 1st, 2011 ]

Sir Mervyn King spoke out this week stating that in the face of the eurozone crisis most mortgage rates are going to increase despite efforts and statements by the UK government that public lending costs need to be kept in check.  According to king, the eurozone crisis is now past control and the Bank of England is readying itself for a worst case scenario should the bottom fall out on the lending situation and the debt crisis.  The news gets worse as Downing Street claims that Britain is now facing its second credit crunch in just four years.

King is mostly concerned that the crisis in the Eurozone is hurting Britain with the financial policy committee in England concerned that the higher borrowing rates that banks are facing will be passed onto to the public over the next few months.  The end result is going to be that the average family is going to have to deal with a much larger mortgage rate than anticipated.  Just a few months ago many experts were claiming that an increase in the base rate would not be seen until late into 2012, but now the outlook has changed due to the Eurozone debt crisis.

According to King, there is about £500 billion from the British banks tied up in European institutions which means there is a great deal of potential for upheaval.   He continued to warn that the situation was getting out of control and that there was is little that the British government can do at this moment to try to control costs.  He explained that the conditions within the markets are starting to look similar to a systemic crisis.  He added that the crisis is allowing people to see the costs of financial instability to the mortgage market.

The governor of the Bank responded to the news by ordering all banks in the US to stop handing out bonuses to their staff members in an effort to reduce costs and attempt to keep the mortgage rates down for the time being.  He also stated that lenders need to protect themselves by putting their houses in order to help protect themselves from the upcoming threat of the financial storm that is likely to be unleashed within the next few months although at the same time he advised banks to continue to lend money in an effort to maintain the small increase in the stale mortgage market that has been seen this year.

Mortgage rates continue to jump higher

[ Posted December 1st, 2011 ]

The average new home owner that secures a new mortgage for themselves today is going to end up paying more than they would have if they had simply headed down to a lending agent or bank a month ago despite the fact that the chancellor just stated that the low public borrowing costs would protect British families.  In fact, it seems that most lenders now are increasing their mortgage rates on a monthly basis meaning that every day lost for a potential homeowner will drive up their final costs of closing a monthly mortgage.

Over the course of the last five days The Mortgage Works, Northern Rock, Clydesdale Bank, Nationwide, and the Skipton Building Society have all jumped up their mortgage rates for almost all of their deals whether they are fixed or tracker variables.  However, the largest increase has been seen in the short term fixed mortgages and the tracker mortgages.  The increase comes at the same time that George Osborne announced that the government would be taking steps to make sure that the average lending rates stay down to help out those who have mortgages.

Osbourne warned that allowing the interest rate to increase by just one percent would cause mortgage bills across the country to increase by a whopping £10bn and that an average family would end up paying £1,000 more for their mortgage every year.  It is estimated that a one percent change in the base interest rate would cause a family with an average mortgage of £160,000 on a tracker mortgage rate to pay about £70-90 more every month which could put a strain on household budgets that are already under a lot of strain causing foreclosures to happen again on a massive scale.

Although mortgage the public borrowing costs are still relatively the same, the rates keep edging up as many analysts have been warning would occur over the past six months with many experts now predicting that they will continue to move upwards over the course of next year due to the eurozone debt crisis.  The unstable nature of the sovereign debt crisis will likely end up increasing the cost of wholesale funding for most banks which will be reflected in the rates that the banks end up offering new home owners or the rates that come attached to the standard variable mortgages offered by lending institutions.

 
 
 
 
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