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Lenders introduce 10 year mortgages

[ Posted January 29th, 2012 ]

Despite the fact that many lenders are starting to buckle down on their rates a number of building societies and banks have introduced ten year fixed mortgages this week in an attempt to lure those that want a more secure option for owning a home.

The standout offer is no doubt a new ten year deal set at 3.99% which should be an excellent choice for those who are applicable over the next few years; especially given the fact that most brokers are now predicting that the market is going to be shaky for the next few months.

Norwich & Peterborough Building Society,  Co-Operative Bank, National, and Woolwich Counties Building Society have all announced new ten year fixed mortgages this week that are all set competitively at under the 5% mortgage mark. The 3.99% mortgage deal offered earlier hails from Norwich & Peterborough and is obviously the best deal for those considering a ten year mortgage.

Although it is hard to tell what will happen in a decade, it seems a safe bet that below 4% is going to remain an excellent mortgage rate to be signed into ten years from now, although it does not allow much room for those who expect to be moving on.

The ten year low price deal is open to homeowners that can afford a LTV of 25% or greater and does have a £295 fee attached to it.  However, those that take advantage of the mortgage rate will get £200 cash back which offsets the fee a bit. In addition, those that are taking a look at the ten year rate as a remortgage will get free legal services and valuation tossed into the deal to sweeten it up a bit more.

If 25% is a bit out of your LTV range, then the Co-Operative Bank deal may be worth a look that, as this sits at 4.79% and is also good for the next ten years. The National Counties deal sits at 4.19% but it is only for those that are remortgaging their home and already have at least 75% or more paid into their home.

The same is true of the Woolwich County loan which sits at 4.99% and has a 70% LTV attached to it making it out of reach for most homeowners. Plus, the latter deal comes with a very high fee of £1500.

Brokers predicting mortgage rates will become unpredictable

[ Posted January 28th, 2012 ]

Many brokers are now telling new borrowers that have taken out variables or SVRs to expect mortgage rates to change quite a bit over the next few months as a result of the economic uncertainty that is looming over the UK. Many of the major lenders have already increased their rates expecting that the mortgage market will become unstable. Thus, those that have not yet taken out a mortgage may want to wait a few months, or act quick in order to get a reasonable rate for their home purchase.

Many brokers predict that the sudden increase in mortgage applications that took place over the last quarter is going to be replaced by an ‘ebb and flow’ that will continue to plague the market for the first half of the year. Most lenders are concerned about the high cost of funds as a result of the eurozone debt crisis which has caused them to increase their mortgage rates in anticipation.

Those with SVRs will also notice their lending rates go up over the next few months and likely have already noted a slight increase over the past month or so in their mortgage payment. Over the last few days, lenders have already made several changes to their advertised rates with some choosing to change their LTV bands so that borrowers will not necessarily get a better deal even with a high deposit.

Trinity Financial representative Aaron Strutt recommends that buyers spend some time shopping around before choosing a lending agent if they want to find the best mortgage rates on the market. It is also important to add up the savings of the deposit and the mortgage rate as well as any savings advertised for fee free loans as the actual savings may be less than expected.

Mortgage broker Andrew Montlake from Coreco said that the market is going to become very unpredictable over the next few months because as the Bank Rate stays stable lenders have the choice to sporadically increase and decrease their rates to help ward off a swarm of applications.

He added that since lenders do not want to see a sudden influx of applications from being the cheapest offer on the market, borrowers will see lenders change their rates at the same time and then decrease their rates at the same time. Therefore, it is useful to watch for the change in action and then jump on a great offer.

Mortgage lending increases over November

[ Posted January 19th, 2012 ]

Mortgage lending increased over the month of November even though mortgage rates started to increase according to a mortgage trade association as many homeowners rushed out to pick up fixed mortgages before the rates went up any higher.  In fact, the amount of home owners that signed into fixed deals during the month was a record number compared to the last two years.  The mount of home loans issued for new purchases also increased when compared to the November figures from last year making it the second time in 2011 that the year[on-year averages showed an increase according to figures that were released from the CML (Council for Mortgage Lenders).

The CML stated that 65% of borrowers over the month of November chose to take out fixed mortgages, which was a slight increase from October in which 62% of borrowers took advantage of low fixed rates.  Many mortgage providers helped to fuel the uptake in mortgage activity as major lenders such as the Post Office and Nationwide slashed their rates for all fixed products since the Bank of England has continued to hold its base rate at the historically low rate of five percent.

Experts are still sceptical of the housing market despite the increase in lending activity that was seen in November with Howard Archer the chief UK and European economist for HIS Global Insight stating that the housing market is still depressed when you look at long term trends.  He also mentioned there are a variety of problems and barriers that are likely going to negatively affect mortgage rates during the upcoming months of 2012 which will reduce the amount of growth in the housing market.  He has predicted that house prices overall will fall by about five percent during this year.

Among the factors will likely cause more havoc on the housing market this year is the rising rate of unemployment, stale wage growth, weakened economy, and consumer confidence lows.  In other news for the month of November the CML also reported an increase in first time buyer activity with an increase of 4% month on month and an increase of 5% for year on year comparisons. First time buyers also saw mortgage payments decrease bb about 13% when compared to the percentage of income that a mortgage payment takes up, which is good news for new homeowners and those considering making a home purchase.

Co-Operative slashes fixed mortgage rates

[ Posted January 14th, 2012 ]

At the close of last year, many mortgage experts were predicting that mortgage rates would start to steadily increase and as the fourth quarter progressed most of the larger banking and lending institutes had already started to slowly increase their rates. This made many analysts concerned that first time home buyers would continue to get shut out of the mortgage market and that the housing market in general would stall again as customers found that they had no other offers on the table.

However, just this week a few of the major lenders have actually reduced their rates, breathing some fresh air into the mortgage industry. Co-Operative made headlines this week by slashing their fixed mortgages by as much as sixty base points, offering those who have not yet remortgaged a shot at getting some great rates before they actually do increase.

First time buyers can also benefit from the high LTV’s that many thought would disappear as it offers them a chance to get onto the market without a large deposit. In some cases, there are even some high LTV’s that do not have any fees attached to them making a home purchase seem a bit more practical.

Included in the discount are fixed mortgages that feature a twenty base reduction with an 85% LTV. The new rates for these are 3.79% or 3.99% depending on whether the loan applicant can afford to pay the £999 product fee or not.  Head of mortgages James Hillon for Co-Operative Bank stated that in the wake of the eurozone crisis there are many lenders that were quick to increase their mortgage rates, but their banking institute is committed to going against the wave and instead helping to build the housing market back up.

Hillon added that outside of lowering their mortgage rates, they also have many different LTV’s available to help all types of home owners get back into the market.  Some of the offers do not even have fees with slightly larger rates instead, to help those who cannot afford the upfront costs of securing a mortgage.

Most of the three year fixed rates offered by Co-Operative have dropped from ten to fifty base points with one 90% LTV coming in at 3.89% which, for the current state of the mortgage market, is a reasonable deal.  Nationwide also announced similar deals this week that have made consumers evaluating their options.

Research shows consumers prepared for hike in mortgage rates

[ Posted January 14th, 2012 ]

As doomsday banking experts continue to raise concern that if mortgage rates jump the amount of foreclosures will increase as people will be unable to afford their monthly payments, a new survey reveals that many people are actually ready for this to happen. In fact, the study shows that most homeowners are aware of the threat of increased mortgage rates and are prepared to meet the new demands should they occur.

The results were compiled as a result of an industry survey that was carried out at the end of 2011. The survey also revealed that during 2011, mortgage repayments were at the most affordable that they have been for a decade.  This may be due to the fact that many people remortgaged their homes over the course of 2011 in order to take advantage of the best mortgage rates.

These rates were offered during the year the first nine months before the Eurozone crisis hit during the last quarter of the year. The poll also showed that 70% of borrowers that were questioned already have a plan in place that will help them afford the increase in their mortgage.

Another 80% of those included in the poll stated that if the interest rate were to change, thus increasing their mortgage rates, they have enough room in their budget that they could still afford their mortgage. While the survey did not state whether or not the changes would restrict their budget, most of those questioned did express that they would be able to continue to make monthly payments without a large reason for concern.

Despite this fact, the survey also showed that despite continual warnings from experts that the rates could go up, most borrowers do not really believe that it will happen in 2012. There are experts who also share this view as some banking industry analysts predict that the Bank of England will not actually change the base rate in the UK until 2014.

This alone would be astounding given the fact that it has sat at .5% for 34 months already.  However, if the euro fails, or the Eurozone debt crisis fails to find a resolution over the next couple of months, then the economic climate in the UK could be quickly affected changing the current predictions of the housing market.

Bank of England concerns amidst large firms defaulting on loans

[ Posted January 6th, 2012 ]

The Bank of England has reported this week that more large firms are defaulting on their loans for the first time in the past two years and that this, combined with the eurozone crisis, will continue to make the mortgage market harder to break into for first time home buyers.

The reason for this is that as the banks find themselves in debt again they will tighten the loaning criteria for smaller loans, such as home mortgage seekers, causing an increase in mortgage rates and loan application rejections.

In a study that was conducted over the last quarter of 2011, the Bank of England discovered that there was an increase in the amount of SME and large company loan defaults. The level of defaults is the largest it has been since the close of 2009.

The Bank also warned that this trend is likely to continue and increase over the next few years which will force lenders to increase their mortgage rates and other interest rates attached to home loans in an effort to better protect their funds, which could cause problems for many first time home buyers already facing a poor housing market.

The Bank study also stated that lenders have seen the amount of defaults by small home lenders decrease over the past quarter, but with larger firms defaulting, the banks will still be forced to increase their SVRs in order to compensate.

Lenders are also wary of a fall in demand for mortgage loans and those seeking out mortgages outside of fixed mortgages, forcing them to compensate for the loss of profit from lending as well which will play a role in determining the price that they demand in exchange for the loans that they do give out.

Lenders that were consulted by the Bank of England stated that they expected to see their credit scoring criteria start to tighten very quickly in regards to lending to companies and to households.  The banks stated that as it is more expensive to raise money via the financial markets, and via interbank lending, they will in turn have to increase the price of lending to everyone.

Lenders are also more concerned about the high costs associated with households that have the potential to default in the future as the economy continues to teeter on the edge of disaster.

Equity specialist LV cuts mortgage rates

[ Posted January 6th, 2012 ]

At a time when most experts are concerned about mortgage rates increasing LV, the equity specialist, has announced a move that has shocked many people. The firm announced this week that they would drop their lifetime mortgage rate for customers that are under the age of eighty that are interested in signing up for a long term mortgage.

Given the current state of the mortgage market, and the shaky ground that it is now teetering on as a result of the Eurozone debt crisis and inflation, signing into a long term mortgage is a good way to find financial security.

LV announced its best mortgage rates for those that are interested in flexible and lifetime mortgages at the start of the week.  A standard rate change from the company includes a drop down to 6.49% from 6.59% for a lifetime mortgage for someone that is between the ages of sixty to eighty.

Those that are interested in a standard flexible lifetime mortgage will find that the rate from LV has dropped from a high of 6.79% down to 6.69% with qualifying credit for the mortgage agreement. Vanessa Owen, the head of equity release for LV, stated that the company feels that when this offer is combined with the equity specialists already low rates then their products will become a strong choice for clients and advisers who are searching for good deals.

Lifetime mortgage products are usually sought out by those who have reached retirement age and want to fix their monthly bills so that their spending is controlled on a regular basis. Although this type of mortgage does not allow for market changes that could produce lower mortgage rates down the line, it does offer a sense of security against future market shifts that could adversely affect a pensioner on a fixed budget.

LV also announced in November the launch of a new product called the Pension Income Plus Annuit,y that allows customers who have a high income upfront to purchase a home with lower income in the future, accounting for such as those who receive large upfront annuities.

This allows for careful budgeting to make sure that a home mortgage remains affordable even as they continue to age and slowly find that their income is not as high as it used to be back when they originally secured the mortgage.

 
 
 
 
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