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Mortgage rate warning is voted down

[ Posted April 26th, 2012 ]

The Government has voted down the Labour mortgage rate warning that would have resulted in amending the Financial Services Bill so that lenders would be forced to educate borrowers before they signed their mortgage papers.

The Labour party wanted a mandate that would require all lenders to be advised clearly on the fact that interest rates could change over the lifetime of the mortgage and how rate increases could change the actual costs and affordability of the mortgage package that they are considering purchasing.  Chris Leslie, the Shadow Treasury financial secretary, led the call for the amendment that would have brought new proposals to the table over the next six months.

Mark Hoban, the Treasury financial secretary, stated that the change to the bill was not needed because the FCA is responsible for checking and requiring that mortgage providers offer an adequate amount of information to borrowers.

According to Hoban, placing a separate amendment to spell out that lenders needed to inform lenders about increasing mortgage rates was not necessary.  He also added that many lenders already offer mortgage lenders information about this anyhow since they want to avoid foreclosures down the road.

Hoban went on to explain that those who seek out fixed mortgages already receive information on changing interest rates and there is currently a consultation being conducted on the mortgage market.  One of the provisions that are part of the consultation includes requiring lenders to think about the changing interest rates in terms of each lender before offering them a home.

Therefore, the implication is that if lenders are lending funds responsibly and weighing in the change in interest rates then a lender should already be deemed able to afford the change down the road making it a non-issue.

Leslie on the other hand defended the proposal before it went up to vote stating that it was needed to help protect consumers down the road when their mortgages suddenly become more expensive because of the jump in interest rates.

He explained that mortgage rates are not going to stay low forever and people need to know that in the future mortgage rates are going to increase and therefore need to be ready and able to accept the change. He added that he was worried consumers will believe that mortgage rates are really this low when in fact the current mortgage market is far from normal.

Five year fixed mortgages at a low

[ Posted April 24th, 2012 ]

Over the past year the average mortgage rate of a fixed product has fallen down by about .8% dropping overall from 5.6% down to 4.86% which makes a large difference for those in the market for a long term fixed product.

The fall in the five year fixed term should be of interest to savvy homeowners with a mortgage that is on a standard variable rate given the fact that many of the larger lenders and a handful of the smaller lenders have announced that they will increase their SVRs come May 1st. spokesperson Louise Holmes stated that the average fixed mortgage rate has been coming down over the last few years and they are currently at the lowest that the market has seen them in the past two years.

She added that fixed mortgages are particularly interesting to those that like knowing what their monthly payment is going to be for a certain designated period of time regardless of how the market performs.  She also stated that this makes it easier to play for a financial budget since the repayment amount does not fluctuate over time requiring adjustment in the family budget.

One of the reasons that lenders are able to offer the best mortgage rates on fixed products is due to the fact that the price of lending in the swap rate market has lowered over the last few years helping out lenders that offer long term mortgage products.

Combined with the fact that the Bank of England is expected to keep the interest rate set at the low .5% for at least the rest of the year if not longer, borrowers should take advantage of the low rates while they are still available on the market.

Chief Executive for SPF Private Clients, mortgage broker Mark Harris stated that a five year deal is a logical length of time for the borrower that wants the certainty that comes with a fixed rate mortgage product.

He explained that a two year fix is not going to be that helpful since rates likely will not start to change until the two years are up and added that long term mortgages of ten years or more can be tricky. However, given the fact that there will be changes in the market over the next five years locking into a deal now can be a great way to get low rates and security.

Mortgage rates for first time buyers

[ Posted April 13th, 2012 ]

Britain is a country that is certainly focused on the housing market, the decline in home prices, and the rising mortgage rates. In fact, when you consider how much air time the subject gets day to day on the news it is a surprise that anybody would actually want to become a first time home buyer.

With the stresses of the market you would think that young professionals would want to stay as far away from the housing market as possible and instead rent without half of the obligation.  Yet, they are still out there looking for great first time home buyers deals.

Of course, you have to bear in mind that most of these young professionals likely grew up in a home that their parents owned, thus owning a home seems more of a rite of passage than a business decision.

Regardless of their outlook, the tighter criterion for renting a home, lower LTVs, and larger mortgage rates mean that it is a bit harder to get up on the ladder. It used to be just income multipliers that decided if one was a good candidate for a mortgage, but now many major lenders judge mortgage applications based on ‘ability to pay.’

It used to be that first time buyers received better deals and the best mortgage rates simply based on the fact that they are not part of the mortgage chain market and therefore are fresh applicants. However, as the price of lending continues to increase and now high deposits are reasonable for keeping most out the market lenders have been forced to find other methods and schemes in order to help first time home buyers actually get back into the market.

Due to this fact, even with the poor economic conditions there is more flexibility being introduced for first time buyers into the market which is a very helpful factor. One adjustment that has been made is that many of the larger banks such as Halifax and Nationwide will extend mortgage terms for forty years instead of just 25 which will help make a loan more affordable.

Of course, in the long term borrowers will end up paying more unless they remortgage successfully, but this is a good way to at least get out into the mortgage market. Lenders also are offering new incentives to first time buyers including free valuation fees cash back, and legal fee assistance which are all great features to take advantage of.

Mortgage rates still rising

[ Posted April 7th, 2012 ]

As most banks continue to face the harsh lending conditions of the current lending environment, due to a combination of factors including the continual eurozone debt crisis, mortgage rates are continuing to increase.

Most banks are aiming to lower the amount that they make available for lending this year which is hurting those that want a to purchase a new home and turning the UK into more of a renter’s market than a buyer’s market with most analysts predicting that the buy to let market will make up the majority of lending this year.

This week Co-op joined the group of lenders that have had to announce higher SVRs, increasing their average term by about 0.5% up to the standard rate of 4.74% as of May 1st. Over the month of March Bank of Ireland, Halifax, Yorkshire, and Clydesdale Banks have all also announced new mortgage rates, making it harder for the average home owner to find a lower deal on their SVR at any large high street lender.

Chelsea Building Society also announced an increase of 20 base points to all of their fixed mortgages deals and Nationwide Building Society raised the cost of both tracker and fixed mortgage deals. John Charcol mortgage broker Ray Boulger stated that there has been a steady trend of major and smaller lenders increasing their mortgage rates over the last month or so,  with many doing so because they want to lend less.

He explained that most lenders are saying that the wholesale funds increasing rates are the reason why they are being forced to increase SVRs, but over the last few weeks this is not so much the case as they have stayed steady. Therefore, the reason for the increase is simply to decrease the amount of lending they conduct with consumers. broker Nigel Bedford said the same as he pointed out that the interbank lending rate and the two year rate swaps that are used to create a mortgage package have actually decreased slightly therefore it cannot be blamed on the high cost of lending funds. Despite this fact, most brokers are expecting that mortgage rates will continue to increase over the next few months making it vital that those who want a good deal get in on the market now.

Skipton releases new set of buy to let mortgage rates

[ Posted April 7th, 2012 ]

Skipton Building Society announced a new set of buy to let mortgage rates this week designed to attract landlords that are looking for fixed products with two, three and five year deals. The new products include different rate/fee combinations to attract every type of lender and is the first time that the building society is offering landlords 75% LTVs since they entered the buy to let market last year.

As buy to let lenders continue to dominate the lending market this is Skipton’s attempt to lure them towards their products. The two year fixed mortgages are available with LTVs as high as 70% and come with an attached rate of 4.69%.  The completion fee for this product is £750 and the application fee is £245.

Also available is another two year product that offers the elusive 75% LTV but  as a trade off the rate increases up to 5.09% with a completion fee of £1250 and the same application fee as the previous product. These are good choices for the landlord that wants a short term deal with the hope of better products on the market once the loan value decreases.

For those looking for a slightly longer deal Skipton is also offering a three year set of fixed deals that also range in value from 70-75% LTVs.  The buy to let mortgage rates range from 4.59% to 5.39%; with the latter corresponding to the 75% LTV for those that do not have as high of a deposit or equity in their products. The higher LTV product comes with a completion fee of £1,250, the lower product comes with a completion fee of £750, and both have an application fee of £245.

Also available are two five year fixed rate products also set with 70 and 75% LTVs. The five year 70% LTV product is an excellent choice for those looking to cut down on fees as it does not carry an application fee and comes with a 2% completion fee based on the value of the loan and an overall interest rate of 5.19%. The 75% LTV comes with an interest rate that is set at 5.69%, an application fee of £245, and a completion fee of £1,250 which makes it a good choice for those with a high value mortgage. aims to provide every client with cheap, affordable and best mortgage loans in the UK market, however the actual mortgage rate available will depend on client's financial circumstances and credit history. Although, has made every effort to ensure that the mortgage rates listed are correct, it bears no responsibility in case of an error. 
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