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Funding pressure building towards higher mortgage rates

[ Posted May 27th, 2012 ]

Banks that rely on the wholesale markets for their funding are the most likely to increase their mortgage rates and reduce the amount of lending that they actually make available to potential lenders if the economic turmoil within the eurozone continues to grow.  The turmoil is actually altering the state of new debt and is making the financial situation in all European countries a bit shakier than it has been in the past several years.  In the wake of the 2008 market collapse and the fragile market that ensued, the EU crisis may simply prove to be too much.

After the financial meltdown many of the high street banks in the UK focused on strengthening their funding positions by choose to reduce how much they borrow from the wholesale markets and instead focused on receiving large savings deposits to back lending from their customers.  Despite this shift in practice, a few of the larger high street banks still lend out more annually than they receive in deposits making them the most likely to be forced to increase their best mortgage rates since they are still dependent also on the wholesale markets for lending purposes and will need to pay higher for funding.

A quick look over the high street lenders reveals that Santander and Lloyds Banking Group are the most dependent on the wholesale market with their loan to deposit rates coming in at about 138% and 130% respectively.  On the other hand, other high street lenders such as the RBS and Yorkshire Building Society are in much better shape with almost perfect loan to deposit ratios that sit at 105% and 102% respectively.  This means that the latter are less likely to feel the effects of the wholesale funding pressures since they only rely on the market for a small percentage of loan funds, making them the best candidates for the best mortgage rates.

Already Santander and Lloyds Banking Group have announced that they will reduce the amount of new mortgage lending that they will approve as they look to even up their numbers.  Mark Harris, a mortgage broker from SPF Private Clients, stated that the eurozone crisis is going to continue to affect some of the largest high street banks and is going to force them to reduce their lending practices in an effort to stabilize their fragile positions and avoid a banking meltdown similar to a few years ago.

End of 2011 great for buy to let mortgage rates

[ Posted February 11th, 2012 ]

In a new survey released by Paragon landlords about the last quarter of 2011, the results were glowingly in support of the low mortgage rates that were available on the market. A combination of falling house prices and some of the best mortgage rates led many to expand their portfolios during the close of the year. As tenant demand continues to increase it seems that landlords are sitting in exactly the right position to make some money with wise investment and letting principles intact.

The survey, PRS Trends, is carried out every quarter and asks a sample of landlords for feedback on rental income levels, the amount of tenant demand out there on the market, their portfolio size, and how they feel about the current buy to let mortgage rates.

Most landlords reported that they were getting the highest yield from their properties during the last quarter of the year when compared to the other three quarters of 2011.  In fact, on average landlords saw their yield increase by about 0.5% from the third quarter to the fourth quarter.

Another half of the landlords in the survey reported that they had noticed demand increase from tenants that were looking for places to let during the last quarter showing a solid increase of about 6% during the previous quarter. It is most likely that this trend is going to continue over the course of 2012 as many landlords will see more people heading through their doors instead of taking out a mortgage of their own.

The same trends have been noticed within the commercial mortgage as well as most businesses would whether rent a property over owning it. Landlords were also questioned about buy to let financing options during the last quarter of the year in regards to how available it was to them.  27% felt that it was widely available and easy enough to attain if wanted with a slightly higher 35% stating that they felt there were still some limiting terms placed on mortgage portfolios.

Either way, the statistics from the survey prove that the last quarter of 2011 was an excellent year for those who are an active part of the buy to let market and that the rental market is likely to continue to expand over the coming year.

TBMC drops buy to let mortgage rates

[ Posted August 26th, 2011 ]

TBMC one of the leading commercial mortgage and buy to let mortgage companies in the UK has announced that they will now be able to offer two great buy to let mortgage rates to interested consumers as part of a partnership with Hinckley & Rugby Building Society.  Chief executive for TBMC, Andy Young, announced the rates stating that they are happy to be able to make the buy to let market a bit more affordable to investors with the new products that are now open with aid from exclusive intermediaries Hinckley & Rugby.

The first product is aimed at those who want a buy to let loan with fixed mortgages attached, and comes with a 2.99% rate that sits somewhere within the 60% loan to value bracket. Attached to the loan is a £2495 completion fee.  Young stated that this product should be very helpful for landlords that want to be able to budget their costs and have equity to balance against the purchase making it even easier to secure.   He added that there is not any ERC attached to the product making it a great way for property investors that are worried about the increase in the interest rate to still get out there and make a solid investment.

The second product is a two year 2.99% discounted mortgage rate that can be up to a 60% loan to value ratio depending on equity and credit and only comes attached with the lower £1249 for qualified candidates.  Both loans have £250 booking fees and there is no concern about early repayment as there are no penalties attached should an investor decide to do so which is another reason why Young mentioned that they are designed for investors that want to increase their portfolios.

Intermediary development manager for Hinckley & Rugby Gill Vernau stated that the company is hopeful that they will be able to develop new products specifically designed to tempt buy to let mortgage applicants that will meet their needs and offer more options to them.  He added that they are very flexible packages and are priced to be cost saving in the short term making it possible for companies with extra funds to insure their products.  Vernau also said that he hoped this will be the first step towards a long relationship with TBMC.

Borrowers Facing Unprecedented Uncertainty Over The Future

[ Posted October 25th, 2009 ]

In many instances

standard variable rate (SVR ) is lower than the rate that had been paid during the initial deal. That’s the reason for many borrowers whose current deal is coming to an end to choose between  taking out a new deal or moving to their lender’s SVR.

Sometimes the mortgages arrangement fee cannot be justified due to the risk of defaulting so it must be due to the risk of interest rates rising.

Asking yourself if you should  insure against mortgage hike? There is only one answer:

Unfortunately there isn’t  any insurance that will protect against a rate increase.

Choosing to move to your lender’s SVR for the time being you should consider setting up a savings account in which the difference between your old and new lower monthly payment could be saved.

This money can be utilised in a future event of a of a sudden rate increase, giving you a buffer,  while you are looking for a new deal.

The only way to ensure that your monthly payment remains the same, regardless of any rate increase, is to move from your current deal onto a fixed-rate deal. But, even financial experts can’t agree on the way ahead.

Borrowers are facing unprecedented uncertainty over the future path of interest rates, which means a tough choice between low-rate tracker mortgages and the security of more costly fixed-rate deals.

Accordinding with L&C the tracker would be the best choice in terms of total repayments over the five years if interest rates rose at a slow, steady pace, but the fix would be better if rates rose sharply.

 Homeowners with low SVRs of 2.5% should also stay put. The  research shows that on any SVR at 4% or higher you could end up paying more than on a five-year fixed rate by the end of the term (in this „steady” scenario) and should consider remortgaging.

Bad Credit? These Are Mortgage Options Just For You!

[ Posted August 25th, 2009 ]

Past Money Troubles? Mortgage Solutions for You!

Just because you have had financial troubles in the past does not mean that you will be unable to get a mortgage.  Don’t worry.  Many of us have been there before.  There are lenders out their that cater to your particular situation.  They are often called credit repair lenders or nonconforming lenders. 

Wondering why someone is willing to lend you money with bad credit?  These lenders understand that just because you have bad credit, does not mean that you should be black balled throughout the investment community right?  To make it to where you too have investment options, these lenders will look at how far you have come and your current situation rather than placing all the weight on your past.  So, maybe you were unemployed and now have a job.  Or you were in serious credit card debt and can finally see the end of it nearing.  No matter what your situation was, as long as you have made forward progress in making your financial situation improve then they can assist you in finding a mortgage that will work for you.

The one thing you will need to remember in regards to mortgages for those of us with bad credit is that even though your credit progress is what gets you the new mortgage, but your past will be factor when it comes to establishing that interest rate.  The key to getting this rate as low as possible is to continue improving your credit so you will have the option for remortgaging for a lower interest rate later on down the line.  Also, you are going to want to shop around and not jump at the first lender who is willing to give you a loan.  Just because you have bad credit does not mean you have to take a long with a huge interest rate.  Remember, you want to continue making good decisions that will improve your credit and not get into another situation in which will possibly damage your credit in the long run.


First Time Applying For a Mortgage?

[ Posted August 25th, 2009 ]

Quick Starting Tips to Make Your First Mortgage Simple.

There are thousands of questions that come to mind for those seeking their first mortgage.  So to take a little of the stress off, we are going to give you all the questions you need to ask.  Don’t worry.  With all these questions will come many of the answers.  That way you are not left wandering throughout your days trying answers endless questions.

What is a mortgage?

A mortgage is a loan specifically designed for those who are wanting to buy property.  This includes both commercial and residential properties.  There is a loan for everything these days, from auto loans to personal loans, so why not have a loan that is specifically for those wanting to buy property right?


What things should be considered in choosing a mortgage type?

The basics questions you need to answer are the following:

1.What are you buying the property for?

For each type of property, the is a different type of mortgage that offers different benefits.  With this being your first mortgage, there are often special offers for first-time home buyers.  However, if you are buying commercial property you might want to check into commercial mortgages as well.  Often the difference in first time mortgages are in regards to interest rates.

2. Which fits your financial budget most comfortably?

This part is often in reference to interest rate options.  The two primary choices you have here are fixed rate and variable rate mortgages.  A fixed rate will guarantee the same interest rate being applied to the balance of the loan.  This means that you will make payments of the same amount every single month until the debt paid off. When it comes to variable interest rates, the are often compounding interest.  The rate has the potential to change.  The good news is, that it typically has a pre-disclosed range.  In regards to the compounding interest, since you could have equal monthly payments you may not always pay off all the interest.  If that is the case then you will be charged interest on the accumulated interest.  Getting complicated?  Basically have them run the figures for you rather than simply going off suggestion.  You can see which really works out best for you, as all our financial situations are a little different.

3. What extra options are important?

You want to look for things such as early payoff benefits (or penalties), mortgage insurance (just in case money gets a little tight for unexpected reasons, and remortgage options in case of lowered future interest rates.

Is it really this simple?

We would love to say this really is all there is to it, but you want to make sure you really take time to look into your options.  That is what we truly want to stress here.  It does not have to be hard or distressing, but it does require research.  This information will help you get started off on the right foot and make things run a little smoother.

Why Are People Not Remortgaging?

[ Posted August 23rd, 2009 ]

Remortgaging:  A good or bad decision?

When it comes to remortgaging, the answer is always dependent on the current economic status, and how good or bad of a deal you got when you first financed that home or business.  While it is sometimes are to see what is behind that closed door, we are going to provide you with the key to re-opening it. 

The best way to make decisions when it comes to remortgaging is to look at a variety of factors.  The first question to ask yourself is, "How were things financially when I made this investment".  That question should be quickly followed with the important question of, "Is my situation now, better or worse?"  Once you have gotten answers to the questions, you can narrow down the paths to choose between.  Obviously if you were struggling in the beginning  and have fought your way to a better financial situation, then remortgaging could be a great option for you to lower those interest rates.  For those of us who received our mortgage with low credit scores, this can make a drastic improvement in your financial well-being.

For all of those people who were in a better position than the rest of us, you most likely got a great interest rate on a cheap loan or mortgage option.  If you fall into this bracket then you will notice that lately it just does not really play in your favor to remortgage at this time.  With interest rates staying low after that initial introductory offer, many have chosen to stay with their initial lender. 

With the number of people opting out of remortgaging their properties, first time home buyers and next time buyers are benefiting as well.  With the competition amongst lenders heating up, it has proven to be a buyers market in which many have chosen to take advantage of expanding current investments instead of refinancing old ones.

Spending Power Increases

[ Posted August 8th, 2009 ]

Halifax has denoted in the past week, that at least for its customers, their spending power has increased by at least 10% over the past year.

The company has a survey that shows how much the money that they spend has at least increased over the last year in comparison with the amount of money they had available in 2008.

According to the company, mortgage holders have more money left over after buying their home essentials than they did the year before.

Halifax says that since March 2008, that they have seen their discretionary income raise from 892 pounds to 989 pounds according to their records.

A Halifax economist said that over the past year, homeowners have seen that income which they should have for household items has increased because of the the mortgage that they have has been lower than in times before.

The fall in the mortgage amount has been a major factor in allowing the homeowner to have more money for things around the home in comparison to making a major house payment when they go shopping for better loans.

We should mention that food prices have increased by at least 10% and utility bills by considerably more, however shopping for your mortgage should still result in better saving if one takes the time to shop around for a short term mortgage.

With a short term mortgage, we will probably see a reduction in the mortgage rate as fall and winter approach and that could see a better result in the amount of money available for consumers, but that is up to the buyer as far as the length of the loan that they want and whether it is fixed or variable.

Clydesdale Bank Mortgage Lending Is Up

[ Posted August 3rd, 2009 ]

According to their figures, Clydesdale Bank has approved a substantial increase in the number of mortgages than they did in the past two months over the same time last year.

Their records show that they have approved approximately 30% more home loans during the months of May and June in comparison to the same two months in 2008.

It is one of Scotland’s largest financial institutions where they have more than 150 location throughout the United Kingdom.

One of the reasons for the increase in home loans was the pledge to release some one-billion pounds of new business to business and homeowners across the country.

Clydesdale and Yorkshire, its sister bank, is currently offering mortgages to homeowners with a 95% LTV (loan to value) ratio.

Bank officials say that they have a commitment to offer competitive mortgages while at the same time provide an excellent service. That they focus on the needs of their customers.

At the same time, Craig Carter states that their deposit business is growing as well, “The fact that the half year results showed that our deposits had increased by 15 per cent to 20.1 billion pounds shows ultimately that our customers trust us.Clydesdale continues to play a key role in helping local buinesses navigate today’s challenging economic climate. Ensuring locally deposited money stays within the local economy means we can reinvest these funds to help the growth plans of other businesses in the East.”

Tracker Mortgages Falling In Popularity

[ Posted July 25th, 2009 ]

We’re sure you’ve seen mention ‘tracker mortgages, which follows the Bank of England Base Rate or the lender’s Standard variable rate (SVR’s), plus or minus a certain percentage.

This year tracker mortgages available products have seen a drastic reduction, this according to Moneysupermarket. The number of these types of products have fallen by more than 80%

Louise Cumming, head of mortgages at the company said, “The fall in tracker mortgages highlights how the last 12 to 18 months have seen a complete meltdown in the mortgage market. The figures show that four out of five tracker products available 12 months ago, when the Bank Base Rate was at 5%, have disappeared.”

She says its not a surprise to see lenders decrease their offerings of this type of product. Lenders have the decision of what products to sell and what ones to pull the plug on. It seems that borrowers have favored fixed rates over these tracker rates and the lenders act accordingly.

She also said, “Banks which had large number of tracker mortgages on their books have had their fingers burnt by the dramatic fall in the Bank Base Rate. It isn’t surprising that they are now a little unwilling to get back into that market, especially with the Bank Base Rate remaining so low. At the same time, customers may be concerned that a tracker mortgage at 2.5% above the Bank Base Rate could quickly become very expensive. For consumers looking for a new mortgage, the near entire absence of tracker products shouldn’t put you off looking around for them; the trackers that are still available are generally much cheaper than the equivalent fixed-rate deals.“ 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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