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Leeds announces new buy to let mortgage rates

[ Posted June 20th, 2012 ]

Although the most homeowners are cringing at the shape of the mortgage market right now, professional landlords are actually enjoying the fact that some of the best mortgage rates out there are designed for them.  This is due to the fact that many high street banks are actually lowering their buy to let deals in an effort to draw business through their doors, as the rental business is reaching new heights.  The reason for the recent surge in the buy to let market is two-fold, as it is partially due to the fact that many first time buyers cannot afford a home and partially due to the fact that property prices of potential letters is so low.

Leeds Building Society is the latest that hopes to draw in more professional landlords with an announcement of new buy to let mortgage rates designed to lure landlords their way.  One of their newest products is a five year fixed product that is set at 4.99% for the length of the term and a low attached 70% LTV.  In addition, if lenders needed another reason to consider the deal, the fact that the building society will also allow for 19% capital repayments every year without an early payment penalty is also very enticing.

Of course, this is not all that Leeds has to offer as they hope that their new fixed mortgages are going to draw a bulk of the professional attention their way.  They have also added a few extra perks that should make signing a new buy to let mortgage deal with them even more tempting for landlords that are expanding their portfolios and taking advantage of the low property prices and high demand.  Each of the perks has to do with fee cuts that are usually associated with a new mortgage.

For those that are willing to take the 5.49% offer that is also fixed at a 70% LTV or higher, fee assistance is available along with a free standard valuation that is otherwise considered to be valued at about £335.  For landlords that are simply looking to re-mortgage their current mortgage, free in-house legal services are also provided as part of this deal to make it as simple as possible.  Sales and marketing director for Leeds Kim Rebechhi stated the new five year product is aimed to help professional landlords that are looking to a competitive rate and looking to help first time landlords with the assisted fee program.

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.

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.

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.

How the European Central Bank interest rate slash affects Britons

[ Posted November 4th, 2011 ]

The surprise announcement this weak that the base rate of the European Central Bank was slashed by another quarter down to just 1.25% came as a shock to most, and helps to cement the current prediction by many experts that the interest rates within Britain are going to stay low.

This is good news for those with mortgages as it will likely help to keep the mortgage rates low in Britain as well, although those who are attempting to build a savings account are going to be hurt by the news.  Analysts are also now predicting that the ECB will cut rates more helping to keep mortgages low.

Those who are signed into tracker mortgages should be happy with the news as this means that their variable rates are going to stay low creating some of the best mortgage rates on the market for at least another few months. This comes as a surprise as most market experts have been warning that the mortgage market is going to come back around, but instead it seems that rock bottom only continues to be redefined, making a variable mortgage the best choice on the market, albeit a bit risky.

However, on the flip side of the equation is the facts that while everyone is enjoying the low mortgage rates, those who already have their mortgage paid off and are simply looking to build a savings account, such as pensioners, are suffering from the news. They will continue to find that their payouts on deposit accounts will continue to be lower than expected every month not yet rising to match with the raising costs of inflation. With the continuing turmoil in Greece this is a factor that is not likely to change either.

This is just one of the many issues that the slash in the ECB raises for now, as there will be plenty more associated with the fact that the way corporations are now making their money which relies on cost cutting instead of growth within one’s market. This combined with other factors over time is going to hurt the fragile European economy making the next few years look a bit shakier at best and a great deal more unstable than it already is at the worse. For this reason alone, anyone contemplating a mortgage should tread lightly and carefully.

Low mortgage rates have hurt savers across Britain

[ Posted July 13th, 2011 ]

Since the Bank of England slashed the interest rate down to just .5% to help steady the economy and improve the housing market, savers have been hit harshly as their savings are not generating any yields.  While the news that the interest rate is staying stable is good news for those with tracker mortgages that are worried about escalating mortgage rates, for those in their golden years who are worried about their savings funds the news is not quite so golden.  In fact, this is the 29th month in a row that the rates have remained this low.

The hardest hit were those in their golden years who have reached retirement years since many manage to pay off their mortgages before they reach this age.  As a result, they are not worried about finding the best mortgage rates but are hurt severely by the fact that the interest they assumed would continue to build at around 3.4% was lost as they watch their savings dwindle without any clear sign in the future that it will rebuild.  Even though the Bank of England is expected to increase the mortgage rate next year, for those hurt there will be no way to recover the lost interest.

This has created quite a clash between those who are worried about the mortgage market and those that are concerned about the savings market as groups such as Save Our Savers have been campaigning to change the interest rate before it permanently damages the savings culture in Britain.  According to one of the leaders of the group, Jason Riddle, at the moment the current interest rates may be helping those with tracker mortgages but it is only helping rich savers who can afford to invest their savings making it useless for anyone else to even consider the idea of building a savings account.

More astounding is the fact that savers are thought to be more frequent than mortgage borrowers by about a figure of seven to one which means that protecting those with fixed mortgages while letting the savers suffer may not be the one.  However, the threat of a potential rise in foreclosures again could be just as crippling to the weak market which is why as of now a move has not yet been made in either direction.

Base rate may go up over fear of inflation affecting mortgage rates

[ Posted May 21st, 2011 ]

The increasing costs of food and energy bills will continue to push contribute to inflation which in turn will create higher interest rates forcing the Bank to increase the rate as expected. For mortgage holders that are already strapped with their current base rate, this added change to the mortgage rate may be all that is needed to push them towards foreclosure.  The thought is devastating, but according to many analysts likely to happen before the end of 2011 for many people.

The Bank of England announced that after two weeks of interest rates staying at a historic low that inflation will cause a rise of about 5% before the end of 2011 which will cuase the interst rates to be increased.  However, the good news is that bank rates will simply return to normal which will be okay for those who have fixed mortgages and have budgeted accordingly, but those on variable mortgages or tracker mortgages may be hit harshly by the fluctuation if they have not budgeted for the anticipated change due to the expected change in the mortgage payments that will follow.

Just a 1% increase in the base rate will cause the average £150,000 mortgage owner to be faced with an increase in their mortgage payment of £43 every month for a total of £513 by the end of the year extra.  If the rate were to increase by 5%, then these figures would multiple by fiv which will leave some eight million households with much higher bills to tackle along with other increases in bills elsewhere.  For many this will be too much, which is why the picture is a bit beak at the moment and many expect to see economic growth start to stall.

Savers on the other hand will welcome the rise in the interest rate given the fact that they have been losing out on their investment since March of 2009.  Therefore, while borrowers may be living in fear of the impending base rate and rise in the mortgage rate, those who have some money in the banks will welcome the change as they are not likely to be affected by the change for at least a few months at which point the news will be completely positive instead of something to dread.

Interest rates still hanging in the balance according to new BBC survey

[ Posted May 5th, 2011 ]

Last week a poll was taken among all of the top economists that showed that most financial market experts believe the earliest that the base rate will increase will not be until August which means that those who are thinking about changing their variable mortgages into fixed mortgages have a bit of time before they start to panic.  Out of the 22 economists that were part of the BBC survey stated that they believe the bank base rate will not increase until August with another four stating it may happen in May and the last four stating that the increase will not be seen until either June, July, November, or as late as February of 2012.

In addition, the experts revealed what they thought the base rate increase may sit at by the close of 2011.  Out of those included in the survey, 12 of the respondents thought that the base rate will only go up by a mere 1% which should have little bearing on mortgage rates compared to what many analysts were predicting just a few months ago.  Another six of the respondents believed that it would increase by 1.25%, one believed it would increase by 1.3%, two by .75%, and one felt the increase could be as small as .5%.

Despite the survey, mortgage rates are still standing steady at the moment with the Mortgage Strategy shadow of the Monetary Policy Committee voting to keep interest rates at their current rate of .5% for this month at least.  Executive director for the Mortgage Lenders Association and the shadow MPC chairman Peter Williams stated that there is still a great deal of confusion surrounding when the interest rates will rise which has impacted business and has also impacted the way that people are approaching securing a new mortgage.

Williams continued to explain that at the beginning of 2011 businesses were already nervous about the increase in the base rate and were making suggestions about how to proceed with most economists expecting to see the increase in August while at the same time others confuse the issue by predicting the rise to hold off until 2012.  He further added that this confusion simply highlights concerns of those looking into buy to let mortgage rates as they try to balance the concerns of inflation with concerns over slow economic recovery with an invisible pendulum swinging between the two.

Top lenders are slashing mortgage rates

[ Posted April 20th, 2011 ]

Two of the largest mortgage banking lenders are dropping their interest rates and mortgage rates in an attempt to get homebuyers back into their doors as the competition for qualified mortgage applicants.  As the home buying season starts up again in April the Skipton Building Society started off the season by taking off .5% of their points on the interest for both five and three year fixed rate mortgages.  The society also decided to drop their tracker mortgages as well.

The decrease means that some homeowners will see a decrease in mortgage rates on mortgages that are valued to be worth at least £200,000.  While monthly the change will only result in about a £50 saving on repayments based on the above mentioned average mortgage price, yearly this will result in a £626 savings on interest.

Not to be outdone, Barclays also has announced that they will reduce their mortgage rates on their fixed mortgages and on their Woolwich tracker mortgages by a total sum of .32 points.  Other leading mortgage lenders who are tossing their hats into the ring as well include Halifax and Northern Rock where rates have been dropped on their three and two year fixed buy to let mortgage rates by as much as .4 points depending on the value of the mortgage and the qualifications of the applicants.

The news that so many large mortgage lenders have decided to drop their rates means that the other high street lenders will likely soon lower their rates or offer special incentive deals in an attempt to get home-buyers to take a second look at them as well.  Experts in the mortgage industry claim that the high end lenders decided to drop their rates as a response to the negative film coating the mortgage industry due to the expected rise in the Bank of England interest rates.

The large jump in the base interest rate is predicted to jump by .5% as early as next month although other experts believe that the jump may not actually occur until next year due to the fact that inflation has not been as strong as most people predicted.  Senior technical manager from John Charcol the mortgage broker, Ray Boulger, stated that there is a reasonable chance that fixed mortgages will drop down under 4% which is something that has not been present in the market for at least six months.

Mortgage rates fall as a result of Japanese earthquake

[ Posted March 17th, 2011 ]

In the wake of the natural disaster that devistated Japan and the turmoil that continues to occur in the Middle East mortgage rates dropped sharply as many investors are nervous about their money choosing to invest in bonds including many bonds that fund mortgages as these are considered a safer form of investment.  This is good news for those who are searching for a home as the prices are down for the first time in a few months making it a ripe time to try to get a foot up on the property ladder.

The drop in mortgage rates is also good news for those in a variable mortgage who have been considering changing their mortgage in an effort to take care of the security of fixed mortgages before the bottom drops out on the inflation rate which is expected to cause mortgage rates to sharply increase in the next six months.  In fact, the situation is predicted to be quite dire for those who are stuck in variable mortgages so with the current stance of the market now is the time to take advantage of the change before the world economy stabilizes again.

At the same time, interestingly enough the demand for loans also dropped as homeowners were reluctant to consider moving and buyers have been holding out unsure if a large investment is a good idea in the current economic climate.  In fact, applications for refinancing were up by about 1% while the requests for new purchase loans fell by four percent over last week which is a total decrease of almost 16% when compared to this time last year. The difference can be seen in those seeking out fixed mortgages as approximately 66% of all mortgage applications were for refinancing.

The silver lining for those who still have variable mortgages without the option to refinance is that many economists now believe that mortgage rates will take longer to rise pushing back the deadline by another few months as a result of the unpredicted earthquake and tsunami in Japan.  Now it is projected that mortgage rates will not increase until the last quarter of 2012 instead of the last quarter of 2011.

 
 
 
 
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