In  mortgage news, the Bank of England released its survey of the 3rd quarter credit conditions in the UK.

According to this report, the high street banks reduced the supply of mortgages and other credit to households during the third quarter, in contrast to the previous quarter which had seen more mortgage availability.

This shrinkage occurred despite te fact that  banks had promised to increase their lending. Bank representatives said they were unable to do this because of the deterioration in the cost and availability of funds.

Paul Samter, economist for the Council of Mortgage Lenders, was quoted in the report: “Lenders reported a welcome reduction in default rates on mortgages in the third quarter – the first in two years. Following our own figures showing a decline in mortgage possessions in the previous three months, there are encouraging signs that households are coping better than expected with difficult conditions. Despite this, however, we still expect payment problems to increase in the coming months, given the weak economy and jobs market.

“The survey also reported a small reduction in mortgage availability in the second quarter, mainly due to an unexpected deterioration in the cost and availability of funds for lenders themselves. More encouragingly, however, the survey found that lenders expect mortgage availability to improve modestly in the next three months.

“There have been recent signs of an improvement in wholesale funding market conditions, and the survey records a notable pick-up in lenders’ expectations that this will continue in the next three months.”

Moneysupermarket (a British price comparison website-based business specialising in financial services) reported that the number of consumers seeking mortgages to purchase a property now outweigh remortgagors. In addition, the number of people looking to remortgage their home fell as well. These figures would indicate that the public is now more confident that home prices have stabilised. With home prices so low now, they are convinced that they won’t fall any further, and are now willing to buy.

Numbers do not always tell the whole story, of course. The drop in remortgage searches may be because homeowners have learned that reverting to the SVR (standard variable rate) of their current mortgage is more cost effective in the short term. There are risks, of course. By not considering the cost implication of an increase in their SVR, they could get an unpleasant shock when rates increase, a shock that could be avoided if they remortgage now. Most, if not all, lenders’ websites and mortgage information sites have calculators that allow the consumer to input their various figures to find out if remortgaging will save them money over the long run. Take advantage of these tools, and of the current climate, if you possibly can, to find the best mortgage rates for you.

In the current mortgage crisis, many borrowers are losing their homes for a variety of reasons. One of these is that they ignore their payment problems, and do not talk to their mortgage lender until it is too late to do anything to help them. There are many reasons for this – many people do not like to meet trouble head on, and hope that if they will ignore it it will go away or solve itself. When it comes to their mortgage, that rarely happens. In an effort to educate the populace about this, and other problems, the government has launched a new Information Scheme, which will help borrowers learn to take control of their repayment problems, most of all by discussing these problems with their lender as soon as possible.

According to Council of Mortgage Lenders (CML) director general Michael Coogan, most customers who are "committed to solving their problems and working with their lender" can successfully solve those issues. The information scheme consists of a series of advertisements – in newspapers, online and on billboards – to alert borrowers to the schemes the Government has put in place to help them to prevent repossession.

Here’s the external link: http://mortgagehelp.direct.gov.uk/

There’s also a scheme to help at risk individuals keep their homes, if they qualify.

Here are the criteria from the direct.gov website:
o be eligible for the scheme your household must include someone in ‘priority need’.
This could be:
* a pregnant woman
* someone with dependent children
* someone who is vulnerable because of old age or a physical or mental impairment

You’ll also need to meet the following criteria:
* your household earns less than £60,000 a year
* you don’t own a second home, including a home abroad
* the value of your mortgage (and any loans taken out against your home) is less than 120 per cent of the value of your home
* the value of your home isn’t higher than certain levels set for each region – ask your council about the level for your area

When you apply for the scheme, your local housing authority will talk you through some other criteria that you’ll need to meet.

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.

Need to Know: Annual Percentage Rates for First-Time Buyers.

It is important that when we choose to make a serious investment that we truly understand the costs involved.  So for those first time mortgages we are going to break it down simply for you. There are numerous times of interest rates out there to choose from when in comes to repayment options.  These are often broken down into "variable" interest rates and "fixed" interest rates.  These rates will apply to all forms of financing from loans, mortgages, and remortgaging options.

The first one we shall discuss is variable interest rates.  Depeding on the company in which you recieve your loan from, the rates are calculated with a range for potential variance.  For example, if you recieve at loan at 5% interest monthly, that is not a guaranteed rate for every month during that year or term of the investment.  It will have a range of values in which it can vary between throughout a single term.  The term can be monthly, annually, bi-annual and quarterly.  Also, which an interest rate is provided to you, it is important to know the time periods in which the interest is going to be applied.  Maybe a little more than you had orginally thought was required to simply make that next home purchase?  It really is not as difficult as it seems.  You are not expected to be an expert in financing as that is your bank or other financing instituions job.  However, it is important that you have basic knowledge of the information you will be presented with so you can ask questions.

The second topic in regards to interest rates are the different types.  The is a different between simple interest and compounding interest. A simple interest rate is easily calculated by simply taking the amount owed (principal), and multiplying it by the interest rate and time period ( number of quarters, months in the year, or number of years).  That will give you the amount of interest that will be paid over the duration of your loan.  This interest type is associated with a nominal APR.  Then there is the matter of compounding interests.  This is the option that most lending providers will choose.  This simply means that everytime interest is applied to your loan, that amount will be applied to the total loan amount.  Now, when it is time to apply the next interest amount, you will be charged interest on the new principal amount which includes the last interest addition.  Just think about it as buying jelly candies.  If I charge you tax for every candy you have, then when you start with 3 candies, the initial tax will be charge on three candies.  Now that you purchased two more, your collection has risen to 5.  The next time I charge you taxes it will be on 5 candies.  Not as hard as you thought right?

Finally, a fixed APR will result in a constant percentage rate being applied to your original loan amount for the duration of your loan.  This is often chosen by those who seek consistency and prefer smaller risks that can be associated with variable interest rates.  Now that you have the basic understand of APR’s and how they can affect your loans, you have enough knowledge to at least ask questions and do not have to solely depend on your or trust your financial institution’s suggestion for "best choice for you".

In response to the Treasury Committee’s finding, the Council of Mortgage Lenders (CML) is happy to see that lenders are being pro-active when their borrowers hit difficulties with their mortgage handling.

According to their study, there are many lenders who are helping borrowers to keep their homes when they are facing temporary difficulties.

When it comes to fees, the CML agrees with the FSA (Financial Services Authority) of England that it should reflect actual work being done and that the fees and charges should not be for the pure profit motive.

While they may not be appropriate for everyone, there are mortgage rescue and homeowner support schemes that were developed by the Government, which could be used by those borrowers who are currently in arrears. They do suggest that lenders and borrowers should be in communication with each other to figure out the best way to resolve the problem.

Regarding the stance that the CML has on the lending industry, the CML head of policy, Jackie Bennett, had to say, “The industry is fully engaged to help its customers through the recession where they have a good prospect of being able to get back on track and sustain their home-ownership in the long term. Repossession remains a last resort.”

She continued, “Lenders have worked hard to ensure that treating customers fairly is at the center of their arrears management. This doesn’t necessarily mean that consumers won’t be charged, but it does mean that the charges will be a reasonable reflection of costs and that they will be applied in ways designed not to exacerbate the borrower’s financial problems.”

She finally said, “We will be publishing our arrears and possessions figures soon. These are likely to demonstrate further that lenders remain committed to helping borrowers who fall into difficulty, where those borrowers are talking to their lenders and committed to helping themselves.”

In the UK, US, Germany, Denmark and other countries, the 30 year fixed mortgage rate has been a standard amount of time to pay back a loan.

First time buyers usually fared the best with these types of loans as they were able to pay them off well in enough time before they reached retirement age.

There seems to be some lending institutions that are cutting back from this term of loan such as the Manchester Building Society who recently changed their fixed rate deals from thirty years to fifteen. The recession was likely one of the reasons that they went ahead an changed the way they structured some of their loans.

Lenders were also somewhat skeptical and that some borrowers had concerns about being involved in a loan that lasted that long.

Moneyfacts was one of those few organizations that stated that there were at least eight lenders that at one time were offering 25 year fixed deals and have now withdrawn them only allowing the mortgage loan to take place for fifteen years. Rates for some of those deals started at 6.49% APR which were somewhat higher than other rates we’ve seen on the market.

The same research show that there were only nine lenders at the time that were offering ten year rates with the rest of them offering a maximum of five years.

One of the reasons that the loan terms have been turning so low is the economy. Banks have been hurting for those loans in arrears, that they don’t want to be tied up in some of the long term deals that have been having problems. They like the stability of the short term loans with the freedom to make changes after the term has expired.

As long as the recession moves forward, we probably will see shorter term loans on the market as a way that banks can insure their investment monies for something more certain.

The Nationwide Building Society has announced that it will cut the price of selected fixed and tracker rate mortgages by some 0.5%.

This is one of the largest organizations that is doing this and hopefully this will carry on to other banks and lenders making it for a more competitive market.

For those buying a home, the two year fixed rate is available from 3.98%. If you’re a new customer, you can borrow up to 85% LTV (Loan-To-Value) and existing accounts who are simply moving can borrow up to 95%.

A three year fixed rate is also available with interest at 4.58% with the same LTV values as the two year loan.

A two-year tracker is also available with rates at 3.08%. New customers have an 80% LTV value while existing borrowers have a 95% LTV.

There are also deals on the table for those involved in a remortgage of a home, with rates up to 4.78%. All deals have a reservation fee of 896-pounds and a booking fee of 99-pounds.

Commenting on the new deals, Andy McQueen, mortgage director at Nationwide said, “We are cutting the price of selected fixed and tracker rate mortgage deals by up to 0.50% so our range offers even better value for new borrowers. We have a superb range of products for existing customers coming to the end of a Nationwide deal including two and three year fixed rates which are currently among the best in the market compared to remortgage deals offered by other lenders.”

He finished by saying, “These mortgages are ideal for borrowers who are uncertain about how interest rates will move in the future as they provide assurance that the mortgage rate will not rise above a certain level.”

If you’ve read many articles, then you know that first time buyers are usually at a younger age. The recession has had am impact on that number as of late and they are not able to make the purchase at least in the last year or so.

The CML, the Counsel of Mortgage Lenders, keeps a number on the number of first time buyers and their records show that the demographics of this key group of individuals is, at least as of now, is slipping to an older age.

According to their records and the Regulated Mortgage Survey (RMS), that number shows that the age has turned from 29 to 31 at least in the last six months of the survey.

According to the CML, “An increasing number of first-time buyers were getting help – most likely from parents or grandparents – to raise funds for a deposit. The latest estimates indicate that around 80% of young first-time buyers are getting help in this way.”

When not receiving assistance from relatives of any sort, the average age is turning around to 37, at least this is the number according to the latest survey.

The LTV (loan-to-value) number that is being issued with the mortgage loan has a major effect on the number of individuals that are receiving the loan. The better the ratio the lower the age that apparently seems to receive the mortgage loan.

First time buyers usually have the hardest time when it comes to securing their mortgage. They usually are unfamiliar with the process and the amount of deposit they must place as security when receiving their first loan.

On the other hand, if they are educated in the process before they seek their first loan and do their homework, chances are better that they will receive the loan on the first attempt.

Mortgageforce, a lender with a long reputation, has been making loans to all types of borrowers and are well known in the industry.

They have just released some statistics that are somewhat surprising for the month of July, where they released figures that show that first time buyers made up some 20% of the company’s mortgage applications for the month of July, compared to only 9% for the month of June.

The company states that purchasers for all types of transactions also increased the past month accounting for 41% of the company’s business and that compares to 23% in June. Mortgageforce is also confident that the business seen at both Nationwide and Halifax also show this same trend.

Katie Tucker, the Technical Manager at Mortgageforce said, “Stable house prices and the availability of higher loan to value mortgages support each other more than you might think: we all know that more 90% mortgages means more buyers can get on the ladder, but it works both ways, property values stabilising means lenders can offer higher loan-to-values without as much risk, so without needing as much deposit. We expect to see even more 85% – 95% deals out there soon."

Tucker added that half of the purchase transactions were 86% to 90% loan to value (LTV) deals. She also said, “This is high against trend and undoubtedly a result of pent up demand.”