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Nationwide slices mortgage rates

[ Posted May 18th, 2012 ]

Although the warning from the Bank of England this week may have seemed to come at a bleak time when many homeowners are already struggling to meet their monthly mortgage payments, in some ways it could not have come at a better time.  This is due to the fact that the Bank of England is warning homeowners to take on fixed mortgages to protect themselves from the damage of the eurozone crisis and increased SVRs, and Nationwide has just released a new set of mortgage deals to the market after slashing their interest rates by a full .1%.

Nationwide has announced some of the best mortgage rates on the market by announcing the slash that now offers borrowers three new types of fixed mortgage deals that have all had their interest rate slashed by the .1%.  Each of these loans comes with a LTV that can be valued as high as 70% for those who may not have a large deposit or a large amount of equity in their home.  Plus, for new homeowners that are taking part in the governmental NewBuy Scheme it is even possible to get a LTV as high as 95% set for five years at only 5.99% which is a pretty good deal for a long term mortgage product.

The application fees attached with the new fixed mortgages are also all fairly reasonable which may be contributed to the fact that Nationwide is supporting the NewBuy Scheme launched by the government heavily in an intent to help first time home buyers get in on the market.  The bank has reduced their products fees by almost half since the start of the month allowing for some great deals all around on mortgage products for those who act now.

First time buyers can receive a mortgage after paying an application fee of only £200 while those who are remortgaging their homes or are moving can look at an application fee that is still set low at £450.  All of the home loans also come with an attached £99 booking fee but there is no completion fee making the rates competitively low when you factor in associated fees that other banks may offer.  Tracie Pearce of the banking institute stating that while other lenders are increasing rates, Nationwide is proud to remain competitive by reducing theirs and offering good news to customers instead.

Bank of England warns of increasing mortgage rates

[ Posted May 16th, 2012 ]

Despite the fact that the base rate is still low at this moment, the Bank of England put out a warning this week to consumers warning them that mortgage rates are going to increase sharply soon and any mortgage holder that is signed into a variable rate may want to rethink their current deal and switch to a fixed rate product.  The warning could affect as many as 11.2m mortgage holders across the UK, and was issued because of the eurozone crisis which is continuing to increase borrowing costs for banks.

Experts are alarmed at the situation because the banks are not going to foot the higher charges of borrowing for long, and will instead push up their variable rates so that they can ‘restore’ profit margins.  An increase in mortgage rates will most likely be felt by those who are on SVRs or tracker loan and could mean as much as a few thousand pounds more each year for mortgage payments.  The result of course is that some homeowners will not be able to find money in the budget and end up in foreclosure.

According to the Bank of England, the eurozone crisis has already affected some households leaving them to struggle to find more money to make their payments.  The economy is not situated in a good place to help as the double dip recession is being carefully walked around as politicians and policy makers attempt to try to keep the UK out of the chaos in Europe but are still finding the country affected.  With the increase in funding costs the high street banks are increasing their SVR loan rates leaving only those with fixed mortgages safe for the moment.

The warning from the Bank stated that it is likely that as funding costs continue to remain high banks are going to look for ways to compensate which unfortunately means for homeowners an increase in mortgage rates.  Those with the Co-Op, Halifax, and Yorkshire Bank have already felt this impact slightly as the three major lending banks have all increased their SVRs interest rate this month.  More banks are expected to follow suit over the coming summer months which is why it is important for those who do not want to be hit unexpectedly with higher mortgage rates to sign into a fixed product.

How to escape increasing mortgage rates

[ Posted May 12th, 2012 ]

Many homeowners took the increase in mortgage rates by the major banks last week in their stride or at least in a low key fashion since they considered themselves helpless in the situation.  While it is true that those on an SVR with one of the major banks such as Halifax and the RSB had the right to increase mortgage rates with or without customer approval, there are choices that you can make as a mortgage holder to get out from underneath the rate hikes.

If you have sufficient credit there is actually no reason that you should pay more simply because the bank demands you too. Those do not have a mortgage with one of the banks that just increase their rates should not get too smug, because unless you have one of the many fixed mortgages products, you may be next.

In fact, anyone with a SVR may be next as many other banks and building societies plan to follow suit next including big lending agents Co-op and Yorkshire Bank.  In fact, experts predict that by the end of the year most people on SVRs will see their rates increase back up.

While an increase of .5% likely is not going to seem like much at first glance, it certainly is not going to result in one of the best mortgage rates, and it is going to do more damage to a household budget then it will seem too at first.

This is due to the fact that the average homeowner is going to see about £40-£50 added to their mortgage payment each month, and by the end of the year that will add up to additional costs of about £480- £600.  At this point it is easier to see how the slight increase can really start to stretch a budget.

The good news is that homeowners that have at least 15% equity in their home do have another choice: to shop around for another mortgage product.  While you will to be careful about termination fees and new product fees, if you are diligent in your efforts to find a new deal it is possible to get locked into a lower rate fixed product.

Bear in mind that even if the fixed product is a bit higher than you are paying now, it will protect you against future SVR hikes and if the mortgage market remains unstable it is likely that these are coming in the future.

Buy to let landlords may have tax problems

[ Posted April 11th, 2012 ]

While those with money are complaining about how millionaires may be affected by Stamp Duty, it appears they may be bigger problems in store for those who took advantage of the best mortgage rates while they were available, because many accountants are now claiming that landlords are sitting on a potential ‘tax timebomb.’

The reason for this is that over the next six months landlords are going to become liable for two years’ worth of taxes and in many cases the income that they received from their properties may not be enough to cover the middle. This is due to the fact that the tax law surrounding buy to let landlords is a bit complex, while the ability to take advantage of the buy to let mortgage rates when possible was easy for those with a bit put away in the bank.

Therefore, the situation created was that those with enough equity or a bit of savings decided to jump into the rental market to take advantage of the new investment opportunity, but without proper knowledge of what they would have to pay in the future. Many of these new landlords are not millionaires or savvy investors, but lack of knowledge is not going to help them out when HM Revenue & Customs comes knocking on the door.

UHY Hacker Young partner, Geoff Davies, stated that a great deal of buy to let landlords that took advantage of the low buy to let mortgage rates and new ‘renters’ economy allowing them to profit for the tax year that ended this April. This means that the landlords could have to pay on their new profits that were earned over the last two year period, and will only have six months in which to do so.

Essentially, being of the timing of when the rates were cut and the timing of when landlords started to actually profit, most landlords are going to end up getting taxed just as they start to break even. The timing is incredibly inconvenient, but then HMRC is not really going to care about that factor since they will want their money when they want it.

As a result, landlords have better start preparing now for the heavy taxes they may find themselves slammed with very quickly otherwise they could lose what they thought they had gained.

Best buy to let mortgage rates for April

[ Posted March 30th, 2012 ]

Homeowners are aware that they should shop around for the best mortgage rates taken time to actually calculate the full costs of a mortgage before signing any contracts.  This includes looking at the mortgage rate and comparing any savings that may be made back by the bank due to extras such as signing fees, booking fees, or evaluation fees.

In fact, sometimes it is more beneficiary to pay a bit higher mortgage rate and avoid all of the fees for the best deal.  However, even though almost all homeowners know this, they tend to forget the rules when it comes to purchasing a buy to let mortgage where the trend among landlords has been to head to the lowest rate on the market.

While it can be assumed that most buy to let landlords are also homeowners, it seems that in their hurry to get in on the low buy to let mortgage rates that are now flooding the market they have forgotten some of the mortgage 101 tips. Given the fact that buy to let lending makes up the majority of the property lending market t the moment, it may be wise to take a step back and look carefully at all of the options before choosing one.

This is especially true for borrowers that only need a small loan to add onto their portfolio, because in this case a higher mortgage rate will be more beneficial since they can pay it off quickly whereas there is no way out of a high arrangement fee.  The fees are generally set in stone, so in this case it would be wiser to pay off a higher mortgage rate quickly versus paying a large fee upfront that is not refundable.  By shopping around sometimes you can pay a higher mortgage rate but in return get fee free buy to let mortgage deals as well.

A great example of this is the new Coventry Building Society buy to let mortgage deals which are based on the size of a loan.  The building society is offering a loan that is set at the low 3.75% but in return comes with fees that total up to £2,499 whereas the higher 4.25% offers fees of only £1,249.  For a small short term loan the latter is obviously the better choice.

Bank of England warns of borrowing pressure

[ Posted March 30th, 2012 ]

The Bank of England is warning mortgage borrowers that they soon may be hit with more problems a loan charges are expected to increase, lending criteria is expected to tighten even more, mortgage rates are set to increase, and the amount of credit given to average households is expected to be decreased.  Most lenders already are making plans that include releasing less credit to households over the next three months as the lending market tightens which will likely impede further economic recovery as the property market begins to flatten again.

The Quarterly credit conditions survey from the Bank of England reported that lenders will reduce the amount of credit they offer to households at the same time that they will increase their mortgage rates making it harder for anyone to purchase a new home, especially first time home buyer.  At the same time, the Bank of England also stated that over first quarter of the year there was a surprising decrease in the amount of mortgage approvals that were issued even though lending terms at the start of 2012 were still considered to be ideal until about March.

The credit conditions survey reported that approvals fell to just under 49,000 which is the lowest that they have been in the past eight months.  This prompted many mortgage brokers and market analysts to compare February of this year to the start of the 2008 bank crisis as the same conditions and trends are reappearing.  The one main difference is that SMEs and large companies have not seen such a large fluctuation in their mortgage rates and the amount of credit open to companies has remained the same prior to March.  However, most experts had expected to see the amount of lending available go up due to Government calls for better SME bank funding.

Lending data from the Bank of England reports that businesses were able to pay back about four billion of what they took out in new loans over the first quarter of the year which comes out to be a 7.9% average three month contraction.  This is another sharp decrease, and one that has not been seen since autumn of 2009.  In addition, commercial lending is expected to decrease over the next quarter although the buy to let market is expected to remain steady.

Yorkshire and Clydesdale Banks increase mortgage rates

[ Posted March 17th, 2012 ]

Yorkshire and Clydesdale banks are the latest mortgage lenders to increase their mortgage rates. Over the last two weeks many major lenders including the RSB and Halifax have announced rate hikes, and it is only expected that more banks will jump in. There are about 30,000 customers that will be affected by the increase announced by Clydesdale and Yorkshire, as they will see their standard variable rates jump about .40% starting on May 1st.  For most customers of the banks, this means that repayments are going to increase by about £30 every month adding up to an increase of £360 per year.

The SVR mortgage rates are increasing up to 4.95% from the lower current rate of 4.59%.  For someone that has a £100,000 mortgage set at a 25 term they will approximately now have to pay £582 per month for their mortgage which is about £20 more.  The pair of banks stated that this is the first time they have had to increase their SVR rate in the last three years, and that they were forced to increase their mortgage rates because of the higher costs of funding.

The last week has been rough on those with mortgage lenders as almost a million borrowers have been affected by news that their SVRs were going to increase.  Of course, those with fixed mortgages will not be affected by the announced changes, but when their term ends it may be harder than ever to find a suitable replacement as mortgage deals are quickly disappearing off of the market.  As buy to let landlords continue to purchase most of the available bank funding, it will only get harder for the average first time home buyer to get onto the property market and for those with a mortgage to find a good remortgage deal.

Clydesdale and Yorkshire banks announced last week that customers have until July 31st if they want to switch their provider due to the increase in their SVRs without paying any exit administration fees.  Bank retail director, Steve Reid, stated that they believe that even with the increase their SVR will still below the rates of many other UK mortgage providers.  He added that the change had to be made because of the rise in costs associated with the mortgage market and that the increase in rates will help them continue to help keep deposit rates low.

Banks offering more buy to let lending

[ Posted March 16th, 2012 ]

Nationwide and Lloyds Banking Group confirmed that most of their net lending is being released to landlords and not to homeowners.  As landlords continue to take advantage of buy to let mortgage rates they are flooding the mortgage market accounting for a large amount of borrowing.  At the same time, homeowners are choosing to sit on their current debts and remain uncommitted within the housing market.  As the lending continues to go to landlords over homeowners the market will become much tighter making it much harder for young first time home buyers to actually get onto the market.

A look at the ‘net lending’ figures which refers to what comes into and then leaves the mortgage system, reveals that at the close of 2011 net landlord borrowing had quickly overtook homeowner lending.  The last time that this occurred was during a brief period in 2010, but this time based on market analysis it is expected that lending will continue to favor landlords.  Prior to the financial crisis general lending and landlord lending tended to be equal, but now that the low mortgage rates and financial stability of the economy are gone, it seems that landlords will dominate the market.

Figures that were compiled using information from the Bank of England and the Council of Mortgage Lenders showed that homeowners are receiving £1 for every £1.11 that landlords receive.  Lenders such as Nationwide state that landlords are simply offering the highest amount of demand for their mortgage deals, and as a result they cater to this group by offering their best mortgage rates. Private buyers on the other hand often do not have the credit or the deposits required to purchase a mortgage therefore reducing their lending figures.

January figures show that net lending in the UK for all building societies totaled up to just £1m which is about seven mortgages total.  This new data has prompted market experts to ask the Government to help increase the tax burden on landlords and instead do something that will help younger people get into the first time home buying market.  The current age of first time buyers that do not receive help from their parents is now sitting close to forty; which is a large jump from the average of 28 in 2005.  4 out of 5 home owners that are under the age of thirty must ask for aid from their parents in order to purchase a home.

Halifax announces increase to mortgage rate

[ Posted March 9th, 2012 ]

Halifax was the second of the major banking institutes over the past two weeks to announce that they will increase their mortgage rates for those that have a standard variable rate mortgage.  The new change will affect about 850,000 borrowers who will see their mortgage costs jump once the change takes place on 1st May.

The bank claims that they have had to increase their rates due to the higher costs of mortgage funding given the current economic environment. However, many mortgage owners are wary of the change affecting their monthly budgets and feel betrayed as the base rate is still quite low.

Customers will be hit hard by the increase in the mortgage rate as the average consumer will find themselves paying £17 to £500 more per month on a mortgage that has 15 years left on it.  On average, a homeowner with a £150,000 mortgage will find themselves paying £40 more per month; which adds up to an extra £480 per year. Homes where the budget is already tight on a month to month basis are the most likely to be affected, as spare money becomes even less of a common occurrence.

Those who may not be able to afford the rate increase will want to take a look into the remaining fixed mortgages options that are left on the market. While some of the fixed offerings may not be a much better choice than the SVRs, in the long term they may be the safer option given the fact that they will at least protect homeowners from future SVR increases.

There is no way to tell if this will be the only rate increase this year from Halifax and the other major banks, so action now may be the best way to protect one’s future interests. The Consumer Action Group is calling the increase in interest rates by Halifax shocking, as well as the other announced increase in SVRs by the RSB and Santander.

However, Halifax is at least responding to its customer’s concerns by offering fee-free transfers to its borrowers that want to change their deals. They are also offering customers that have a 60% LTV or higher the chance to switch to a fixed two year mortgage set at 3.49% with no fees attached. For some customers this may be the best option versus taking a chance on future SVR increases.

Lending rates skyrocketing

[ Posted March 8th, 2012 ]

Despite the fact that the Bank of England base rate is still sitting at the historical low of 0.5%, banks are still hitting household budgets hard by tightening and increasing mortgage rates, interest rates on credit cards, and increasing their interest on overdrafts.

In fact, new figures released from the Bank of England show that the gap between the base rate and the average mortgage is now wider than it has been since January1995, which is when records documenting the gap were first recorded. Also at its highest peak yet is the lending rate assigned to overdrafts, which currently sits at 19.5%.

While the news focuses most on the rising costs of home ownership and jumps in the average fixed mortgages and SVRs deals, those who hold credit cards are also feeling the pinch in their pocket every month. The average credit card interest rate is now 17.3%; the highest that it has been in the last decade. Many experts are now turning an eye to the banking system, stating that the banks are taking advantage of the situation to profit when lenders should still be benefiting due to the low base rate.

Former chairman of the Treasury Select Committee, Lord McFall, stated that due to this fact many people are losing their faith in the banking sector. Given the fact that the public had to bail to out the banks with their hard earned taxes, it seems unfair that the banks are now charging more for services than they should be.

The latest increase in SVRs from many high street banks that announced their mortgage rate increase over the last few weeks is where most homeowners are feeling the strain, making the public feel as if they have not been given a fair deal.

Figures from the Bank of England reveal that the average interest rate assigned to a SVR mortgage was 4.16% during January, which is a 3.66% difference from the base rate. This gap is the largest it has been in almost two decades, and mortgage levels are expected to get even worse over the next few weeks.

In fact, a rate increase from Halifax this week has already affected 850,000 homeowners and with other banks expected to follow suit the amount of people affected will only increase.  Although Halifax only increased their SVR by 0.49%, for those with a £150,000 mortgage, this means an extra £40 each month must be found to meet the payments 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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