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Mortgage lending in Northern Ireland increases for first time

[ Posted April 28th, 2011 ]

The first quarter of 2011 brought good news to the Northern Irish housing market when after a four year slide in home loans there as a rise in the mortgage loans.  Home owners also saw the best mortgage rates over the past there months which helped them to get their loans approved and finally get their foot up on the housing market ladder.  The wider margins are the result of banks’ access to money market financing falling which the Central Bank said resulted in lengthier margins overall that helped benefit property purchasers.

The Central Bank compiled the figures that show that mortgage lending is on the rise by gathering statistics from the leading five Irish banking lenders who all reported their euro zone bank lending figures.  Included in the figures are the cost of funds of the bank combined with the lending risks, balance sheet constraints, and the tighter credit standards.  Even with these factors in mind a spokeswoman stated that these factors were not enough to change the lending standards even though they did show an increase in lending giving faith back to those who want to pursue a commercial mortgage or a personal homeowner mortgage.

Also revealed in the Central Bank survey was that wholesale funding markets were starting to fall apart over the first few months of 2011 with banks anticipating the fact that they will not be able to make use of the unsecured money market.  This may hurt mortgage rates North and South of the border as the banks are forced to get more selective in who they loan to without the proper debt securities in place to back mortgage lending.  This is aligned with the Department of Finance predictions last year that Irish banks will need to turn to the ECB for aid over the course of 2011 before they can get back into the wholesale market next year.

Commercial mortgage interest in mortgages for non-financial businesses did not change over Q1 of 2011 although there is expected to be a slight increase during the next quarter of the year.  The stagnant rate of growth for these types of mortgages at the beginning of the year were blamed on reduced lending facilities, debt restructuring, lower levels of fixed investment, and lower demand for business credit.  The tentative approach to business acquisitions and mergers also likely kept the market moving slow over the beginning of the year.

Lenders are reducing their mortgage rates as the fear of the interest rate hike fades

[ Posted April 26th, 2011 ]

As more analysts and experts are now predicting that it may be much longer than just six months before the bank interest rate hike occurs many lenders have decided to reduce their mortgage rates in an effort to bring customers back into their doors.  Among the lenders slashing their rates are Yorkshire and Clydesdale Banks who are cutting their arrangement fees in half for anyone who takes out a mortgage over the month of May starting on the 3rd and concluding on July 2nd.  These rate drops apply to both those who take out tracker and fixed mortgages.

The half-priced arrangement fees may be attractive to those looking to purchase a new home, but buyers should make sure to take a step back from the equation and look at all the costs involved in securing a home loan before making a final purchase.  For instance, the half arrangement fees sound like a great deal, but when placed in perspective based on a mortgage valued at £150,000 and the additional stipulations you could expect to pay £10,947 with Yorkshire and £11,851 with Clydesdale demonstrating that even with half fee offers there is still value in shopping around to make sure you are getting the best mortgage rates before simply jumping at an offer.

Other offers on the market include two new products released by Santander, a two year mortgage charge that is set at 2.99% for fixed mortgages with arrangement fees of £1,250 placed against their best buy mortgage rate for fixed mortgages that is set at 2.59% with attached fees of £1,995.  However, for those who want a short term solution the higher priced loan will still be the best choice when you look at all of the mortgage costs included with the mortgage loan which is why it pays to shop around before choosing where to apply for lending if possible.

Lending data reveals that more fixed mortgages and general mortgages are being approved

[ Posted April 22nd, 2011 ]

Despite the fallout from the credit crisis that kept many potential homeowners off of the lending ladder new data from the Trends in Lending report from the Bank of England shows a glimmer of hope with new mortgage approvals showing a slight peak during the month of March when compared to the previous month of February.  The increase in mortgage approvals also correlated with the decrease in house prices and the new best mortgage rates that are being offered by many of the major High street lending institutions.

According to the report, mortgage loans over the month of March increased by 1,000 compared to February and by 2,000 compared to January but still sit well below the year on year comparison to March of 2010 when they were almost 7,000 higher.  The report also noted that the increase in mortgage approvals may be due to the fact that many homeowners are seeking out fixed mortgages in an attempt to fix the threat of an increase in the Bank rate before it affects their monthly property repayments leaving their budgets in disarray.

Surprisingly, the latest Trends in Lending report also noted that most of the UK lenders did not receive overpayments of their 2010 mortgages even though many of the variable rate loans offered low best mortgage rates that were given out before the financial meltdown occurred two years ago.  Lenders believe that the tightened budgets, the attractiveness of property for tax advantages, and the higher rate of unemployment may explain this phenomenon.  Mortgage owners are not the only ones reporting a noose around their disposable incomes however, as business lending is also feeling the squeeze.

The data from the five largest lenders in the UK revealed that the commercial mortgage market contracted by about £2bn during the first three months of 2011 with SMEs feeling the crunch particularly hard.  Overall, the lending rate fell by -3% during the first quarter of this year with data from the Bank revealing that small businesses were hurt the hardest by the price changes although the larger companies did not see their interest or mortgage rates increase much during the first few months of the year.  Also indicated by the report was the fact that lenders are still aggressive and selective when lending to SMEs despite promises that they will offer more lending opportunities.

Euro rate hike hurts those with overseas property

[ Posted April 20th, 2011 ]

Those who own buy to let mortgage rates that are attached overseas were hurt in terms of their property investments after the first hike in the European interest rate occurred in July of 2008. With the mortgage rates continually rising throughout Europe and the currency becoming overvalued and inflated against the dollar and the pound the investments are no longer proving to be as viable as they may have looked two years ago before the world wide global recession fully set in.

Since the interest rate increase was announced the Euro has gained back some of its strength, but in the face of the pound weakening those in the UK who own properties overseas are now struggling.  Moneycorp senior currency expert Adam Jordan stated that the company has seen about a 40% increase in the amount of people forced to repatriate money back to the UK during the start of 2011 compared to the figures that were reported for the last quarter of last year.  He added that the outlook will most likely get even worse when the ECB (European Central Bank) is forced once again to increase their interest rates to combat inflation.

Jordan explained that although the property market expects to see the an increase in the Bank of England interest rates in October, if this does not occur due to the fact that there has not been a response to the ECB rate increase from the Bank of England then the interest rate gaps will continue to grow between overseas market and the UK.  This in turn will cause heavy strain on those who do not have fixed mortgages abroad as budgets may have to stretch in order to make up for the difference.

The most recent set of figures released from the Smart Currency Exchange demonstrate that after the ECB rate rise the average European mortgage repayment will increase to total around £1,750 per year with the mortgage rates expected to continue to increase by another 1.75%.  Jordan also added that over the last year he has seen many of the company’s clients decide to re-mortgage their main residential home in the UK in an effort to quickly pay off the overseas home mortgage so that they do not have to worry about making Euro payments on any properties.

Nationwide offering new deals for those in search of low fixed mortgages

[ Posted April 15th, 2011 ]

While the property ladder is continually getting harder for first time home owners to get a leg up onto, there are still some banks that are willing to help out perspective property owners who have the credit to secure a new home.  One of the latest to set their own list of fixed mortgages out on the table to consumers is Nationwide after news that the major banking institute decided to drop their mortgage rates in an attempt to lure potential property owners back their direction.

Nationwide announced that they have made large interest rate cuts across the board to all of their three year fixed mortgages by .2% which may seem small at first glance, but when compiled with the price of a mortgage can be the difference between affordability and stretching the budget past its elasticity.  Each of the mortgages also is offered with new mortgage rates of 3.79% with LTV (loan-to-value) ratios that can extend as far as 70%.

This news also may help those with the proper credit get a little farther away from the large required deposits that keep many potential home owners away from the property market. New Nationwide mortgage customers can borrow as much as 85% of the LTV with rates that begin at 5.3% under the terms.

Those that want to get the deal even lower will receive rates that start at 4.09% if they are able to put down a 30% deposit and only borrow 70% of the LTV.  These customers will also be able to avoid the product fees associated with the new mortgage applications which includes saving £900 in the product fee and an additional £99 as a booking fee.

The new fixed mortgages deals are also available to those who want to switch their mortgage or remortgage their home although they will still be required to pay the £99 booking fee.  New customers who take advantage of the deals can borrow up to 85% of the LTV with rates that begin at 5.6%.  It is likely that most candidates will add the arrangement fees into their mortgage arrangements to help make the financial burden or purchasing a new home a bit more manageable.

North-South divide in property rates and mortgage rates in the UK

[ Posted April 6th, 2011 ]

The southern regions of the UK have continued to draw away from the northern regions of the country as the property prices in both respective regions continue to separate away from each.  Although the entire country has seen a drop in property sales as the result of an increase in mortgage rates, tough lending criteria, and the credit crisis the south has seen their property prices slowly start to climb back up while the northern areas are still struggling with property growth forcing the divide to become more of a fault line.

Part of this is attributed to the fact that three of the regions that saw the sharpest decline in both personal mortgages and commercial mortgage rates are located in the northern region of England with Bunly and Gainsborough in Lincolnshire seeing a drop of 68% in 2007 and Birkenhead on Merseyside see a 69% drop since 2007.  However, the town that faired the best since 2007 was in the south within the town of Esher in Surrey which only reported a drop in housing prices by about 14% making it easier for the area to recover quickly.

With a closer look into 2010 the southeast region in particular has seen a growth in property recovery and is leading the UK back towards positive growth while other areas still struggle with poor mortgage rates. Brent in London saw its property sales increase by 53% last year and Tadworth in Surrey saw their sales increase by an additional 51% which is great for the south, but only serves to exemplify the difference in property sales in the north where many people are simply working to hang onto their properties let alone sell them at an excellent market value.

Housing economist for Lloyds, Suren Thiru, stated that the divide between the North and the South has clearly been defined within the housing market with both prices and home sales housing to be much more resilient in the south when compared to the condition of the northern housing market.  With this in mind, if you are looking for a better sound investment for buy to let mortgage rates the south may be the better region to invest in even if it means traveling to scope out the investment.

 
 
 
 
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