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Falling mortgage rates and house prices may make owning better than renting

[ Posted January 29th, 2012 ]

Those who own a home at the moment save £1,400 a year or even more versus those who rent, according to a study that was released yesterday.  The newest mortgage rates combined with the fall in house prices leave the average mortgage at around £600 per month for a three bedroom home.

On the other hand, the average rent for a three bedroom house is £716 leaving the average home owner ahead by about £116 every month. This is a large contrast to 2008 when the average mortgage came in at about £928 before the credit crisis. Also included in the comparison figures were insurance and maintenance costs.

The gap between owning and renting a home increased a great deal over the course of 2011 and is expected to become even larger as many first time home buyers are unable to raise enough money to meet high LTVs without paying large mortgage rates and thus find they have no other option but to rent. The increased demand for rental properties will no doubt increase the cost of renting, making it even more affordable to buy a home for those with the financial ability to do so.

The research was carried out by Halifax, which claims that the drop in home mortgage costs is the result of dramatic falls in the average house prices and in mortgage rates. In 2008, mortgage rates sat at about 5.75% on average and at the same time last year were down to just 3.63% due to the influx of cheap deals that hit the market after the Bank of England dropped its base rate down to the historical low of 0.5%.

Over the same period of time house prices fell by about 11%, reducing mortgage payments even more for first time buyers. However, in the face of the falling mortgage, market rental prices have increase in most areas of the country due to heightened demand for accommodation from those that were wary of purchasing a home in uncertain times and those that simply could not afford the required LTV for a mortgage.

The lack of new construction and development projects throughout the economic recession has always left the number of available rentals lower than expected in comparison to the high demand.

5% LTV’s are back on the market

[ Posted January 28th, 2012 ]

After the last few years have been spent with most first time home buyers spending their time saving instead of purchasing because of high LTV’s on most home mortgages many home buyers are starting to feel relief as some lenders are offering 5% LTVs.

Five years ago there were hundreds of different 5% LTVs for homeowners, allowing first time home buyers to easily jump onto the market, but as mortgage rates continued to fluctuate and the credit crunch hurt lenders everywhere these deals slowly dropped off the radar, until now.

The fact that such low LTVs are on the market at all in 2012 is quite a surprise as most brokers called for sharp increases in mortgage rates and tighter credit restrictions due to the unstable economy and the looming eurozone crisis.

However, those seeking to buy may just have some ground to stand on if they can get out there and take advantage of the surprise that the first few weeks of 2012 have offered them, because if there is one thing for certain, it is that low rates and low LTVs are not going to last much longer.

Leeds Building Society was one of the first lenders to offer a mortgage with a 5% deposit attached to it. Of course, it also comes with an interest rate of 5.25% which is pretty high considering the average best mortgage rates that are out there right now.

It also has £999 attached to it in fees, but for those that will never likely be able to scrape together an LTV that is 75% or more this is a fantastic way to get a step onto the property ladder and get some equity built up to make future home purchases a bit less stressful.

Ipswich and Newcastle building societies also have 95% LTV deals on the market that were introduced last week and John Charcol the broker stated that they will also offer a low deposit home purchase scheme at the beginning of February aimed at helping first time home buyers out.

On the other hand, buyers that can manage a 90% LTV should take a look over at HSBC and their low 3.84% which can be a significant amount of savings for those that can afford a bit more upfront on their new home purchase.

Crystal Mortgages celebrates 2011

[ Posted January 20th, 2012 ]

Crystal Mortgages, a Walsall based firm, is hailing 2011 as an ‘outstanding’ year that helped the company to grow in strength.  The company prides itself as being an independent commercial mortgage finance loan specialist offering a vast away of lending choices for those who are considering investing in commercial property.  Over the course of 2011 the company has announced figures that show they completed about 37% of all applications and brought in £250 million in new business mortgage applications.  While most of the mortgages that the company receives are commercial property based, they also offer some buy to let products to interested consumers

The average loan size offered from the company did decrease by about £20,000 which is against the national trends that saw average loan sizes increase year on year, but the small drop was allowed for by the company given that they saw a 13% increase in the amount of applications they received by those interested in securing a commercial mortgage. A few huge deals also helped such as their largest completion mortgage that was £1,177,500 that had a turnaround from the time it was in the application stages to the market in just 35 days.

Senior underwriter for Crystal Mortgages, Roger Dewsbery, stated that the figures are outstanding and indicate that 2011 was one of the best performance years for the company.  He added that the company continues to work on improving their finance options and offering bridge loan products to help clients that previously may have had problems securing funding.  In order to help continue to report strong mortgage numbers the company has a few new products on the market for 2012 some of which offer some reasonable mortgage rates given the fact that many High Street Banks are starting to raise theirs.

One of the new products offered by Crystal Mortgages is their sitting tenant discounts that allows businesses with solid accounts to help get as high as 100% of their purchase price if the tenant  is buying the premise that they want from their landlord.  They also have a full portfolio of buy to let products that can offer loans as high as £10,000,000 and as low as £25,000 to investors that are looking to bulk up their portfolios are reasonable buy to let mortgage rates.  For those within certain sectors such as vets, doctors, and pharmacies there are also a wide array of products available.

Mortgage apps increase in popularity throughout 2011

[ Posted January 19th, 2012 ]

In the last month of 2011 mortgage applications were still higher than their year on year average with 20% of people applying for new home loans, but compared to the high figures seen in November of 2011 they still fell by a whopping 43%.  The fact that many banks started to increase their mortgage rates during December is likely a factor, but the weakening economy and the instability that was heavily predicted during the month for the year 2012 is also likely a factor as potential lenders wearily took a look at the housing market.

Also rising in December of 2011 compared to figures from 2010 was the amount of applicants that had fixed mortgages in mind with almost 76% choosing a fixed rate product over any other type of deal.  This indicates that homeowners are no longer willing to take a chance with variable products as the housing market starts to shift and potentially fall back down over the course of 2012.  Interestingly enough, despite warning that house prices will start to fall back down again the average loan size also increase by about 4.62% with the average loan itself valued at about £132,800.

The MAB also reported that the average age of those applying for mortgages increased up to 39 over the course of December which is the highest it has reached since the MAB started to compile and release its monthly National Mortgage Index.  Remortgage activity also slowed drastically when compared to November’s figures falling by about 39% at the close of the month. However, year on year remortgages showed a 55% increase displaying that lower mortgage rates and more stability is still present in the market then there was a year ago.

The average December LTV increased as well up to 59% compared to 57% in November suggesting that homeowners are willing or required to pay a higher deposit in order to get the mortgage rate that they want.  The highest average mortgage loan was seen in London for the month of December 2011 where the average home loan was worth £251,000.  Conversely, the smallest home loan was seen in Wales where it sat at £84,000.  LTV’s on the other hand were the lowest in London at an average of 66% and highest in Yorkshire and Humberside sitting at 80%.

Even as Bank Rate stays steady mortgage rates increase

[ Posted January 14th, 2012 ]

Although the Bank Rate has stayed stable at .5% over the past few years, mortgage rates are still increasing, and over the past few months they have increased noticeably as many people fear that there may be a second banking crisis within the UK.

Senior technical manager for John Charcol, Ray Boulger, stated that the cost of variable mortgages and fixed mortgages set at low rates have continued to increase as a result of the Eurozone banking sector which forced lenders to charge more for their loans. However, even with rates on the rise, there are some fixed mortgages out there that are worth taking a look at by potential home buyers looking for a great deal.

For instance, Newcastle Building Society announced a new two year fixed deal that starts at 5.95% for a 95% LTV that can be an excellent choice for first time home buyers that cannot afford a large deposit.  The loan does come with a £995 fee, but for those who need a bit more help there is a 6.25% fixed rate deal that comes without any fee and an offer of £300 cashback.

On the other hand, those that are in the market for a remortgage and have not yet switched their mortgage, but want to lock down the best mortgage rates before they jump up, a deal from HSBC may be worth checking out.

This is due to the fact that HSBC has a life time tracker that starts at 1.99% above the current base rate and will maintain this rate for life and is available with a 65% LTV. There aren’t any fees attached to this deal and there is also no charge for early repayment, making it an attractive deal for those who want to maintain some sense of security.

Finally, those that want a bit more security than banking on the Base Rate may want to check out a two year fixed mortgage from Chelsea Building Society that comes with a LTV of 85% and a mortgage rate of 3.69% with a £395 fee.

On the other hand, chantey Economic Building Society offers a five year fixed deal to borrowers that want a longer term with a 4.4% rate and the same 85% LTV.  Included in the later offer however is free legal work or free valuation making it worth checking out.

Nationwide attempts to entice first time home buyers

[ Posted January 14th, 2012 ]

There has been a lot of concern in the news about the housing market starting to stall again as mortgage rates slowly inching back up due to economic concerns.  This has led many to fear that the market for first time home buyers may get even worse, making the dream of owning a home something that will completely disappear.

However, banking giant Nationwide has stepped up amidst the fears to tempt first time home buyers back into their doors with an offer that is hard to beat, compared to what is currently out there on the market. Right now, Nationwide is offering a first time buyer a two year fixed mortgage term set at 5.59% that only requires a ten percent deposit.

The low LTV should help encourage those who have thought that fixed mortgages were out of their reach, but there is an attached £900 product fee attached that can still be a bit intimidating.  However, for those that need a little more help the product fee can be waived if a homeowner chooses the higher priced mortgage set at 5.69%.

Outside of the new deals for first time home buyers, Nationwide is also offering a handful of deals to other qualifying customers, as well as including a five year fixed rate term that is set at 3.59% with an attached LTV of 70%.  This deal comes with a £99 booking fee and a £900 product fee and is open for remortgages, existing customers, and for home purchases.

For those without the ability to pay the fees the same deal is available with just the £99 booking fee and a £400 product fee although the rate is set a bit higher at 3.79%. Head of mortgages for Nationwide, Martyn Dyson, stated that the banking institute is hoping to support the housing market by offering more 90% LTV mortgage deals to those who need a leg up in the mortgage market.

Dyson announced this is why they now have two year products for those who need a 90% LTV with two-five year terms. Given the fact that most banks are getting stricter with their lending criteria, this is excellent news for anyone that is in need of a great mortgage to purchase their first home.

Mortgage Lending Results from the last quarter of 2011

[ Posted January 6th, 2012 ]

With many people looking into the New Year hoping for improved mortgage prospects, the figures from the last quarter of 2011’s housing market have been released, shining what is hoped to be a little light at the end of the tunnel for those that have been reading the experts warnings that the housing market may collapse again.

Now that mortgage rates are steadily starting to increase once more, and the Eurozone crisis has made lending criteria a bit stricter again due to the high costs of lending between banks, many potential home owners are wary of approaching the market.

However, some lenders have been working hard to help lenders secure a home either by offering special deals via conventional means or introducing new programmes like equity loans that proved to be successful during November of 2011.

In fact, while many financial experts believed that lending approvals would drop harshly in November as a result of the Eurozone crisis, they in fact jumped up to the highest that they have been over the past two years showing an increase of 4%.  This could be due to the fact that banks are now working harder to publish attractive mortgage rates, or LTV’s, in an effort to draw more home buyers through their doors.

Overall, the figures proved to be 15% when compared to the amount of mortgage approvals in November of 2010 and low LTVs valued at less than 15% actually made up 13% of all of the lending that was approved during the month.

Some experts believe that the increase is the result of the banks altering the way they lend to accommodate the new needs of lenders in today’s economy. Another reason may be that buy to let mortgages were up as landlords have started to take advantage of the renting society to get a larger cut of the market.

Despite this fact, the Council of Mortgage Lenders is still concerned that gross mortgage lending rates are going to be down when compiled for all quarters of 2011, and not just the last quarter, and expects to see gross mortgage lending over 2012 continue to drop.  In fact, the CML dropped its estimate for gross lending in 2012 to £133 billion which is a large drop from its previous prediction of £150 billion, as the weaker economy is expected to drag down the housing market.

Coventry Building Society offer new fixed mortgage deals

[ Posted January 6th, 2012 ]

Coventry Building Society has announced the launch of a new set of mortgage deals aimed at customers and first time buyers that want long term fixed mortgages for the added security of a stable financial future.

As the economic state of the country continues to stand on unsteady ground, and the mortgage market starts to fall downwards again, the security of knowing the terms of a mortgage agreement for a lengthy time period is attractive to those who feel they will be remaining at the same residence for a significant amount of time with a stable income source.

Included in the new set of best mortgage rates available from Coventry Building Society is a five year fixed mortgage set at 3.58% for those that can afford a LTV of 65%.  There is an attached £199 booking fee and a £800 arrangement fee that borrowers should be aware of, although attached fees are becoming standard as the housing market starts to tighten back up.

It is expected that mortgage rates are going to increase over the course of the next year so those that have not yet taken advantage of the low rates of last year are encouraged to take a look at what is on the market before they make any final decisions.

Also offered by the Coventry Building Society are Flex fixed mortgages that are set for five years at 3.89% along with a 65% LTV.  The same fees are also attached to this mortgage product.  First time home buyers on the other hand may find the five year deal set at 5.25% and a low 10% required deposit is an enticing offer.

Also available to first time home buyers as part of the deal is a booking fee of £199, but no arrangement fee with the mortgage package.  As part of the first time home buyer package all successful applicants will also receive IKEA vouchers worth an additional £500.

Those that are not members of the Coventry Building Society can also take advantage of the offer, although they will have to pay an arrangement fee of £300 and the mortgage rate is set a bit higher at 5.49%.  Sales and Managing Director for Coventry BS, Colin Franklin, stated that their aim is to start the New Year off with great deals for those buyers who need a break in order to make owning a home affordable.

 
 
 
 
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