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Number of mortgage complaints fell in 2011

[ Posted March 2nd, 2012 ]

The number of mortgage complaints recorded by the Financial Ombudsman Service in 2011 decreased by five percent. Despite the fact that the year on year average continued to fall in a downward trend, in the last half of 2011 there were about 38% more complaints than there were during the first six months of the year.

Surprisingly, it is not the increase in mortgage rates that had most people concerned, but instead administrative errors that caused consumers to see their mortgage applications denied unfairly. Most mortgage complaints centered on consumers that were not able to port their mortgage as a result of tighter lending criteria that now make the consumer inapplicable.

Although mortgage contracts generally have conditions placed on them that prevent a consumer from being able to port their mortgage as well, the FOS is able to look at the criteria that is listed and decide if a customer is being fairly denied by a bank. Other complaints that were received in high volume during 2011 include disputes where a lender increased the age limit for a mortgage or increased the cap on the SVR mortgage rates.

Interestingly enough however, overall complaints that centered on the mortgage rates were actually less common during 2011. This is most likely a result of the low base rate that has remained set at 0.5% by the Bank of England and the fact that those whose fixed mortgages ended were met with very low SVRs.

In terms of arrears, about the same amount of complaints were issued as in 2010, but there are more complaints continuing to be heard regarding charges that are being applied to arrears by lenders and the inflexibility of lenders in this situation.

The Financial Ombudsman still hear some repossession cases although they were low in number and mostly concerned complaints about ineffectual communication with the lender. Overall, the Financial Ombudsman Services received a total of about 106,000 complaints in 2011 and out of these 89% were about financial businesses.

Most cases received by the FOS were about payment protection insurance and the FOS expects that they will receive an even higher record amount about PPI this year as well. This is due to the backlog of PPI cases that are currently being addressed by the banks.

Yorkshire Building Society offers its offset mortgages for ten years

[ Posted March 1st, 2012 ]

One out of every three mortgage applications approved by Yorkshire Building Society are for offset mortgages, and the building society announced that they are proud to now be able to offer these products for their tenth year.

The advantage of offset mortgages is that they bring with them lower mortgage rates, allowing consumers to save a larger amount of money over time. As a limited amount of lenders offer this option, many home mortgage seekers are not even aware that they have this option open to them.

Jenna Smith, mortgage product manager for Yorkshire Building Society, stated that as one of the first building societies to be able to offer offset mortgages as a choice for consumers, they believe that the offset option offers a great opportunity to savvy customers.

Smith continued to explain that based on their own figures it is easy to see how an offset mortgage can actually make a difference in homeowners’ finances when you figure how much they save over time in interest. The drop in mortgage rates also has helped homeowners to save money, along with the unique mortgage product offering.

In 2011, the average home mortgage account was estimated at about £184,000, out of which an offset mortgage borrower held about £51,000 in their offset savings. Therefore, about 28% of their mortgage was offset. Based on this term, over a 25 year mortgage term a monthly payment would cost the much lower figure of £971 and a mortgage could be paid off in just five years.

This saves the average home owner about £63,000 in interest that would have built up if the mortgage rates stayed aligned with what they are now over the course of the next five years. Many people believe that an offset mortgage is only a good option for those that have a large savings, but according to Yorkshire even those who are only able to place £2500 aside in an offset savings account could reduce a mortgage valued at £1000 by about half a year saving about £4,000 in total interest.

In addition, placing £25 a month in an offset savings account every month for term could help shorten a mortgage term by about nine month,s resulting in an overall savings of £5,000 when you add up interest that does not have to be paid.

NatWest introduces new mortgage range aimed at corporations

[ Posted February 25th, 2012 ]

NatWest Intermediary Solutions announced new commercial mortgage rates today for their range of corporate products that may help make corporate deals a little more achievable for those in the business world.

Among the new products were two exclusive deals and slashed rates on their core ranges of offerings. Lower fees have also been attached to many of their ordinary corporate deals, which is a significant saving for those that are looking for the best deal before making an investment in a new property for development or other business use.

Among its corporate ranges, NatWest introduced a new two year fixed mortgages scheme that is set at a 60% LTV, and aimed at those who want to remortgage a product at a better mortgage rate. The interest rate attached to the loan is 3.39% and is not exclusive to remortgages, although it is expected that this is where most of the interest will come from.

The company also introduced an 18 month variable mortgage that comes with an attached 75% LTV that is set at 2.99% initially, which could remain a great deal if the base rate remains low. Also offered is a two year tracker purchase mortgage without an LTV that is set at 4.39% for qualified candidates.

Outside of their general loan opportunities, NatWest is also offering two deals for designated AR firms that also featured slashed mortgage rates. The first product is a two year fixed mortgage that is set at 3.59% with an LTV of 75%.

Also being offered to designated firms is a 90% LTV package, aimed at purchase mortgages, that comes with the initial variable rate of 5.79%. While this may seem high, the low deposit may help many corporate firms actually get back into the property market.

In addition to these offerings, NatWest has also slashed its rates within its core range, offering a two year fixed mortgage with an 80% LTV that is set at 3.95% but comes without any fees attached. Within its normal corporate range, the two year tracker offered by the company will come with an 85% LTV and the set rate of 4.39%. Finally, its remortgage two year fixed rate product will remain the same but there will be a £999 fee attached to it.

The best mortgage rates on the market

[ Posted February 24th, 2012 ]

For those who have not yet remortgaged in an effort to take advantage of low mortgage rates, the good news is that there are still some great deals out there on the market. In fact, with interest rates remaining low and the Bank of England base rate staying at its current low, the market is still able to offer some of the best mortgage rates of the last few years.

Given the fact that the base rate is expected to stay depressed for at least another 18 months, with some experts predicting it will stay down until 2017, a fixed mortgage may not even be the best bet. Instead, lenders are starting to push their tracker and variable mortgage rates and some experts are starting to agree that for the best deals this may be the way for homeowners to go.

Over the last two months there has been a significant amount of new deals available for first time home buyers and many of these are also great deals for those who need to remortgage to take advantage of.  This is partially due to the fact that the stamp duty holiday on new home purchases will end near the end of March.

Those that can now swing a 90% LTV may want to take advantage of the new two year fixed mortgages that are being offered by HSBC, set at the low price of 3.84%. What makes this deal particularly enticing to home owners is the fact that there are no fees associated with the deal so if approved all that is owed is the deposit or equity in the home. Also attractive is a First Direct product that is set at 4.19% for two years, although this deal does come with a £999 fee.

Of course, those who have a home and equity may instead want to look into a mortgage deal that offers better rates for a higher LTV, such as the Mommouthshire Building Society deal that requires an 80% LTV but offers 3.35% for three years without any associated fees.

A better option for those willing to take a chance with the variable mortgage market comes from the Marsden Building Society, which is also based on an 80% LTV but starts at 3.19%. There is a £598 fee for the loan offer but valuation is free and remortgaging homeowners receive a £250 rebate.

Buy to Let Mortgage market grows in 2011

[ Posted February 14th, 2012 ]

If 2011 was any indication, the buy to let market is continuing to gain strength as the housing market in the UK continues to become a rental market instead of a buying market.  High mortgage rates, uncertain economic times, and increasing deposits are all reasons why many people are now choosing to rent instead of buy and landlords are taking advantage of it.

Savvy landlords have been checking out the strong buy to let mortgage rates and are increasing their portfolios, anxious to cash in on the new emerging rental market. The Council of Mortgage Lenders  reported that the amount of people that took advantage of low buy to let mortgage rates increased by a whopping 84,000 over the course of 2011 which is pretty astounding.

Even more astounding is the fact that during the fourth quarter of last year there were about 35,000 of these completed, showing that throughout the year the amount of landlords seeking new properties was steadily increasing. Therefore, it can be expected that the upwards trend of buy to mortgage purchases will be continued throughout 2012 as more landlords reach out to lenders.

The high in 2007, before the housing market collapsed, was actually 97,000 buy to let products in one year, so if the mortgage rates stay somewhat stable this year, and the amount of applicants continue to rise, there is a chance that buy to let lending will get back on track.

This is ironic given the fact that the housing market is actually considered stale and the average house price is falling, but it seems that for landlords there is no better time to get out there on the market. In fact, the CML stated that buy to let mortgages actually made up about 13% of all mortgage values for last year.

The CML also reported that during the last quarter of 2011 buy to let mortgage deals that were completed made up 11% of the gross lending for mortgages.  Therefore, it seems as if the road to recovery may actually be comprised of successful buy to let lending, even if it does keep new home owners off the market for some time. Lenders would do well to notice this trend and capitalise on it while they can before the base rate increases.

TMBC offers discounts for commercial mortgage products

[ Posted February 13th, 2012 ]

TMBC, the commercial mortgage and buy to let lending specialists, have launched a new deal in conjunction with Hinckley & Rugby Building Society that will see their mortgage rates drop by as much as 0.5% for those who take up their new two year offers.

The new rate will be set at 3.25% for mortgages that come with a free valuation for those who can manage a 60% LTV or better.  In addition, there are no charges for early repayment for those who rush to take advantage of the market.

The low commercial mortgage rates do have an attached £999 completion fee and £250 arrangement fee which is common place with high buy to let or commercial investments.  Therefore, those that want to take advantage of the low property prices on the market right now will want to take a look at the TMBC deal which the chief executive of the company, Andy Young, states is designed to help make it an attractive product for those that want to remortgage or purchase new rental properties.

He added that the free valuation will help reduce the standard upfront costs that come with securing a new mortgage or remortgage. It is expected that it will be most popular among those looking for low buy to let mortgage rates as the housing market is quickly becoming a rental market.

Intermediary development consultant Gill Vernau for Hinckley & Rugby stated that last year was an excellent year for the buy to let market and with more improvements and great deals such as the one they are offering with TMBC, 2012 looks like it will also be a great year. He added that the company is looking to offer more buy to let products to interested investors.

Vernau also stated that the aim of Hinckley & Rugby right now is to increase the amount of loans they have available at the low 60% LTV rate to help encourage landlords to take a second look at increasing their portfolios.

He added that the building society expects to see a rise in the amount of new applicants that take a second look at the product offer simply because of the low LTV and the fact that it will allow those who already have properties to reduce their mortgage rate and potentially afford more properties in the future.

Shelter supports CML wish for individual mortgage rates

[ Posted February 10th, 2012 ]

Shelter, the watchdog organisation, is supporting the call by the Council of Mortgage Lenders (CML) for the government to reconsider the way that it figures support for mortgage payments.  The SMI, in most cases, is assigned by the government at a flat rate; therefore, in many cases the figures produced are not the same as the rate that a borrower actually pays their mortgage.

Set at 3.63% at the minute, the SMI payment right now is calculated from the Bank of England mortgage rate which does not necessarily match up with the mortgage market where there are additional factors to consider. According to the CML, the discrepancies in the mortgage rates often leads to borrowers finding that they are short of money because their benefit does not actually cover their mortgage payments on a monthly basis.

On the other hand, other borrowers find that they actually overpay their mortgages because the state pays too much. Therefore, the government calculations for its SMI is not working effectively or offering people the benefits that they really need, causing the CML and Shelter to ask the government to rethink the way they assign their payments.

In a newsletter written last week by the CML, the organisation wrote that the government could save money and more fairly assign funds if they would pay the benefit based on the rate that borrowers actually have on their individual mortgages.

In other words, instead of using the base rate to make a determination, actually take a bit of time and pay the same mortgage rate that borrowers have attached to their loans to make sure that everyone is getting the accurate amount at the end of the month so that no one ends up short and no one ends up overpaid.

The arguments came after an informal call for evidence was made by the Department for Work and Pensions in regards to the SMI. Chief executive for Shelter, Campbell Rich, stated that in some cases, changing the way that benefits are paid out could help some people who are very close to foreclosure.

He explained that the SMI is a saving grace for many home owners that are struggling, and if payments were made that aligned with the borrower’s actual mortgage then they could make sure that their homes would not come close to repossession.

Private banks offer best mortgage rates

[ Posted February 10th, 2012 ]

Despite the fact that over the last few weeks many lenders are increasing their mortgage deal costs because of the rising costs of lending, many private banks are still offering some of the best mortgage rates available out there on the market.

Last week saw major lenders such as UBS, RBS Private, and Barclays Wealth increase their average mortgage rates due to the fact that the wholesale markets have increased their funding costs. This has been disappointing to those who had hoped to secure a low mortgage before the housing market turned around.

USB increased its pricing by about 1.5 points above the interbank lending rate and then another 1.6 points for loans that have a 65% LTV or less. For those with higher LTV’s, the bank increased their rate by another 1.85%. Barclays Wealth followed suit, choosing to increase its tracker deals by about 0.3% and its fixed mortgages by another 0.1%.

RBS Private chose to do the same by increasing their tracker rates by about 0.2% and adding on additional fees of around £1,500, which is high enough to keep many potential home owners away from the market. Despite the fact that some of the banks are sharply increasing their offers, private banks continue to offer the best mortgage rates out there for homeowners that want to borrow large sums of money.

In fact, for those who happen to be searching for a loan on a home that is valued at over £1m, private banks are the best options according to many analysts. Mortgage broker Nigel Bedford stated that many high street lenders that offer large amounts will not offer competitive rates, with banks such as Lloyds Banking Group choosing not to offer interest only loans for those seeking amounts higher than £1m.

However, private banks such as Clydesdale Bank will offer a two year discount rate as low as 2.68% for the same type of million pound loan. Nationwide will also toss in a two year tracker set at 3.39% that is pretty evenly matched with the Halifax 3.84% deal for the same multimillion deal.

The truth is that most private banks will offer rates that are set closer to the Libor due to the fact that they are willing to play with their mortgage figures a bit more, making them a great choice for high mortgage loans.

What can mortgage rates tell you about the investment market?

[ Posted February 6th, 2012 ]

To those who are looking for the best mortgage rates in order to refinance their homes, or to get some added security over the next couple of years, the new 3.19% mortgage deal that is good for a five year fixed term may look very enticing. However, there is a great deal of significance behind this rate that is very telling.

This is because when a bank offers a great term that extends significantly into the future it reflects the lenders belief about how interest rates are going to behave in the future. Therefore, if Chelsea is secure enough to offer the low fixed mortgages then this should serve as a signal that they believe interest rates are not going to dramatically increase over the coming years, or at least for the next five years.

For borrowers, this is good news as lower interest rates are always desirable, but for those who are intent on saving some money, or making an investment, this may not be great news since it means that they are not going to see a large return over the next five years either. The first place that many people turn to for investment and savings options are banks or building societies.

A large safety deposit can offer income in the future if placed into a savings account, but it does not always offer capital along with it.  Investors like the idea of knowing they do have funds, but the amount can vary as a result of inflation.  For instance, if one puts down £10,000 with the rate of inflation and an increasing mortgage rate what they would end up paying is a bit under £7,000 which is of course much less.

This is why it is important that investors and savers understand the value of the stock market and equity income because equity in a home will not change as inflation continues to rise.  Therefore, investors often use equity to act as a hedge to prevent inflation from hitting their savings account.

Of course, there is always the risk that with the way house prices are falling and increasing in a steady sideways flow that you may not get back what you expect from your investment.  However, just like any stock market option, there is always a bit of risk involved in any potential yield.

Buy to let market exploding

[ Posted February 6th, 2012 ]

While house prices are falling and many are claiming that the housing market is going to be incredibly unstable as the year progresses, the buy to let market continues to grow as landlords are taking advantage of the current climate to expand their portfolios.

With over 100 deals on the market for landlords to take advantage of, all attached to amazing buy to let mortgage rates, it is hard to deny that now is the time to buy property if you are looking for a solid investment opportunity that will likely pay back twofold.

Of course, the drop in home buyers and increase in rental properties is helping everyone out including those who are looking for a commercial mortgage to let as well, since many business owners are also shy about actually purchasing their property.  Therefore, even commercial landlords are finding that now is the time to act for investments that are continuing to grow in value.

In fact, over the last two years, letting prices have increased in both the private and commercial markets, allowing landlords of all types to reap monthly rewards off of their timely investments.

At the moment, there are 486 buy to let mortgage rates available on the market ready to be taken advantage of; which is an increase of around 100 compared to February of last year.

One of the reasons for the intense increase is lenders competing against each other in order to attract landlords to their lending deals as they are aware of the considerably safe lending prospects. As a result, the actual rate of buy to let mortgage deals is down by about 5% compared to last year, an astounding fact given the fact that other mortgage rates for traditional home purchases are increasing.

Many lenders that used to see buy to let lending as a high risk activity are now increasing their ranges as they are banking on landlords to have a more secure source of income to fund their payments with. Given the high demand for rental properties, most landlords are not having a problem filling their vacancies which to the banks means a secure payment option.

Therefore, if the rental market continues to increase in demand as most housing experts expect, the buy to let rates may drop further as banks chase after lucrative deals with potential landlords.

 
 
 
 
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