A report from the property website Rightmove shows a record 1,000,000 homes are currently for sale in England and Wales. The same report also shows that the average house price has dropped by £3,000 between May 11 and June 14 - a drop of 1.2%.
The report's figures are seen as a sign of panic selling to stave off massive losses; people selling and hoping to invest the cash for now and buy cheaper in the future and people selling to take advantage of cut priced new properties.
Monday 23 June 2008
Thursday 19 June 2008
Rates could have risen
As we said earlier this month, the Bank of England's decision to hold interest rates was not an easy one, with the minutes of the Bank's Monetary Policy Committee revealing that some of the nine committee members wanted an interest rate increase to stem rising inflation.
The minutes said 'if there were a serious threat to medium-term inflation expectations then a pre-emptive rise in rates would be appropriate. Delay would only increase the eventual costs of bringing inflation back to target.'
The minutes said 'if there were a serious threat to medium-term inflation expectations then a pre-emptive rise in rates would be appropriate. Delay would only increase the eventual costs of bringing inflation back to target.'
Thursday 12 June 2008
Lenders charge punishing fees
The number of lenders charging 'horrendous' mortgage arrangement fees and rocketed over the last year and a half according to a report by the comparison website MoneyExpert.com.
The report showed that in September 2006 fees of £750 or more were charged in just 22 fixed-rate mortgages. But since the 'credit crunch', this figure has shot up to 323, on the back of the number of available mortgage products tumbling. At the same time, average fees have increased from £517 in September '06 to £860 now.
And this average is small fry compared to some charges on the market. For example, Abbey's 5-year 7.04% fixed rate mortgage deal comes with charges of £2,499 and this must be paid upfront when the deposit is less than 15%.
Only fixed rate mortgages were looked at in the report, and only fixed rate charges. Some deals charge a percentage of the loan amount, so the actual rise could be far worse.
The report showed that in September 2006 fees of £750 or more were charged in just 22 fixed-rate mortgages. But since the 'credit crunch', this figure has shot up to 323, on the back of the number of available mortgage products tumbling. At the same time, average fees have increased from £517 in September '06 to £860 now.
And this average is small fry compared to some charges on the market. For example, Abbey's 5-year 7.04% fixed rate mortgage deal comes with charges of £2,499 and this must be paid upfront when the deposit is less than 15%.
Only fixed rate mortgages were looked at in the report, and only fixed rate charges. Some deals charge a percentage of the loan amount, so the actual rise could be far worse.
Wednesday 11 June 2008
Interest Rates To Rise???
The prospect of further rate cuts this year have gone and there are likely to be two or even three quarter percent rises in interest rates this year, the City is gambling.
Having made three interest rate cuts since December, the Bank of England's efforts have been hit by rising oil costs, putting inflation up. Investors are now gambling on the prospect of rather than interest rates dropping to 4.5%, the base rate might be increased to 5.5%, or higher.
Having made three interest rate cuts since December, the Bank of England's efforts have been hit by rising oil costs, putting inflation up. Investors are now gambling on the prospect of rather than interest rates dropping to 4.5%, the base rate might be increased to 5.5%, or higher.
Saturday 7 June 2008
Bradford & Bingley increase borrowing cost
Following the lead of the Abbey and Woolwich and then Nationwide, interest rates for mortgages have been increased by Bradford & Bingley.
They will increate rates on their standard residential, buy-to-let and self-certification mortgages by between 0.05% and 0.55%, even though the Bank of England this week kept the base interest rate at 5%.
They will increate rates on their standard residential, buy-to-let and self-certification mortgages by between 0.05% and 0.55%, even though the Bank of England this week kept the base interest rate at 5%.
Friday 6 June 2008
Interest Rates
As expected, the Bank of England decided to keep interest rates steady at 5% this month. With inflation around 3% well ahead of their 2% target and likely to approach 4% over the summer due to rising fuel and food prices, even falling house prices could not convince the Bank to cut interest rates.
If inflation rises above 3%, Bank Governor Mervyn King has to write a second letter to Alistair Darling to explain why it is so high. King has said he expects to write a number of such letters this year following the first letter in the Bank's history when inflation hit 3.1% last year.
The British Chambers of Commerce urged the MPC to consider the whole economic outlook and not just inflation. 'We understand the critical need for the MPC to maintain credibility, but it cannot disregard the worsening threats to growth,' said the BCC's David Kern.
The European Central Bank also left interest rates at 4% as it concentrated on its own inflation battle.
If inflation rises above 3%, Bank Governor Mervyn King has to write a second letter to Alistair Darling to explain why it is so high. King has said he expects to write a number of such letters this year following the first letter in the Bank's history when inflation hit 3.1% last year.
The British Chambers of Commerce urged the MPC to consider the whole economic outlook and not just inflation. 'We understand the critical need for the MPC to maintain credibility, but it cannot disregard the worsening threats to growth,' said the BCC's David Kern.
The European Central Bank also left interest rates at 4% as it concentrated on its own inflation battle.
Halifax House Prices Down
The Halifax has reported that the price of an average home dropped by 2.4% or £4,600 in May - down to £184,111. It compares very badly to the 10.6% rise in house prices experienced in the year ending last May. This means that the average home has lost £15,000 in value since the market peaked last August - down 8% since prices peaked at £199,600.
Comparing the index's average monthly prices shows an average house is worth £12,525 less than the May 2007 value of £196,636 - a drop of 6.4%.
Economist Howard Archer, of analysts Global Insight, predicted prices would fall by 12% in both 2008 and 2009, revising an earlier forecast of 7% this year and 9% next year.
Archer said: 'The latest data on the housing market are undeniably alarming. Clearly, the downward pressure on house prices coming from stretched buyer affordability and tight lending conditions is now biting hard.
'Elevated affordability pressures on potential house buyers stem from high house prices and modest real disposable income growth, while ongoing tight credit conditions are leading to significantly fewer and more expensive mortgages being available.
'Furthermore, potential house buyers now have to provide higher deposit levels, which is a particularly major problem for first-time buyers.'
Comparing the index's average monthly prices shows an average house is worth £12,525 less than the May 2007 value of £196,636 - a drop of 6.4%.
Economist Howard Archer, of analysts Global Insight, predicted prices would fall by 12% in both 2008 and 2009, revising an earlier forecast of 7% this year and 9% next year.
Archer said: 'The latest data on the housing market are undeniably alarming. Clearly, the downward pressure on house prices coming from stretched buyer affordability and tight lending conditions is now biting hard.
'Elevated affordability pressures on potential house buyers stem from high house prices and modest real disposable income growth, while ongoing tight credit conditions are leading to significantly fewer and more expensive mortgages being available.
'Furthermore, potential house buyers now have to provide higher deposit levels, which is a particularly major problem for first-time buyers.'
Tuesday 3 June 2008
Nationwide increase mortgage costs
The Nationwide has followed the lead of Abbey and Woolwich by increasing the cost of its fixed rate mortgages. Its top two-year fixed rate for homebuyers has jumped by over quarter of a percent from 5.95% to 6.25%, with a £599 arrangement fee - leaving it just 0.24% below its 6.49% base mortgage rate. Whilst the fee-free two-year fixed rate has also risen by 0.3% to 6.65%, and the best two-year fixed rate for remortgagers is now 6.45%, with a £599 fee.
Nationwide said that a significant rise in money market swap rates over the past few weeks had led it to reverse cuts made to its mortgage rates in May.
Nationwide said that a significant rise in money market swap rates over the past few weeks had led it to reverse cuts made to its mortgage rates in May.
New low for new mortgages
Official Bank of England figures have shown a record low in the number of new mortgages approved for the second month in a row for April 2008. With only 58,000 mortgages for homebuyers being approved in April, that was less than half the 107,000 recorded in April 2007. These monthly figures are the lowest since records began in 1993 and are a worrying drop on the previous 12 months' peak of 115,000 in May 2007.
Simon Rubinsohn, Rics chief economist said: 'The latest weak data on mortgage approvals highlights the continuing problems facing borrowers trying to secure finance to purchase property.
'Lenders are continuing to tighten up on the conditions accompanying new loans making it hard for first-time buyers to take advantage of the modest fall in house prices seen over the part few months.
'This highlights very clearly the real problem facing not just the property market but also the wider economy.
'A collapse in transactions of this magnitude has major implications both for consumer spending and a wide range of ancilliary industries. Although a supportive response from the Bank of England is improbable in the near term, the persistence of such a trend could force the hand the authorities as autumn approaches.'
Simon Rubinsohn, Rics chief economist said: 'The latest weak data on mortgage approvals highlights the continuing problems facing borrowers trying to secure finance to purchase property.
'Lenders are continuing to tighten up on the conditions accompanying new loans making it hard for first-time buyers to take advantage of the modest fall in house prices seen over the part few months.
'This highlights very clearly the real problem facing not just the property market but also the wider economy.
'A collapse in transactions of this magnitude has major implications both for consumer spending and a wide range of ancilliary industries. Although a supportive response from the Bank of England is improbable in the near term, the persistence of such a trend could force the hand the authorities as autumn approaches.'
Monday 2 June 2008
Interest Rates Up.
In the light of a difficult decision for the Bank of England, two of the country's main lenders have already preempted what might happen.
The Abbey and Woolwich have both raised the costs of their new fixed rate mortgages, with other lenders now expected to follow this move.
Abbey has increased the price of all its fixed-rate products by between 0.15% and 0.56%. Abbey cut its fixed rates just two weeks ago.
Woolwich increased its two-year fixed-rate deal from 5.49% to 6.19% while its ten-year fixed rate product went from 5.59% to 5.77%.
Both banks are blaming last week's increase in swap rates - the level at which banks lend to each other - for the increase. They also say they want to control business volumes in a volatile market.
The Abbey and Woolwich have both raised the costs of their new fixed rate mortgages, with other lenders now expected to follow this move.
Abbey has increased the price of all its fixed-rate products by between 0.15% and 0.56%. Abbey cut its fixed rates just two weeks ago.
Woolwich increased its two-year fixed-rate deal from 5.49% to 6.19% while its ten-year fixed rate product went from 5.59% to 5.77%.
Both banks are blaming last week's increase in swap rates - the level at which banks lend to each other - for the increase. They also say they want to control business volumes in a volatile market.
Hobson's Choice For Bank
The Bank of England's monetry committee will have a difficult meeting this week when it meets to decide what will happen with interest rates this month, and the experts are divided as to what might happen.
On one side, the plunge in the housing market is calling for interest rates to be cut to ease the burden on mortgage payers and get some movement back into the property market.
On the other side, the rising cost of fuel and food is putting inflation up, well over the Bank's target of 2% to it's limit of 3%, with this month's figures yet to be released. This is seen as an indicator to increase interest rates, good news for those with savings.
Normally the rising inflation would automatically trigger an interest rate rise, but inflation is rising due to the increase in the cost of essentials, which would not be controlled by interest rises.
Whichever way the Bank of England reacts it will no doubt be seen to be doing the wrong thing. Either it will be punishing hard pressed people who have borrowed too much; it will be not looking after the economy and allowing inflation to spiral; or it will be sitting on the fence dithering!
Watch this space on Thursday!
On one side, the plunge in the housing market is calling for interest rates to be cut to ease the burden on mortgage payers and get some movement back into the property market.
On the other side, the rising cost of fuel and food is putting inflation up, well over the Bank's target of 2% to it's limit of 3%, with this month's figures yet to be released. This is seen as an indicator to increase interest rates, good news for those with savings.
Normally the rising inflation would automatically trigger an interest rate rise, but inflation is rising due to the increase in the cost of essentials, which would not be controlled by interest rises.
Whichever way the Bank of England reacts it will no doubt be seen to be doing the wrong thing. Either it will be punishing hard pressed people who have borrowed too much; it will be not looking after the economy and allowing inflation to spiral; or it will be sitting on the fence dithering!
Watch this space on Thursday!
Thursday 29 May 2008
House prices dive
The Nationwide Building Society has reported that house prices have fallen 2.5% during May, which is the biggest fall ever reported by the Building Society since it started creating reports back in January 1991.
This takes the run of months in which house prices have dropped up to 7 months, the longest continuous run of house price falls since 1992. This leaves house prices down 4.4% on what they were this time last year, the biggest annual fall also since 1992.
This brings the price of an average house in Britain to £173,583 - a fall of almost £5000 over the month and £8000 over the year. But even with these falls house prices are still up 5% over the last 2 years and 10% over the last 3 years.
Howard Archer, chief UK economist at Global Insight, said: 'The plunge in house prices in May is a real shock, and will fuel concern that we are now headed for a sharp correction.
'The downward pressure on house prices coming from stretched buyer affordability and tight lending conditions is increasingly biting. It now looks more likely than not that house prices will suffer double-digit falls both this year and in 2009.
'Clearly, a sharp housing-market correction would add to the already serious risks to economic growth, particularly through weighing down on consumer spending.'
This takes the run of months in which house prices have dropped up to 7 months, the longest continuous run of house price falls since 1992. This leaves house prices down 4.4% on what they were this time last year, the biggest annual fall also since 1992.
This brings the price of an average house in Britain to £173,583 - a fall of almost £5000 over the month and £8000 over the year. But even with these falls house prices are still up 5% over the last 2 years and 10% over the last 3 years.
Howard Archer, chief UK economist at Global Insight, said: 'The plunge in house prices in May is a real shock, and will fuel concern that we are now headed for a sharp correction.
'The downward pressure on house prices coming from stretched buyer affordability and tight lending conditions is increasingly biting. It now looks more likely than not that house prices will suffer double-digit falls both this year and in 2009.
'Clearly, a sharp housing-market correction would add to the already serious risks to economic growth, particularly through weighing down on consumer spending.'
Monday 26 May 2008
More house price falls
A report revealed today that house prices in England and Wales have fallen for the 8th month in a row. The report from Hometrack showed an average fall of 0.5% over May, following a fall of 0.6% in April. Looking at a year on year basis, the annual house price growth rate fell from 0.9% to a drop of 1.9% - the lowest level recorded since Novermber 2005, when a drop of 2.5% was recorded.
Richard Donnell, Hometrack's director of research said: 'What we referred to last month as the 'buyer's strike' continues with a 6.7% drop in the number of buyers registering with agents over May.'
'It is too early to say whether the level of monthly falls will now start to moderate as this will require an improvement in demand and sales agreed which are both linked to overall buyer confidence.'
'The current trends in the survey indicate that pricing looks set to remain under downward pressure over the coming months.'
The report also reveals an increase in the time taken to sell a house. This is now 9.8 weeks, up by 3 weeks over the last year. This follows a repositioning last week by the Council of Mortgage Lenders, who changed their forecast of a 1% growth in property prices to a 7% fall combined with a 35% decrease in property sales this year.
Richard Donnell, Hometrack's director of research said: 'What we referred to last month as the 'buyer's strike' continues with a 6.7% drop in the number of buyers registering with agents over May.'
'It is too early to say whether the level of monthly falls will now start to moderate as this will require an improvement in demand and sales agreed which are both linked to overall buyer confidence.'
'The current trends in the survey indicate that pricing looks set to remain under downward pressure over the coming months.'
The report also reveals an increase in the time taken to sell a house. This is now 9.8 weeks, up by 3 weeks over the last year. This follows a repositioning last week by the Council of Mortgage Lenders, who changed their forecast of a 1% growth in property prices to a 7% fall combined with a 35% decrease in property sales this year.
Wednesday 21 May 2008
Mortgage Crunch Easing
Observers are hoping that the first signs of the end of the mortgage crunch may have arrived with positive news from lenders regards mortgages. Nationwide Building Society has cut its fixed rate mortgage products by up to 0.3% whilst Abbey has cut up to 0.17% off its fixed rates and 0.05% of tracker mortgages in its ranges.
And after pulling out of mortgages for new customers at the beginning of last month, HSBC-owned First Direct will again start plying for new trade by offering mortgages to new customers.
First Direct stopped accepting new applications after it said it had received 5 times the normal number of applications, but it has now cleared the backlog and is ready to take more new applications, for those with at least a 20% deposit.
But many lenders are still only offering top rates to those able to put down a 20%, or even a 25%, deposit on their purchase.
Louise Cuming, from price comparison site Moneysupermarket.com, said: 'This is welcome news in an otherwise hostile market place. First Direct's original stance - made at the start of April - was reflective of a cautious attitude towards the market as a whole. The reversal of the decision demonstrates a growing confidence in the market.
'The news that First Direct is reopening its doors comes hot on the heels of Abbey and Nationwide cutting mortgage rates last week and HSBC extending its rate matcher offer. The clouds over the mortgage market are starting to clear, much to the relief of borrowers across the country.'
And after pulling out of mortgages for new customers at the beginning of last month, HSBC-owned First Direct will again start plying for new trade by offering mortgages to new customers.
First Direct stopped accepting new applications after it said it had received 5 times the normal number of applications, but it has now cleared the backlog and is ready to take more new applications, for those with at least a 20% deposit.
But many lenders are still only offering top rates to those able to put down a 20%, or even a 25%, deposit on their purchase.
Louise Cuming, from price comparison site Moneysupermarket.com, said: 'This is welcome news in an otherwise hostile market place. First Direct's original stance - made at the start of April - was reflective of a cautious attitude towards the market as a whole. The reversal of the decision demonstrates a growing confidence in the market.
'The news that First Direct is reopening its doors comes hot on the heels of Abbey and Nationwide cutting mortgage rates last week and HSBC extending its rate matcher offer. The clouds over the mortgage market are starting to clear, much to the relief of borrowers across the country.'
Monday 19 May 2008
House sales could collapse by 40%
The latest survey from RICS (Royal Institution of Chartered Surveyors) has revealed that house sales could collapse by 40% this year.
The impact of this would hit the economy, as firms providing services to movers struggle for sales - such as carpet retailers, white goods, DIY stores etc. RICS warned the number of house sales could plunge by around 400,000 to approximately 600,000 with the second half of the year bein a 'difficult period for the housing market'.
Whilst a collapse of the housig market might be seen as good news for first time buyers trying to get onto the property ladder, these people are also struggling to get loans as the number of available different mortgage products has dropped by around 56% over the last 6 months to just 16,000.
The impact of this would hit the economy, as firms providing services to movers struggle for sales - such as carpet retailers, white goods, DIY stores etc. RICS warned the number of house sales could plunge by around 400,000 to approximately 600,000 with the second half of the year bein a 'difficult period for the housing market'.
Whilst a collapse of the housig market might be seen as good news for first time buyers trying to get onto the property ladder, these people are also struggling to get loans as the number of available different mortgage products has dropped by around 56% over the last 6 months to just 16,000.
Wednesday 14 May 2008
House prices could tumble 10%
A government blunder has revealed that 'at best' property prices are expected to fall between 5 and 10% this year.
Caroline Flint accidentally revealed a briefing note on her way to this week's Cabinet meeting. It was headed 'Caroline Flint - speaking notes' and contained a summary of what the minister told Mr Brown, Mr Darling and other Cabinet colleagues.
A sticker on the document said 'Papers for Cabinet meeting 13 May 2008'. The briefing said leading house price indicators were predicting reductions for the first time in recent years and warned : 'We can't know how bad it will get. Given present trends, they will clearly show sizeable falls in prices later this year - at best down 5%-10% year on year.'
Caroline Flint accidentally revealed a briefing note on her way to this week's Cabinet meeting. It was headed 'Caroline Flint - speaking notes' and contained a summary of what the minister told Mr Brown, Mr Darling and other Cabinet colleagues.
A sticker on the document said 'Papers for Cabinet meeting 13 May 2008'. The briefing said leading house price indicators were predicting reductions for the first time in recent years and warned : 'We can't know how bad it will get. Given present trends, they will clearly show sizeable falls in prices later this year - at best down 5%-10% year on year.'
Surge in inflation
A massive surge in inflation has been reported from 2.5% to 3% caused by rising gas & electricity bills and food prices and Budget tax increases on alcohol and tobacco. Although only just released, the Bank of England's monetary policy committee did have access to this data when it met last week and decided to hold interest rates. The committee's aim to to keep inflation around 2% and never allow it to creep above 3%. City economists had been expecting a report of 2.6%.
The result of this is that another rate cut is highly unlikely. Back in October when inflation crept to 2.1% analysts thought it unlikely that there would be any further base cuts before spring.
When they next meet, the monetary policy committee will have to work out how to balance rising inflation against the reports from RICS yesterday of a record low in house sales.
Savers who are watching their savings dwindle in the face of increasing inflation will be hoping that the next rate announcement will be for a rate rise, but there is no guarantee that a rise in interest rates would have any effec on high street prices.
The result of this is that another rate cut is highly unlikely. Back in October when inflation crept to 2.1% analysts thought it unlikely that there would be any further base cuts before spring.
When they next meet, the monetary policy committee will have to work out how to balance rising inflation against the reports from RICS yesterday of a record low in house sales.
Savers who are watching their savings dwindle in the face of increasing inflation will be hoping that the next rate announcement will be for a rate rise, but there is no guarantee that a rise in interest rates would have any effec on high street prices.
Tuesday 13 May 2008
Lowest House Sale Rate on Record
Estate agents are reporting they are selling less homes than at any point since current records began, back in 1978, according to a report from the Royal Institution of Chartered Surveyors (RICS).
House prices are also showing the biggest falls since RICS started recording them, 30 years ago, making the current crisis worse than the property crash of the '90s, at least on paper.
82% of the 282 estate agents that took part in the RICS poll recorded falling house prices over the last 3 months. Between February and April they sold on average just 18.3 properties, with one reporting sales down by 60%. Even Scotish House Prices recorded a drop last month, meaning that all regions of Britain are now experiencing price falls. The worst hit area is the East Midlands, having suffered 16 straight months of decline.
It has also been noted that the number of buyers registering an interest to buy with estate agents is also down and has been sliding for 2 years. Estate agents blame mortgage difficulties, saying that buyers looking for "perfectly normal loans" are being rejected.
House prices are also showing the biggest falls since RICS started recording them, 30 years ago, making the current crisis worse than the property crash of the '90s, at least on paper.
82% of the 282 estate agents that took part in the RICS poll recorded falling house prices over the last 3 months. Between February and April they sold on average just 18.3 properties, with one reporting sales down by 60%. Even Scotish House Prices recorded a drop last month, meaning that all regions of Britain are now experiencing price falls. The worst hit area is the East Midlands, having suffered 16 straight months of decline.
It has also been noted that the number of buyers registering an interest to buy with estate agents is also down and has been sliding for 2 years. Estate agents blame mortgage difficulties, saying that buyers looking for "perfectly normal loans" are being rejected.
Monday 12 May 2008
June rate cut in doubt
The City was expecting the Bank of England to cut interest rates from 5% to 4.75% next month, having left them unchanged last week. But the price of goods leaving British factories in April up 7.5% over the last 12 months, the fastest rate of price growth since records began in 1986. It came as manufacturers faced a record 23.3% jump in input costs, with crude rising more than 60%, food over 30% and fuel more than 20%.
City economists described the figures as 'appalling' and 'truly horrible' for the Bank of England. This is likely to drive the official rate of inflation over the Bank's 2% target, possibly even breaking 3% and remaining there. This will limit how much the Bank of England can reduce interest rates.
Howard Archer of Global Insight said: 'The April producer price data are truly horrible and very worrying indeed for the Bank of England.
'It highlights why the Bank was unwilling to enact a back-to-back interest rate cut last week, and raises serious questions as to whether the Bank will be willing to cut interest rates from 5% to 4.75% as soon as June, despite current signs that the economic downturn may be deepening and widening.
'For now at least, we still expect the Bank to act in June, but it is by no means a gimme.'
City economists described the figures as 'appalling' and 'truly horrible' for the Bank of England. This is likely to drive the official rate of inflation over the Bank's 2% target, possibly even breaking 3% and remaining there. This will limit how much the Bank of England can reduce interest rates.
Howard Archer of Global Insight said: 'The April producer price data are truly horrible and very worrying indeed for the Bank of England.
'It highlights why the Bank was unwilling to enact a back-to-back interest rate cut last week, and raises serious questions as to whether the Bank will be willing to cut interest rates from 5% to 4.75% as soon as June, despite current signs that the economic downturn may be deepening and widening.
'For now at least, we still expect the Bank to act in June, but it is by no means a gimme.'
People want house prices to fallhouse prices
A BBC-commissioned survey has found that 28% of respondents wanted house prices to drop against 22% who hoped for an increase in house prices. And giving an indication that crash fears may be misplaced, almost two-thirds of respondents said a fall of more than 10% in house prices would not negatively impact on their household spending.
This survey follows a series of gloomy data from the mortgage industry. In April average house prices fell by 1.3%, according to the Halifax. It contributed to the first 12 month house price drop since February 1996.
Level house prices or a fall in prices could help hard-pushed first-time buyers who have struggled in recent years to get onto the property ladder with ever increasing prices. It could also help those hoping to move up a level in the future, as the steps between the house prices narrows. Fears of the impact of a sizeable fall in house prices appear to be less pronounced than with the '90s property crash.
More than 60% said a drop of more than 10% would make no difference to their spending plans or make them likely to spend more. That compared with 38% who said it would make them more likely to cut back.
This survey follows a series of gloomy data from the mortgage industry. In April average house prices fell by 1.3%, according to the Halifax. It contributed to the first 12 month house price drop since February 1996.
Level house prices or a fall in prices could help hard-pushed first-time buyers who have struggled in recent years to get onto the property ladder with ever increasing prices. It could also help those hoping to move up a level in the future, as the steps between the house prices narrows. Fears of the impact of a sizeable fall in house prices appear to be less pronounced than with the '90s property crash.
More than 60% said a drop of more than 10% would make no difference to their spending plans or make them likely to spend more. That compared with 38% who said it would make them more likely to cut back.
Thursday 8 May 2008
Interest Rates On Hold
The Bank of England has, as predicted on Monday, announced that it will hold interest rates this month, following last month's rate cut to 5%. There was intenst pressure for the rate to be cut another 0.25% to 4.75%, but the monetary committee were concerned over the threat of rising inflation.
Whereas this is good news for savers, householders with mortgages will be disappointed that there is not another potential cut in their repayments.
At the same time, the European Central Bank kept interest rates at 4% to counter its worries about inflation on the Continent.
Experts are predicting a cut next month, with mixed views as to har far the cuts will continue this year - possibly taking the base rate down to 4.5% or even 4% by the end of the year, with the most optomistic expecting further cuts to 3.75% over the next 9 months.
Whereas this is good news for savers, householders with mortgages will be disappointed that there is not another potential cut in their repayments.
At the same time, the European Central Bank kept interest rates at 4% to counter its worries about inflation on the Continent.
Experts are predicting a cut next month, with mixed views as to har far the cuts will continue this year - possibly taking the base rate down to 4.5% or even 4% by the end of the year, with the most optomistic expecting further cuts to 3.75% over the next 9 months.
Monday 5 May 2008
No interest rate cut???
Following last month's rate cut where the banks did not all follow suit, is expected that the Bank of England will not cut rates this week. This is because Sterling is falling on the currency markets:
'Sterling represents one of the inflation risks,' said George Buckley, chief UK economist at Deutsche Bank.
'We have seen a long period of lower prices thanks to cheap imports and a strong pound. That is now coming to an end.'
As Sterling weakens, the pound buys less an dputs the price of imported goods up, increasing inflation. But some economists do predict a rate cut, saying that it will come soon, so why not sooner than later?
'Sterling represents one of the inflation risks,' said George Buckley, chief UK economist at Deutsche Bank.
'We have seen a long period of lower prices thanks to cheap imports and a strong pound. That is now coming to an end.'
As Sterling weakens, the pound buys less an dputs the price of imported goods up, increasing inflation. But some economists do predict a rate cut, saying that it will come soon, so why not sooner than later?
Saturday 3 May 2008
Halifax House Price Drop
A report by the Halifax agrees with the report from Nationwide earlier in the weekin showing that house prices have dropped in the previous 12 months.
It is the first time in over 12 years that a drop in house prices over a year has been reported by the Halifax, with an average 0.9% drop since last April, taking the average house price to £189,027. The last time they reported an annual house price drop was February 1996.
Halifax chief economist Martin Ellis said: 'We are expecting a modest decline in house prices in 2008, and there is a strong chance that will continue into 2009. House prices are high in relation to earnings so there is a problem for people entering the market, and there is a general squeeze on spending as well.'
This news piles on more pressure to the Bank of England to cut interest rates, although many lenders have still to pass on rate cuts since last month's rate cut, with some lenders actually increasing rates since the cut.
It is the first time in over 12 years that a drop in house prices over a year has been reported by the Halifax, with an average 0.9% drop since last April, taking the average house price to £189,027. The last time they reported an annual house price drop was February 1996.
Halifax chief economist Martin Ellis said: 'We are expecting a modest decline in house prices in 2008, and there is a strong chance that will continue into 2009. House prices are high in relation to earnings so there is a problem for people entering the market, and there is a general squeeze on spending as well.'
This news piles on more pressure to the Bank of England to cut interest rates, although many lenders have still to pass on rate cuts since last month's rate cut, with some lenders actually increasing rates since the cut.
Wednesday 30 April 2008
House Prices Dropped In A Year
For the first time during the current credit problems, a major survey has shown house prices have dropped over the last 12 months.
The survey, by the Nationwide, shows that average house prices have dropped 1% since April 2007, bring the average price to £178,555. This follows 133 consecutive months of house price rises, since March 1996.
Natiowide's chief economist Fionnuala Earley said: 'April's fall in prices continues the trend of the last six months and reflects the weakening sentiment in the market brought about by poorer affordability and tighter financial market conditions.'
The survey, by the Nationwide, shows that average house prices have dropped 1% since April 2007, bring the average price to £178,555. This follows 133 consecutive months of house price rises, since March 1996.
Natiowide's chief economist Fionnuala Earley said: 'April's fall in prices continues the trend of the last six months and reflects the weakening sentiment in the market brought about by poorer affordability and tighter financial market conditions.'
Tuesday 29 April 2008
Buyers Hit Record Low
The effect of the credit crunch on the houseing market can be seen by new figures that show the number of new mortgage deals completed was down to just 64,000 in March, 44% lower than the same time last year.
This is the lowest level since this data has been collected - which started in 1993, during the then home buying slump.
But remortgages were only down from 109,000 in February 2007 to 98,000 in February 2008 according to Bank of England figures.
Despite a cut in interest rates, lenders have increased rates, increased deposits and reduced mortgage products available. According to MoneySupermarket, the average best fixed rate from main providers was 6.18%, while the average tracker rate was 6.29%, and just 32 mortgages offering 95% loan-to-value were left on the market.
This is the lowest level since this data has been collected - which started in 1993, during the then home buying slump.
But remortgages were only down from 109,000 in February 2007 to 98,000 in February 2008 according to Bank of England figures.
Despite a cut in interest rates, lenders have increased rates, increased deposits and reduced mortgage products available. According to MoneySupermarket, the average best fixed rate from main providers was 6.18%, while the average tracker rate was 6.29%, and just 32 mortgages offering 95% loan-to-value were left on the market.
Monday 28 April 2008
Nationwide increases mortgage deposit
The Nationwide Building Society is to reduce its maximum loan to value ratio (LTV) to 90% on nearly all of its products for new borrowers from 1st May. The exceptions are its three-year fixed rate mortgage and its three-year tracker.
And any new customers wanting to take out the group's standard variable deal, which it calls its base mortgage rate, will now need a deposit of at least 25%.
The Nationwide is not the first lender to limit lending to customers with only a 5% deposit. Lloyds TSB will only lend 95% of a property's value to people who have a current account or other products with it and apply for the loan through a branch.
The Abbey also only offers its 95% mortgages on a five-year fixed rate deal and a standard variable rate.
95% LTV mortgages are following the trend of the 100% and 125% mortgages following the credit crunch and slowly being withdrawn or becoing harder to apply for, as lenders protect their debts.
And any new customers wanting to take out the group's standard variable deal, which it calls its base mortgage rate, will now need a deposit of at least 25%.
The Nationwide is not the first lender to limit lending to customers with only a 5% deposit. Lloyds TSB will only lend 95% of a property's value to people who have a current account or other products with it and apply for the loan through a branch.
The Abbey also only offers its 95% mortgages on a five-year fixed rate deal and a standard variable rate.
95% LTV mortgages are following the trend of the 100% and 125% mortgages following the credit crunch and slowly being withdrawn or becoing harder to apply for, as lenders protect their debts.
More repossessions this year
The Centre for Economics and Business Research (CEBR) has warned that around 33,400 people could lose their homes this year, 23% more than 2007. Lastest mortgage offers will also remain expensive until the current economic situation settles down.
The CEBR predicted repossessions should stay well below the 75,000 a year levels seen in the early 1990s and the housing market will begin to recover in 2010 after interest rates fall as low as 3.5% towards the end of next year.
The CEBR predicted repossessions should stay well below the 75,000 a year levels seen in the early 1990s and the housing market will begin to recover in 2010 after interest rates fall as low as 3.5% towards the end of next year.
Thursday 24 April 2008
Housing Market Is Only Half Of What It Was
The National Association of Estate Agents has reported that its members sales have reduced from an average of 14 to 7 in March, compared to last year. The Bank of England has also claimed that the number of people pulling out of house purchases as they are unable to secure the necessary loans has jumped.
OFT To Review Bank Charges
The OFT have won the first part of the battle against the banks in the high court and can now assess the terms and conditions of charges for fairness.
The OFT will begin reviewing bank charges immediately and is expected to announce its findings in July, before heading back to the high court. Once it decides whether these bank charges are unfair and returned the case to the high court, the loosing side ie expected to appeal, delaying finalising individual cases until next year.
The OFT will begin reviewing bank charges immediately and is expected to announce its findings in July, before heading back to the high court. Once it decides whether these bank charges are unfair and returned the case to the high court, the loosing side ie expected to appeal, delaying finalising individual cases until next year.
Tuesday 22 April 2008
More rejected credit cards
In the wake of the credit crunch, banks have rejected an estimated 3.24m new credit card applications over the last 6 months, or 18,000 per day.
It is thought that Barclaycard, the biggest credit card company, is rejecting up to half of all those applying for a credit card it strives to protect its exposure to bad payers. Whilst other credit card providers are reducing spending limits and increasing interest rates and charges.
The report, by MoneyExpert.com, found that 7% of adults have experienced a credit card rejection in the last 6 months. Being rejected by one company can also make it harder to ger money from other companies as this can be recorded on your credit file.
It is thought that Barclaycard, the biggest credit card company, is rejecting up to half of all those applying for a credit card it strives to protect its exposure to bad payers. Whilst other credit card providers are reducing spending limits and increasing interest rates and charges.
The report, by MoneyExpert.com, found that 7% of adults have experienced a credit card rejection in the last 6 months. Being rejected by one company can also make it harder to ger money from other companies as this can be recorded on your credit file.
Bank Charges Decision
The Office of Fair Trading (OFT) has confirmed that it will announce its decision on unfair bank charges this Thursday. The OFT is deciding whether unauthorised overdraft charges fall under the Unfair Terms in Consumer Contracts Regulations.
Once the decision is revealed the watchdog will decide on the next steps to take.
Once the decision is revealed the watchdog will decide on the next steps to take.
Monday 21 April 2008
Bank of England to bail out banks?
The Bank of England looks set to shore up British banks today by £50m of tax payers money. It will effectively guarantee bad mortgage debts that banks migh run up, although critics are saying that this will enable banks to profit from their good decisions, whilst taxpayers pick up the bills for the banks' mistakes.
But this assitance doesn't come with any guarantees that the banks will follow the Bank of England's lead and reduce interest rates.
There are concerns that too many cheap mortgage deals have been scrapped. The number of mortgage products available is down from 15,599 in the summer, to under 4,000 currently.
Liberal Democrat Treasury spokesman Vince Cable said: 'It is obviously necessary for urgent action to be taken to unblock the mortgage market and to break the crippling effects of the credit crunch.
'However, we cannot have a situation where the banks are able to privatise their profits and nationalise their losses. Since the mortgages from the banks are of inferior quality and higher risk than the Government bonds which they are replacing, the implication must be that taxpayers are shouldering the risks and losses of the banks. This cannot be right.
'We need urgent reassurances from the Government that the exchange is taking place on a discounted basis so that the banks and not taxpayers carry any losses.'
But this assitance doesn't come with any guarantees that the banks will follow the Bank of England's lead and reduce interest rates.
There are concerns that too many cheap mortgage deals have been scrapped. The number of mortgage products available is down from 15,599 in the summer, to under 4,000 currently.
Liberal Democrat Treasury spokesman Vince Cable said: 'It is obviously necessary for urgent action to be taken to unblock the mortgage market and to break the crippling effects of the credit crunch.
'However, we cannot have a situation where the banks are able to privatise their profits and nationalise their losses. Since the mortgages from the banks are of inferior quality and higher risk than the Government bonds which they are replacing, the implication must be that taxpayers are shouldering the risks and losses of the banks. This cannot be right.
'We need urgent reassurances from the Government that the exchange is taking place on a discounted basis so that the banks and not taxpayers carry any losses.'
Friday 18 April 2008
London House Prices Falling
Rightmove has reported house selling prices in London have fallen in nearly every borough between March and April. Average Kensington and Chelsea house prices have fallen by £33,000 to £1,458,558 - down more than 2.2% in 1 month.
Across London, the average house price has fallen by £3,838, with only 5 boroughs able to report an increase.
Across London, the average house price has fallen by £3,838, with only 5 boroughs able to report an increase.
Thursday 17 April 2008
First time buyers struggle more than before
A report by the housing charity Shelter has shown that first time buyers are suffering the "hardest ever battle" to get into the property market.
Whilst the average property price has jumped 200% over the last 10 years, average salaries have increased only 53%. And whilst house prices are now falling lenders are no longer offering 100% mortgages, meaning first time buyers must put down at least a 5% deposit and up to 25% o get the best deals.
Ten years ago monthly mortgage repayments accounted for £1 in every £8 of family income, whereas now that figure has increased to £1 in every £5.
Whilst the average property price has jumped 200% over the last 10 years, average salaries have increased only 53%. And whilst house prices are now falling lenders are no longer offering 100% mortgages, meaning first time buyers must put down at least a 5% deposit and up to 25% o get the best deals.
Ten years ago monthly mortgage repayments accounted for £1 in every £8 of family income, whereas now that figure has increased to £1 in every £5.
Wednesday 16 April 2008
Pay more for your mortgage
A report out yesterday from Mform showed that mortgage arrangement fees have almost doubled over the last year, to an average £5,000.
It looked at the average charges on the five most competitive 3-year fixed deals and compared costs from last March to yesterday's top 5. A year ago the average charges were £578 whereas by yesterday that had increased 96% to £1,132. Likewise, 2-year deal have seen average charges rise from £999 to £1,478.
It looked at the average charges on the five most competitive 3-year fixed deals and compared costs from last March to yesterday's top 5. A year ago the average charges were £578 whereas by yesterday that had increased 96% to £1,132. Likewise, 2-year deal have seen average charges rise from £999 to £1,478.
Calls for homebuyer protection
Michael Coogan, director general of the Council of Mortgage Lenders, is calling for a shake-up of the system for homeowners at risk of losing their homes.
He has suggested the Income Support for Mortgage Interest be revisited. Currently it does not cover the first 9 months of arrears and is capped at £100k, whereas the average mortgage is around £160k.
He has suggested the Income Support for Mortgage Interest be revisited. Currently it does not cover the first 9 months of arrears and is capped at £100k, whereas the average mortgage is around £160k.
Halifax Raises Mortgage Rates
The Halifax has made it's second round of mortgage rate rises in just 9 days, less than a week after the Bank of England dropped interest rates.
These increases add more than £1,000 repayments to a typical £158,100 home loan. Popular deals such as the 2 year fixed rate and a number of tracker mortgages will rise by 0.5%. The 2 year fixed deal was set at 5.72% 2 weeks ago for those with 10% deposits. This was increased to 6.09% last week and again to 6.59% from today.
The Alliance & Leicester also raised rates twice last week - with a fixed rate mortgage going from 4.99% to 5.74% in just three days - the same time as the base rate cut.
These increases add more than £1,000 repayments to a typical £158,100 home loan. Popular deals such as the 2 year fixed rate and a number of tracker mortgages will rise by 0.5%. The 2 year fixed deal was set at 5.72% 2 weeks ago for those with 10% deposits. This was increased to 6.09% last week and again to 6.59% from today.
The Alliance & Leicester also raised rates twice last week - with a fixed rate mortgage going from 4.99% to 5.74% in just three days - the same time as the base rate cut.
Tuesday 15 April 2008
Estate Agents Could Close
The downturn in the property market could cause the closure of up to a third of Britain's estate agents this year, estimates Movewithus.
They predict that 4,000 of the country's 12,000 property businesses might be forced to close their own doors by December.
They predict that 4,000 of the country's 12,000 property businesses might be forced to close their own doors by December.
Abbey Doubles Market Share
Analysts think that the Abbey was responsible for 1 in 6 new home loans in the first quarter of this year - doubling it's market share of 9% in 2006 to 17% now. It is partly prtected from the problems other banks are currently experiencing as it's Spanish owners, Santander, can use the European Central Bank for borrowing.
Abbey is now the second biggest UK lender, behind HBOS.
Abbey is now the second biggest UK lender, behind HBOS.
Record House Price Falls
A report by the Royal Institution of Chartered Surveyors (RICS) has painted a gloomy picture of house prices in the UK. It found that house prices are falling at their fastest rate for 30 years with a future of lower prices, few buyers and desperate sellers.
Every region in England and Wales has been reported as suffering drops, with the majority falling at record levels. The East Midlands is reporting the worst drops after 15 months of decline.
Every region in England and Wales has been reported as suffering drops, with the majority falling at record levels. The East Midlands is reporting the worst drops after 15 months of decline.
Thursday 10 April 2008
Interest Down, Mortgages Up
Hours before the widley anticpated move by the Bank of England to lower interest rates to 5% (down .25% from 5.25%) two leading banks raised interest rates on their mortgage products.
Nationwide building society and Alliance & Leicester increased the cost for their borrowers as the Bank of England tried to lower rates to protect the UK economy, undermining the Bank of England's control on Mortgage rates. Although the Nationwide did also reduce the rate on some of it's mortgages today as well.
Tim Fletcher of financial analysts Baseline Capital said: 'Today's decision is irrelevant as far as pricing for mortgage borrowers is concerned.
'The Bank has effectively lost control of retail interest rates, which have become decoupled from the base rate.
'Any change in the Base Rate is likely to have little or no impact on the cost of raising funds for lenders.
'Together with the need to control demand this cost will continue to dominate retail lenders' pricing decisions.'
Such moves could leave a lot of people suffering twice after today - with banks not passing on rate cuts, or even increasing rates, for mortgages whilst others will reduce interest paid on savings accounts.
Nationwide building society and Alliance & Leicester increased the cost for their borrowers as the Bank of England tried to lower rates to protect the UK economy, undermining the Bank of England's control on Mortgage rates. Although the Nationwide did also reduce the rate on some of it's mortgages today as well.
Tim Fletcher of financial analysts Baseline Capital said: 'Today's decision is irrelevant as far as pricing for mortgage borrowers is concerned.
'The Bank has effectively lost control of retail interest rates, which have become decoupled from the base rate.
'Any change in the Base Rate is likely to have little or no impact on the cost of raising funds for lenders.
'Together with the need to control demand this cost will continue to dominate retail lenders' pricing decisions.'
Such moves could leave a lot of people suffering twice after today - with banks not passing on rate cuts, or even increasing rates, for mortgages whilst others will reduce interest paid on savings accounts.
Rate Cut Predicted
The Bank of England is expected to drop interest rates by 0.25% today. This expectation led to the Pound hitting a record low of 80 pence to the Euro yesterday - a fall of around 20% in just 6 months.
Wednesday 9 April 2008
HSBC Remortgage Lifeline
The HSBC bank has offered a lifeline to borrowers coming off low rate deals - they have offered to match current rates for both their own customers and other banks' customers.
The offer is only available for 5 weeks, so borrowers need to move quickly and its is not available through mortgage brokers as the bank will only deal directly with borrowers. The maximum LTV is 80%.
The offer is only available for 5 weeks, so borrowers need to move quickly and its is not available through mortgage brokers as the bank will only deal directly with borrowers. The maximum LTV is 80%.
First Time Buyers Hit Hard
Mortgage rates for first time buyers are at an 8 year high.
An average borrower with just a 5% deposit looking at a two-year fixed rate deals has seen mortgage offers jump from 6.55% to 6.64% last month, the dearest since June 2000.
Tracker rates also followed the trend, increasing from 5.96% to 6.04%, according to Bank of England figures.
Almost half of all mortgage products have been removed by the banks in recent months, with borrowers with small deposits watching the best deals being removed as lenders have sought to deter the 'riskiest' customers during the credit crunch.
An average borrower with just a 5% deposit looking at a two-year fixed rate deals has seen mortgage offers jump from 6.55% to 6.64% last month, the dearest since June 2000.
Tracker rates also followed the trend, increasing from 5.96% to 6.04%, according to Bank of England figures.
Almost half of all mortgage products have been removed by the banks in recent months, with borrowers with small deposits watching the best deals being removed as lenders have sought to deter the 'riskiest' customers during the credit crunch.
Tuesday 8 April 2008
House Prices Tumbled In March
House prices fell in March by their biggest monthly drop since the the property crash of the 1990s. The value of an average property fell by almost £5,000 - 2.5%.
The report by the Halifax showed that March suffered the worst monthly fall in property prices since September 1992 when prices dropped by 3% in a single month. This means that the average house is now worth only 1.1% more than 12 months ago and house prices have dropped 1% in the first quarter of this year.
After allowing for inflation, the real price of an average home over the last 12 months has dropped by £4,909.
The report by the Halifax showed that March suffered the worst monthly fall in property prices since September 1992 when prices dropped by 3% in a single month. This means that the average house is now worth only 1.1% more than 12 months ago and house prices have dropped 1% in the first quarter of this year.
After allowing for inflation, the real price of an average home over the last 12 months has dropped by £4,909.
Less Mortgages In February
The Council of Mortgage Lenders (CML) has reported that mortgages for new purchases hit a record low in Frburary when they dropped by almost a third over the last year. And this is expected to get worse because of the credit crunch and property prices falling.
The CML has reported just 49,000 loans completing in February, worth £7.5bn, 5.1% than the total amount advanced in January.
Remortgaging activity remained unchanged from January, making it's share of the total level jump to it's highest level in three years. And this part of the market is expected to stay high as borrowes fixed and discounted rate deals come to an end.
The CML has reported just 49,000 loans completing in February, worth £7.5bn, 5.1% than the total amount advanced in January.
Remortgaging activity remained unchanged from January, making it's share of the total level jump to it's highest level in three years. And this part of the market is expected to stay high as borrowes fixed and discounted rate deals come to an end.
Monday 7 April 2008
No More 100% Mortgages
Abbey, the last lender still offering 100% mortgages, how now bowed to the current financial situation and removed it's 100% mortgage products.
It is now not possible to get a 100% motgage, making it harder for first time buyers to step onto the property ladder. Money experts are now saying that owning a home is a luxury, not a right, and suggest that young couples and first time buyers should take close stock of their finances before taking the huge risk of buying.
It is now not possible to get a 100% motgage, making it harder for first time buyers to step onto the property ladder. Money experts are now saying that owning a home is a luxury, not a right, and suggest that young couples and first time buyers should take close stock of their finances before taking the huge risk of buying.
Friday 4 April 2008
Halifax Increases Deposits
The Halifax Bank has followed the Nationwide's increased deposit with a similar move. It also will now only offer it's best rates to the two-thirds of home buyers with at least a 25% deposit.
The Halifax now has 3 rates of lending, those borrowing less than 75%; those borrowing between 75% and 90% and those borrowing 90% to 95%.
Brokers will also no longer be able to arrange 97% loans, although Halifax branches will still offer these, with a premimu of 0.35% on the interest rate.
The changes will leave new borrowers with the Halifax and subsiduaries Bank of Scotland and Inteligent Finance better off by 0.1% if they are able to pay a 25% deposit, but 0.14% worse off if the deposit is 75% to 90%.
The Halifax now has 3 rates of lending, those borrowing less than 75%; those borrowing between 75% and 90% and those borrowing 90% to 95%.
Brokers will also no longer be able to arrange 97% loans, although Halifax branches will still offer these, with a premimu of 0.35% on the interest rate.
The changes will leave new borrowers with the Halifax and subsiduaries Bank of Scotland and Inteligent Finance better off by 0.1% if they are able to pay a 25% deposit, but 0.14% worse off if the deposit is 75% to 90%.
Thursday 3 April 2008
Credit Squeeze To Get Worse
Banks and building societies have warned the Bank of England they expect to be cutting secured loan lending - mainly mortgages - even more severely in the second quarter of the year than they did in the first quarter.
Growing economic uncertainty and the credit crunch is forcing lenders to reduce their risks whilst the wholesale cost of borrowing (the libor rate) has increased.
The Bank said: 'The reduction in secured credit availability was associated with a reduced risk appetite and increased concerns about the macroeconomy and the housing market.' The Bank of England also said that lenders expect to cut back on unsecured lending, which covers both credit cards and overdrafts, in the coming three months.
Growing economic uncertainty and the credit crunch is forcing lenders to reduce their risks whilst the wholesale cost of borrowing (the libor rate) has increased.
The Bank said: 'The reduction in secured credit availability was associated with a reduced risk appetite and increased concerns about the macroeconomy and the housing market.' The Bank of England also said that lenders expect to cut back on unsecured lending, which covers both credit cards and overdrafts, in the coming three months.
Tuesday 1 April 2008
Annual House Prices Down Again
A report by the Land Registry shows a drop in the annual house price growth for the 6th consecutive month.
The average property cost in England & Wales rose by just 5.3% in the 12 months to the end of February, the slowest rate of gain since July 2006. The price of an average property has held at £185,616
The average property cost in England & Wales rose by just 5.3% in the 12 months to the end of February, the slowest rate of gain since July 2006. The price of an average property has held at £185,616
Northern Rock To Repossess
Repossession by the Northern Rock have soared this year, with the trend likely to continue, the bank admitted yesterday.
Over the last year the number of repossessions on Northern Rock borrowers has increased by 234%. The bank repossessed on average 6 homes per day last year, compared to 4 per day in 2006.
Numbers of repossessions are expected to continue to rise this year as increasing mortgage costs hit customers who can't afford the repayments.
It is also estimated that a third of the bank's workforce, around 2,000 people, will lose their jobs by 2011, according to the management team.
Over the last year the number of repossessions on Northern Rock borrowers has increased by 234%. The bank repossessed on average 6 homes per day last year, compared to 4 per day in 2006.
Numbers of repossessions are expected to continue to rise this year as increasing mortgage costs hit customers who can't afford the repayments.
It is also estimated that a third of the bank's workforce, around 2,000 people, will lose their jobs by 2011, according to the management team.
Scrap HIPs
The Tories are calling for Home Information Packs (HIPs) to be scrapped. A report has shown that some packs are costing over £500, with more than half over the original target price of £350.
Only 1 in every 8 is produced in the target of 4 to 5 working days, whist over half (52%) are taking 12 days and 31% 15 days, claims a report from Estate Agents.
Over 370,000 packs have been produced since their introduction last summer. They were supposed to provide buyers with further information and speed up the sales process, but most members of the National Association of Estate Agents believe this has not happened.
Only 1 in every 8 is produced in the target of 4 to 5 working days, whist over half (52%) are taking 12 days and 31% 15 days, claims a report from Estate Agents.
Over 370,000 packs have been produced since their introduction last summer. They were supposed to provide buyers with further information and speed up the sales process, but most members of the National Association of Estate Agents believe this has not happened.
Friday 28 March 2008
Less New Mortgages
Only 43,870 new mortgages worth £7bn were approved in February of this year, 33% fewer than February of 2007. This is down on the 6 month average of 47,402 (worth 7.4bn), according to the latest report from the British Bankers Association.
And following on from the removal of mortgage deals, 139 further mortgage deals were removed in just a 24 hour period.
And following on from the removal of mortgage deals, 139 further mortgage deals were removed in just a 24 hour period.
Nationwide Increases Mortgage Costs
Although the base rate was not changed this month, the Nationwide Building Society has put up it's lending charges. Rates for two-year trackers have increased by 0.57% and average fixed rate mortgages have gone up by 0.2%.
Matthew Carter, Nationwide's director of mortgages, said: 'Nationwide sympathises with anyone who is concerned about the availability of affordable mortgages. We continue to offer our customers a wide range of fixed and variable rate mortgages up to 95% loan to value with, as always, a focus on prudent and responsible lending rather than volume.'
Matthew Carter, Nationwide's director of mortgages, said: 'Nationwide sympathises with anyone who is concerned about the availability of affordable mortgages. We continue to offer our customers a wide range of fixed and variable rate mortgages up to 95% loan to value with, as always, a focus on prudent and responsible lending rather than volume.'
Sell High, Buy Low
Around 18% of homeowners ready to sell houses are considering moving into rented accommodation. These owners are willing to gamble that the market will tumble over the next 12 to 18 months and are hoping to sell whilst property prices are high and then buy again after a hoped for property crash.
A further 14% are considering moving to rented accommodation to free up capital to ease the burden of debts, according to a survey of 1,100 people moving house by iammoving.com.
But it is a risky choice to rent in the hope of a property crash. An average property has to fall by 7% in value before you recover purchase & sales costs and stamp duty.
A further 14% are considering moving to rented accommodation to free up capital to ease the burden of debts, according to a survey of 1,100 people moving house by iammoving.com.
But it is a risky choice to rent in the hope of a property crash. An average property has to fall by 7% in value before you recover purchase & sales costs and stamp duty.
Wednesday 26 March 2008
Mortgage Deals Crash
Research has revealed that the number of mortgage deals on offer to customers has dropped from 15,599 last July to 5,785, according to Moneyfacts.
Lenders are removing deals and changing conditions daily. Conditions can change to raise minimum deposits or pay higher rates. This will have a huge impact on the hosuing market, with only 1 in 3 houses expected to sell, according to Henry Pryor, property expert from website Primemove.com.
He said that many will find their dream home, but will not be able to raise a mortgage for it and that sellers must be realistic with prices and expect to raise 10% - 15% less than last summer.
This drop is not just in the troubled sub-prime market. The 'prime' market has also dropped from 3,803 deals to 2,540 in the same time period.
Deals that have done include the 100% and 125% mortgages. Only Abbey now offers a 100% mortgage to the main market, with other lenders offering 100% deals that require further securities, e.g. parental involvement.
Lenders are removing deals and changing conditions daily. Conditions can change to raise minimum deposits or pay higher rates. This will have a huge impact on the hosuing market, with only 1 in 3 houses expected to sell, according to Henry Pryor, property expert from website Primemove.com.
He said that many will find their dream home, but will not be able to raise a mortgage for it and that sellers must be realistic with prices and expect to raise 10% - 15% less than last summer.
This drop is not just in the troubled sub-prime market. The 'prime' market has also dropped from 3,803 deals to 2,540 in the same time period.
Deals that have done include the 100% and 125% mortgages. Only Abbey now offers a 100% mortgage to the main market, with other lenders offering 100% deals that require further securities, e.g. parental involvement.
Tuesday 25 March 2008
Housing Market Slumps
Estate agents are reporting the lowest number of potential purchasers for 20 years. The National Association of Estate Agents (NAEA) reported the number of house buyers down from an average of 276 per agent in January to 243 in February 2008 – the lowest figure since 1989/1990.
The number of houses for sale and the number of first time buyers is also down, as the difference between advertised prices and house selling prices widened.
The number of houses for sale and the number of first time buyers is also down, as the difference between advertised prices and house selling prices widened.
Tuesday 11 March 2008
House Prices Continue To Fall
A report from the Royal Institution of Chartered Surveyors is the latest verdict that the decade long housing boom is over. It shows that across England and Wales house prices are falling in every region, with record levels of decline being reported in East Anglia, the South West, Yorkshire, Humberside and the East Midlands.
The average estate agent now has 92 properties for sale on it's books - the highest for a decade, with the average number of unsold properties increasin to 49% in the past 12 months.
Overall, the RICS report found the 'balance' of estate agents reporting a fall in house prices is at its highest level since 1990 - the time of the last property crash when prices started falling and did not recover for 6 years.
The average estate agent now has 92 properties for sale on it's books - the highest for a decade, with the average number of unsold properties increasin to 49% in the past 12 months.
Overall, the RICS report found the 'balance' of estate agents reporting a fall in house prices is at its highest level since 1990 - the time of the last property crash when prices started falling and did not recover for 6 years.
Monday 10 March 2008
First Time Buyers' Stamp Duty Doubles
Stamp duty for first time buyers' purchases has almost doubled to £1,751 over the last 5 years. Worst hit is London, where the average first time buyers' bill is a staggering £8,675.
20% of southern first time buyers are paying at the 3% rate (property price above £250,000) - adding £7,500 to their outlay. Five years ago only 2% bought properties costing more than £250,000.
20% of southern first time buyers are paying at the 3% rate (property price above £250,000) - adding £7,500 to their outlay. Five years ago only 2% bought properties costing more than £250,000.
Thursday 6 March 2008
No Rate Cut
The Bank of England has announced that rates will remain steady this month. Whilst good news for savers, holding mortgage rates at the current position will continue to be painful for mortgage borrowers and others with outstanding debts.
On the back of this news, the pound rose against the dollar, breaking the $2 mark for the first time in 2008.
On the back of this news, the pound rose against the dollar, breaking the $2 mark for the first time in 2008.
House Prices Drop Further
The Halifax monthly house price report has shown a further drop in February. The Halifx reported a drop of 0.3%, taking the total house price increase ove the previous 12 months to 4.2%.
Whereas the average house cost £197,244 in January, that figure has now fallen to £196,649. Economists are forecasting a 5% drop in house prices over the coming year.
You can check house selling prices in your area totally free, here.
Whereas the average house cost £197,244 in January, that figure has now fallen to £196,649. Economists are forecasting a 5% drop in house prices over the coming year.
You can check house selling prices in your area totally free, here.
Tuesday 4 March 2008
FSA Mortgage Shock Warning
The Financial Services Authority has reported concerns that as many as 20% of mortgage payers could be struggling with payments over the next 12 months, yet many have no plans for how to cope. The concerns centre around mortgage payers who may recieve a 'rate shock' when existing fixed deals come to an end.
It has launched a £2m advertising campaign to help raise awareness about shopping around before deals come to an end. It has published a checklist of steps on it's website for homeowners, as it is feared that 1.4million mortgage payers could be hit by by monthly rises in mortgage repayments of up to 25%.
Impartial mortgage rate tables are available on many websites, whether you want to view possible changes or plan a new mortgage. There are still many good fixed rate mortgage deals to be had, as well as trackers, discounted and all of the usual variations.
It has launched a £2m advertising campaign to help raise awareness about shopping around before deals come to an end. It has published a checklist of steps on it's website for homeowners, as it is feared that 1.4million mortgage payers could be hit by by monthly rises in mortgage repayments of up to 25%.
Impartial mortgage rate tables are available on many websites, whether you want to view possible changes or plan a new mortgage. There are still many good fixed rate mortgage deals to be had, as well as trackers, discounted and all of the usual variations.
Thursday 28 February 2008
More Interest Rate Cuts On Way??
'Growth is slowing quite sharply now, in part because of the rises in interest rates last year. That in itself might justify a progressive shift in policy from a restrictive to a more neutral stance,' reported Sir John Gieve, Deputy Governor of the Bank of England.
A neutral cost of borrowing is seen by many as 5%, which would mean a further 0.5% cut in interest rates. But he warned that inflation is still playing a worrying part in the current interest rates, due to the cost of food and fuel.
A neutral cost of borrowing is seen by many as 5%, which would mean a further 0.5% cut in interest rates. But he warned that inflation is still playing a worrying part in the current interest rates, due to the cost of food and fuel.
The End Of Cheap Loans???
Hector Sants, head of City regulator the Financial Services Authority, has predicted the cheap credit era may be over. He believes the crisis in the financial markets will force the banks to keep more loans on their own books, which could raise the cost of borrowing.
By passing debts to other companies who suffered the loss when debts went bad, banks may now how to keep more loans in house and to cover these bad debts themselves. This could end the ability to provide cheap loans and banks will be forced to provide loans that attract customers for longer terms. This would be the end of the so called 'rate tart', who moves mortgages every time the current special offer comes to an end.
By passing debts to other companies who suffered the loss when debts went bad, banks may now how to keep more loans in house and to cover these bad debts themselves. This could end the ability to provide cheap loans and banks will be forced to provide loans that attract customers for longer terms. This would be the end of the so called 'rate tart', who moves mortgages every time the current special offer comes to an end.
Tuesday 26 February 2008
New Housing Market Gloom
Persimmon has reported falling levels of interest in new homes, compared to this time last year. 12 months ago it had forward reservations of £1.3bn, now it is down 19% to £1.05bn.
Footfall through sites is also down 13% on the same period, with cancellations up 20% as potential buyers refuse to commit with banks and building societies tightening lending conditions.
Chairman John White complained of 'a very challenging year' and was cautious about the spring selling season. 'When confidence returns and sentiment improves we anticipate a return to a stronger market,' he said.
'In the meantime we remain cautious. Understandably, potential purchasers are currently taking longer to make decisions about the timing of their house purchase. There remains an underlying demand and desire for new homes but we have been experiencing a period of a "wait and see" approach.'
Footfall through sites is also down 13% on the same period, with cancellations up 20% as potential buyers refuse to commit with banks and building societies tightening lending conditions.
Chairman John White complained of 'a very challenging year' and was cautious about the spring selling season. 'When confidence returns and sentiment improves we anticipate a return to a stronger market,' he said.
'In the meantime we remain cautious. Understandably, potential purchasers are currently taking longer to make decisions about the timing of their house purchase. There remains an underlying demand and desire for new homes but we have been experiencing a period of a "wait and see" approach.'
Monday 25 February 2008
Nationwide Increases Deposits
Nationwide has increased the deposit homebuyers must produce for their best available rate from just 10% of the property price to 25%. With average house prices in London in excess of £300,000, this will mean a £75,000 deposit is required to secure the best possible rate.
High loan to value mortgages are steadily disappearing, with 125% mortgages being pulled last week. This goes hand in hand with the credit crunch and the number of mortgage defaulters stteadily rising. Banks are reacting to this by making it more difficult to get high levels of credit.
Borrowers unable to rise the extra 15% deposit will still be able to borrow from the Nationwide, but only by paying a further 0.2% - almost effectively removing this months rate cut.
High loan to value mortgages are steadily disappearing, with 125% mortgages being pulled last week. This goes hand in hand with the credit crunch and the number of mortgage defaulters stteadily rising. Banks are reacting to this by making it more difficult to get high levels of credit.
Borrowers unable to rise the extra 15% deposit will still be able to borrow from the Nationwide, but only by paying a further 0.2% - almost effectively removing this months rate cut.
Saturday 23 February 2008
Card Firms Slash Spending Limits
Customers of various credit cards are claiming that their spending has been curbed by the banks cutting their credit limit to £100 more than their current balance, without warning. These people are only discovering the change when they try to use their cards for purchases.
There was no warning of the impending reduction and the affected people have unblemished credit reports. Some people are reporting their credit limits dropping from thousands to hundreds, a drop of almost £10,000 in one reported case.
Most of those affected have been given no warning and believe themselves to have impecible credit histories, always paying off their cards on time. Banks are beleived to be reducing credit limits to protect themselves from customers who over spend and then are unable to meet the debts.
There was no warning of the impending reduction and the affected people have unblemished credit reports. Some people are reporting their credit limits dropping from thousands to hundreds, a drop of almost £10,000 in one reported case.
Most of those affected have been given no warning and believe themselves to have impecible credit histories, always paying off their cards on time. Banks are beleived to be reducing credit limits to protect themselves from customers who over spend and then are unable to meet the debts.
Friday 22 February 2008
Northern Rock Nationalisation 1 Step Closer
The government won the vote last night to nationalise the Northern Rock. Although the Lords had tried to make amendments to the bill on grounds that it could put tax payers' money at risk. The Lords did want an independent audit of the bank's books and the dealings to be brought under the Freedom of Information laws as well as an Office of Fair trading review over concerns over giving the bank an unfair competitive advantage. But they had to settle for government guarantees after loosing votes on the first 2 amendments.
The bill is expected to get royal assent today.
The bill is expected to get royal assent today.
Northern Rock Ends 125% Mortgages
Northern Rock has followed other lenders and yesterday withdrew it's 125% mortgages. It will no longer offer this mortgage to new customers as it concentrates it's lending on low-risk customers and attempts to shrink it's book.
Many of the better quality loans in it's books are owned by another company, Granite, and are not part of the Nationalisation process. This along with customers who can moving away, leaves the bank with a poorer quality mortgage book for nationalisation.
Analysts are also worried about customers across the board with 100%+ mortgages where the deals are coming to an end shortly. Many of these will not be able to find new offers and could end up struggling to meet repayments. Only Birmingham Midshires still offers a 125% mortgage, and this is expected to be withdrawn.
Many of the better quality loans in it's books are owned by another company, Granite, and are not part of the Nationalisation process. This along with customers who can moving away, leaves the bank with a poorer quality mortgage book for nationalisation.
Analysts are also worried about customers across the board with 100%+ mortgages where the deals are coming to an end shortly. Many of these will not be able to find new offers and could end up struggling to meet repayments. Only Birmingham Midshires still offers a 125% mortgage, and this is expected to be withdrawn.
Thursday 21 February 2008
Stamp Duty Raises £31bn
Over the last 10 years stamp duty has accounted for £31.5bn, according to latest figures. £6.5bn of this was paid last year alone - an increase of 675% since Labour came to power.
Prior to the current government, stamp duty was paid at 1% on properties selling for £60,000 or more. Had this stamp duty threshold have increased in line with house price inflation, buyers paying under £190,000 would not be paying any stamp duty. But currently, buyers paying between £125,000 and £250,000 pay 1%; those paying up to £500,000 pay 3% and above that 4%.
This meant that last year 1.1m paid stamp duty, compared to 400,000 in 1997. A treasury spokesman did say that 5 out of 6 buyers pay either the 1% rate or none at all.
Prior to the current government, stamp duty was paid at 1% on properties selling for £60,000 or more. Had this stamp duty threshold have increased in line with house price inflation, buyers paying under £190,000 would not be paying any stamp duty. But currently, buyers paying between £125,000 and £250,000 pay 1%; those paying up to £500,000 pay 3% and above that 4%.
This meant that last year 1.1m paid stamp duty, compared to 400,000 in 1997. A treasury spokesman did say that 5 out of 6 buyers pay either the 1% rate or none at all.
Wednesday 20 February 2008
Could the Alliance & Leicester be next?
Analysts are concerned that the Alliance & Leicester could be the next major bank to follow in the Northern Rock crisis.
The A&L is expected to try to protect itself by reducing the value of mortgages on it's book. It has already dropped it's 125% mortgage and it may increase mortgage rates to force some borrowers to move elsewhere.
Analysts are particularly worried about the Alliance & Leicester because it relies on raising money from global money markets.
The A&L is expected to try to protect itself by reducing the value of mortgages on it's book. It has already dropped it's 125% mortgage and it may increase mortgage rates to force some borrowers to move elsewhere.
Analysts are particularly worried about the Alliance & Leicester because it relies on raising money from global money markets.
End Of 100% Mortgages?
Lenders Abbey and Alliance & Leicester have both removed their 125% mortgages. This leaves just Birmingham Midshires and the troubled Northern Rock with mortgages above the value of the property being bought. These mortgages are often used by people unable to meet the other costs of moving, such as stamp duty and legal fees.
Recently lenders have been removing the 100% mortgages on offer - before Christmas a third of lenders had these available, but that figure stands at around ten percent now.
This indicates a clear move of attempting to make borrowers more responsible for their borrowings and forcing buyers to be able to place a deposit on their new home.
Even after this month's rate cuts, there are fears that Northern Rock might have to increase it's lending rates and that this might cause other lenders to follow.
Recently lenders have been removing the 100% mortgages on offer - before Christmas a third of lenders had these available, but that figure stands at around ten percent now.
This indicates a clear move of attempting to make borrowers more responsible for their borrowings and forcing buyers to be able to place a deposit on their new home.
Even after this month's rate cuts, there are fears that Northern Rock might have to increase it's lending rates and that this might cause other lenders to follow.
No Rate Cuts Even Though Prices Will Fall
Bank of England rate setter Kate Barker has warned that property prices could continue to fall, but next month might be too soon for a further interest rate cut.
More house price drop 'cannot be ruled out' after the 211% increase in house prices since 1997, said Barker in a speech in North Staffordshire.
'The risk I believe to be of most concern is around the interplay between the property market and the financial sector resulting from the credit turmoil.' said Baker
'There are clear signs of a marked weakening in both the commercial and residential property markets.' Barker went on: 'While the outlook for house prices is always highly uncertain, it is likely that prices will decline in the short term relative to earnings, and falls in nominal terms cannot be ruled out.'
More house price drop 'cannot be ruled out' after the 211% increase in house prices since 1997, said Barker in a speech in North Staffordshire.
'The risk I believe to be of most concern is around the interplay between the property market and the financial sector resulting from the credit turmoil.' said Baker
'There are clear signs of a marked weakening in both the commercial and residential property markets.' Barker went on: 'While the outlook for house prices is always highly uncertain, it is likely that prices will decline in the short term relative to earnings, and falls in nominal terms cannot be ruled out.'
Tuesday 19 February 2008
Less Home Owners
A report by the Halifax has shown that the number of people owning the home in which they live has fallen to its lowest level since 1998 - standing at 69.8% in 2007 - down 0.8% from 70.6% in 2006.
Monday 18 February 2008
More Unsold Houses
Property website Rightmove have released figures showing that on average, estate agents have 64 properties on their books for sale, against 54 each this time last year. At the same time, it is now taking an average of 98 days to sell a property, against 78 a year ago.
This might be caused by panic selling as home owners try to beat a price tumble, whilst others are selling as they are unable to keep up mortgage repayments.
It is also suspected that homeowners are choosing to hold out for higher selling prices rather than accept lower offers.
This might be caused by panic selling as home owners try to beat a price tumble, whilst others are selling as they are unable to keep up mortgage repayments.
It is also suspected that homeowners are choosing to hold out for higher selling prices rather than accept lower offers.
Sunday 17 February 2008
Interest Rates Not To Fall Fast
The Bank of England this week warned that it expects inflation to rise above 3% due to the rise in fuel, food and household energy bills. This is way above the 2% target and therefore makes drastic rate cuts unlikely.
Markets had expected rates to be cut to 4.75% by the end of the year - rates have been cut from 5.75% to 5.25% over the last 3 months. But the Bank are more concerned with soaring inflation rather than a possible recession.
Whilst this might be bad news for mortgage payers, net savers will be pleased that the rates aren't going to drop quickly.
Markets had expected rates to be cut to 4.75% by the end of the year - rates have been cut from 5.75% to 5.25% over the last 3 months. But the Bank are more concerned with soaring inflation rather than a possible recession.
Whilst this might be bad news for mortgage payers, net savers will be pleased that the rates aren't going to drop quickly.
Monday 11 February 2008
House Prices Up 9.1%
Official figures show that the price of the average home rose by 9.1% in 2007 - around £20,000 TO £219,591.
This is below the figure of 9.7% that had been reached in November.
This is below the figure of 9.7% that had been reached in November.
Saturday 9 February 2008
Savings Accounts Rates Drop
Savers should be wary about how much their savings accounts interest rates are dropping following Thursday's rate cut, after some rates have been cut much more than the 0.25% Bank Of England cut.
Saga dropped the interest rate on its one year fixed rate account by 0.85%, or 0.26% for the internet based account. At the same time the Nationwide has only passed on a cut of 0.17% or less to its savers.
If you shop arround some banks and building societies are bringing out new account offers that might be well worth your while.
Saga dropped the interest rate on its one year fixed rate account by 0.85%, or 0.26% for the internet based account. At the same time the Nationwide has only passed on a cut of 0.17% or less to its savers.
If you shop arround some banks and building societies are bringing out new account offers that might be well worth your while.
Friday 8 February 2008
Repossessions Hit High
Reposesssions have hit an 8 year high, leaping by more than 20% last year. Even this was still below what mortgage lenders had predicted.
There were 27,100 reposessions last year, but the real scale of the problem could be being hit by firms buying homes of struggling families then renting them back to the same family.
There were 27,100 reposessions last year, but the real scale of the problem could be being hit by firms buying homes of struggling families then renting them back to the same family.
Interest Rates Cut .25%
The Bank of England cut interest rates by 0.25%, down to 5.25%, saying it was needed given the expected sharp rise in inflation over the next few months due to increased food and fuel costs.
Experts had called for a 0.5% cut, but the Bank of England held it's nerve with just a quarter of a percent drop to help homeowners. Within an hour of the announcement, 9 of the top 10 lenders had said they would pass on the cut to their customers. Only Northern Rock did not offer to cut rates for it's customers.
Experts had called for a 0.5% cut, but the Bank of England held it's nerve with just a quarter of a percent drop to help homeowners. Within an hour of the announcement, 9 of the top 10 lenders had said they would pass on the cut to their customers. Only Northern Rock did not offer to cut rates for it's customers.
Thursday 7 February 2008
25 Year Fixed Rate Mortgages?
25 year fixed rate mortgages will become commonplace, Alistair Darling, the current chancellor, said.
Fixed rate mortgages are currently a popular choice, with the security of knowing what payments you are going to be making. But the vast majority are currently for 5 years or less (about 3150 of the 3289 listed in the Fixed Rate Mortgage Chart end in or before 2013).
Mr Darling is planning to encourage the launch of more fixed rate mortgage loans with terms of up to 25 years, to give extra security to hard pressed buyers.
'For many households, particularly those on low incomes, fixing the level of mortgage repayments for several years makes real sense,' the Chancellor added. 'It can also contribute to wider macroeconomic stability.'
He also wants the penalties for early redemption reduced so that homeowners are not punished as severely for paying off or moving their mortgage.
There are currently a handful of 25 and even a couple of 30 year fixed rate mortgages available, but they are few and far between.
Fixed rate mortgages are currently a popular choice, with the security of knowing what payments you are going to be making. But the vast majority are currently for 5 years or less (about 3150 of the 3289 listed in the Fixed Rate Mortgage Chart end in or before 2013).
Mr Darling is planning to encourage the launch of more fixed rate mortgage loans with terms of up to 25 years, to give extra security to hard pressed buyers.
'For many households, particularly those on low incomes, fixing the level of mortgage repayments for several years makes real sense,' the Chancellor added. 'It can also contribute to wider macroeconomic stability.'
He also wants the penalties for early redemption reduced so that homeowners are not punished as severely for paying off or moving their mortgage.
There are currently a handful of 25 and even a couple of 30 year fixed rate mortgages available, but they are few and far between.
Tuesday 5 February 2008
House Price Inflation Below 5%
The Halifax has reported that in January house price inflation dropped to below 5%, leaving the average house price, according to its survey, at £197,244. The Halifax reported that the average home now costs £7,628 more than it did 12 months ago.
The slow down in the property market has driven this decline, leading to a drop in property prices over the last quarter. The annual house price inflation in August had stood at 11.4%
But experts are pleased that houseing prices have not plumeted and are predicting that this will limit the Bank Of England to a maximum of a 0.25% base rate cut later this week.
Halifax has said it expects housing prices to remain flat in 2008, even though the quarter to January showed a 1% drop.
Wondering what house prices are in your are? You can find house selling prices in your area for free, here.
The slow down in the property market has driven this decline, leading to a drop in property prices over the last quarter. The annual house price inflation in August had stood at 11.4%
But experts are pleased that houseing prices have not plumeted and are predicting that this will limit the Bank Of England to a maximum of a 0.25% base rate cut later this week.
Halifax has said it expects housing prices to remain flat in 2008, even though the quarter to January showed a 1% drop.
Wondering what house prices are in your are? You can find house selling prices in your area for free, here.
Monday 4 February 2008
Egg Accused
Egg has been accused by customers of freezing cards of people who do not pose a credit risk. It reported last week that it had told 160,000 that their spending power was to be curbed as they were high debt risk customers, but many have reported on internet forums and post boards that they have in fact always paid off balances in full.
Egg reject Dave from, Hertfordshire, wrote on the BBC website: 'My credit record is excellent and I actually took out an Egg loan three months ago.
'My Egg credit card has not been used for over six months and had £0 owing. Some customers are being ditched because in my view they are not making Egg any money.'
At the same time, customers have posted that their credit limits have been increased, even though they were in debt.
Egg rejected the claimns. A spokesman said 'We are not using this as an excuse to get rid of unprofitable customers.'
Egg reject Dave from, Hertfordshire, wrote on the BBC website: 'My credit record is excellent and I actually took out an Egg loan three months ago.
'My Egg credit card has not been used for over six months and had £0 owing. Some customers are being ditched because in my view they are not making Egg any money.'
At the same time, customers have posted that their credit limits have been increased, even though they were in debt.
Egg rejected the claimns. A spokesman said 'We are not using this as an excuse to get rid of unprofitable customers.'
Sunday 3 February 2008
Bank To Cut Rates?
It is expected that the Bank Of England will cut interest rates by 0.25% when it meets later this week in an effort to prevent a recession.
Such a move could save around £32 per month off a typical mortgage of around £200,000, assuming that banks pass on the full rate cut immediately. But the Bank will be worried about the fine balancing act as such a rate drop might encourage people to save more, instead of paying off outstanding debts.
Such a move could save around £32 per month off a typical mortgage of around £200,000, assuming that banks pass on the full rate cut immediately. But the Bank will be worried about the fine balancing act as such a rate drop might encourage people to save more, instead of paying off outstanding debts.
Insolvencies Drop
The number of new insolvencies dropped at the end of 2007. During the final quarter of 2007 'only' 25,000 people became insolvent, a fall of 16.4% against the same quarter in 2006, says the Insolvency Service.
This took the year's total to just under the previous year's record of 106,645 people and is the first year since 1996 that this total has decreased year on year.
But with a slowing economy, it is expected that unemployment may rise and with it personal insolvencies. Add to this the global credit crunch and it is expected that over 2008 the number of insolvencies will rise.
This took the year's total to just under the previous year's record of 106,645 people and is the first year since 1996 that this total has decreased year on year.
But with a slowing economy, it is expected that unemployment may rise and with it personal insolvencies. Add to this the global credit crunch and it is expected that over 2008 the number of insolvencies will rise.
Credit Cards Harder To Come By
Egg started sending out letters to its customers last Thursday to tell them their cards where to be locked in 35 days, although they are expected to continue making repayments. The move is reported to be a response to the company being bought last year, rather than the global credit crisis.
HSBC has reported that its acceptance of credit card applications has reduced from around 2 in 3 to just under 1 in 2 applications, whilst Barclaycard has said that it is blocking some customers from withdrawing cash on their credit cards, as this can be a sign of financial distress.
A poll on the This Is Money website reported that about 20% of respondents have suffered a cut in their credit limit since August. Whilst the website MoneyExpert.com reported from its survey that the number of people missing at least one repayment has soared. In June around 4.1m card holders had missed a payment whereas by December that figure had increased by 1m.
HSBC has reported that its acceptance of credit card applications has reduced from around 2 in 3 to just under 1 in 2 applications, whilst Barclaycard has said that it is blocking some customers from withdrawing cash on their credit cards, as this can be a sign of financial distress.
A poll on the This Is Money website reported that about 20% of respondents have suffered a cut in their credit limit since August. Whilst the website MoneyExpert.com reported from its survey that the number of people missing at least one repayment has soared. In June around 4.1m card holders had missed a payment whereas by December that figure had increased by 1m.
Egg To Block Credit Cards
Egg is to block 160,000 credit card users from using their credit cards. These people will be receiving letters warning them that their cards are to stop working in 35 days.
It is believed to be the first time a credit card company has implemented such a drastic move to curb over spending. But other companies could follow suit over time. If many do copy and a lot of adults are affected, the ramifications on the high street could be hard hitting as people who rely on credit are unable to shop for luxuries.
Egg is believed to be targeting 7% of it's 2 million customers, because they pose a 'higher than acceptable risk profile'. This could include being over the credit limit or failing to pay the minimum balance.
It is believed to be the first time a credit card company has implemented such a drastic move to curb over spending. But other companies could follow suit over time. If many do copy and a lot of adults are affected, the ramifications on the high street could be hard hitting as people who rely on credit are unable to shop for luxuries.
Egg is believed to be targeting 7% of it's 2 million customers, because they pose a 'higher than acceptable risk profile'. This could include being over the credit limit or failing to pay the minimum balance.
Saturday 2 February 2008
Fixed Rate Hope
Borrowers with HSBC with fixed rate mortgages about to come to an end have been thrown a lifeline by their bank. The HSBC has offered those with deals coming to an end prior to the end of April new mortgage deals that will match their current mortgage rates for periods of 2, 3 or 5 years. It says it hopes to extend the offer beyond April.
This will come as a great relief to borrowers with the bank that were fearing a huge rise in mortgage repayments when their fixed rate offers end in the next couple of months.
Various arrangement fees will apply, but could cost less than the cost of moving to a fixed rate mortgage based on current mortgage interest rates.
This will come as a great relief to borrowers with the bank that were fearing a huge rise in mortgage repayments when their fixed rate offers end in the next couple of months.
Various arrangement fees will apply, but could cost less than the cost of moving to a fixed rate mortgage based on current mortgage interest rates.
Thursday 31 January 2008
House Prices Fall Again
The Nationwide, the biggest building society in the UK, has reported falling house prices for the third month in a row.
It said that after December's 0.4% drop, January's drop was 0.1% - better than had been predicted by analysts at 0.3%.
This reduced the annual house price inflation from 4.8% in December to 4.2% in January, the lowest it has been since December 2005. This drop reduced the average house selling price by £1,607 to £184,473.
Looking at quarterly figures, prices fell 0.3% in the three months to January in contrast to a 0.9% increase in the three months to December.
These drops, along with yesterday's announcement by the Bank of England that mortgage approvals had dropped to their lowest level for 13 years, are making analysts to predict a quarter percent drop in base rates next week.
It said that after December's 0.4% drop, January's drop was 0.1% - better than had been predicted by analysts at 0.3%.
This reduced the annual house price inflation from 4.8% in December to 4.2% in January, the lowest it has been since December 2005. This drop reduced the average house selling price by £1,607 to £184,473.
Looking at quarterly figures, prices fell 0.3% in the three months to January in contrast to a 0.9% increase in the three months to December.
These drops, along with yesterday's announcement by the Bank of England that mortgage approvals had dropped to their lowest level for 13 years, are making analysts to predict a quarter percent drop in base rates next week.
Wednesday 30 January 2008
One Million Families Could Be Homeless
The FSA fears that huge mortgages and other debts could put one million families in the UK at risk of losing their home over the next 18 months. Huge mortgage debts along with other debts such as store cards, credit cards and loans will combine to force many families over the edge. As many fixed-rate mortgages come to an end many families may find they cannot move to another cheap deal and will be left struggling with repayments.
It forecast that nearly 20% of families who took out a mortgage between April 2005 and September 2007 are at risk of having their home repossessed. This accounts for 1.04 million families who have taken out their first mortgage or remortgaged to a better deal.
These families are identified by having 2 or more of the three identifying factors:
- paying less than a 10% deposit
- mortgaging for longer than 25 years
- borrowing more than 3.5 times annual salary
150,000 families have all 3 factors and the FSA are particularly worried about these, having taken out the mortgage at a time when property prices were soaring.
If you are worried see Bankruptcy Help and find out about IVA before time runs out.
It forecast that nearly 20% of families who took out a mortgage between April 2005 and September 2007 are at risk of having their home repossessed. This accounts for 1.04 million families who have taken out their first mortgage or remortgaged to a better deal.
These families are identified by having 2 or more of the three identifying factors:
- paying less than a 10% deposit
- mortgaging for longer than 25 years
- borrowing more than 3.5 times annual salary
150,000 families have all 3 factors and the FSA are particularly worried about these, having taken out the mortgage at a time when property prices were soaring.
If you are worried see Bankruptcy Help and find out about IVA before time runs out.
Tuesday 29 January 2008
House Prices To Fall 10%
Neil Woodford, one of Britain's most powerful fund managers with investment house Invesco Perpetual, said house prices are simply too high and the average home will drop £18,500 by New Year's Eve, or £50 a day.
Some parts of the country could be even worse hit, with buyers of newly built flats aimed at the buy-to-let market worst hit, as he fears these will become 'almost unsellable'.
Neil said 'Although my forecast is for house prices across the UK to fall eight to 10% in 2008, the decline may be much worse in certain areas.'
But even the most pessimistic of the more respected housing commentators, Capital Economics, had been forecasting a fall of only five per cent this year.
You can check house selling prices in your local area for free, here.
Some parts of the country could be even worse hit, with buyers of newly built flats aimed at the buy-to-let market worst hit, as he fears these will become 'almost unsellable'.
Neil said 'Although my forecast is for house prices across the UK to fall eight to 10% in 2008, the decline may be much worse in certain areas.'
But even the most pessimistic of the more respected housing commentators, Capital Economics, had been forecasting a fall of only five per cent this year.
You can check house selling prices in your local area for free, here.
Thursday 24 January 2008
Rates Might Drop
Analysts reviewing the minutes from the Bank Of Englands meeting earlier this month in which there was only 1 vote for lowering interest rates are confident that there will be a quarter percent drop in interest rates in February.
There are already warnings for savers to snap up fixed rate accounts before the offers are withdrawn, but the cut is not expected to be anything like the rate cuts in the USA.
There are already warnings for savers to snap up fixed rate accounts before the offers are withdrawn, but the cut is not expected to be anything like the rate cuts in the USA.
Tuesday 22 January 2008
Mortgage Lending Falls
Falling confidence in the property market and tighter lending restrictions worked against the December interest rate cut and led to the lowest mortgage borrowing in December for 2 and a half years.
At £22.6bn, this was a 21% reduction against the previous December and 25% less then November, revealed the Council of Mortgage Lenders.
Overall, in 2007 almost £1bn was borrowed in mortgages per day - a £362bn. This is up 5% on 2006 in which £345bn was borrowed.
The Council of Mortgage Lenders' figures showed mortgage lending by building societies broadly flat during 2007 at £52.1bn, compare to £52.8bn lent in 2006. But net lending, which allows for redemptions and repayments, fell by 21% to £12.6bn.
Analysts predict "a very good chance of an interest rate cut in February, and at least one more during 2008".
At £22.6bn, this was a 21% reduction against the previous December and 25% less then November, revealed the Council of Mortgage Lenders.
Overall, in 2007 almost £1bn was borrowed in mortgages per day - a £362bn. This is up 5% on 2006 in which £345bn was borrowed.
The Council of Mortgage Lenders' figures showed mortgage lending by building societies broadly flat during 2007 at £52.1bn, compare to £52.8bn lent in 2006. But net lending, which allows for redemptions and repayments, fell by 21% to £12.6bn.
Analysts predict "a very good chance of an interest rate cut in February, and at least one more during 2008".
Monday 21 January 2008
House Prices Dropping
A new report by Britain's biggest property website Rightmove, has revealed that house prices have fallen for the third consecutive month. The 0.8% drop this month brings the total drop since October to almost 5%.
The average house price was £241,642 in October but now stands at just £230,428 - a decrease of £11,214, or around £120 per day.
Rightmove reported that house prices did rise last year, by just 3.4%, which is below the level of inflation (4%).
You can view latest house selling prices in your local area here for free.
The average house price was £241,642 in October but now stands at just £230,428 - a decrease of £11,214, or around £120 per day.
Rightmove reported that house prices did rise last year, by just 3.4%, which is below the level of inflation (4%).
You can view latest house selling prices in your local area here for free.
Friday 18 January 2008
Unfair Charges Test Case
The test case for unfair bank charge claims has started, with banks defending their position saying that customers agreed to the charges when they opened the accounts, therefore they are allowed to enforce such charges.
Charges can reach as much as £38 for slipping slightly into the red, whilst campaigners claim the real cost to the banks could be as little as £2.50.
An army of legal advisors is representing banks were in court to defend the eagerly awaited case.
Charges can reach as much as £38 for slipping slightly into the red, whilst campaigners claim the real cost to the banks could be as little as £2.50.
An army of legal advisors is representing banks were in court to defend the eagerly awaited case.
Thursday 17 January 2008
More Endowment Worries
Norwich Union has warned that 9 out of 10 of its endowment policies will not cover the repayment of the mortgage loan when they mature.
The Norwich Union expects half of the 69,000 policies maturing this year to show a shortfall. Last year's average shortfall was £1,470, but this was halved because the Norwich Union introduced a 'promise' in 2000. Within this scheme the Norwich Union helps to reduce shortfalls for some policy holders.
Saves with Commercial Union, whose policies are now under the control of Norwich Union, may receive only around £39,000 having paid £50 per month for the 25 year term. This is 10% down on the over £43,500 paid out to a comparable plan taken out a year earlier, in part due to new policies becoming more expensive in 1982.
But these figures are both worse then the almost £49,000 that would have been paid out two years ago to a similar policy, even though the fund that supports these investments grew by 11.7% and 5.4% in the last two years.
The Norwich Union expects half of the 69,000 policies maturing this year to show a shortfall. Last year's average shortfall was £1,470, but this was halved because the Norwich Union introduced a 'promise' in 2000. Within this scheme the Norwich Union helps to reduce shortfalls for some policy holders.
Saves with Commercial Union, whose policies are now under the control of Norwich Union, may receive only around £39,000 having paid £50 per month for the 25 year term. This is 10% down on the over £43,500 paid out to a comparable plan taken out a year earlier, in part due to new policies becoming more expensive in 1982.
But these figures are both worse then the almost £49,000 that would have been paid out two years ago to a similar policy, even though the fund that supports these investments grew by 11.7% and 5.4% in the last two years.
Wednesday 16 January 2008
House Prices Falling As Much As 90's Crash
According to the Royal Institution of Chartered Surveyors, house prices are falling as quickly today as they did in the crash of the early 1990's and only interest rate cuts will avoid a property meltdown.
There are more estate agents reporting falling house prices now than at any time since 1992. Of the 500 polled, more than 60% said they had experienced falling house prices over the last quarter. Rics spokesman Ian Perry said: 'The Bank of England may have to cut rates further if the market is to remain stable.'
The Bank of England cut rates in December by 0.25% to 5.5%, but held the base rate at 5.5% this month.
Home Information Packs were blamed by most estate agents for the problems in the housing market. All sellers must buy a pack, which deters many of them from putting their home on the market just to 'test the water'.
Before the introduction of HIPs, many homeowners advertised their house for sale with no intention of selling, but were persuaded by a good offer.
There are more estate agents reporting falling house prices now than at any time since 1992. Of the 500 polled, more than 60% said they had experienced falling house prices over the last quarter. Rics spokesman Ian Perry said: 'The Bank of England may have to cut rates further if the market is to remain stable.'
The Bank of England cut rates in December by 0.25% to 5.5%, but held the base rate at 5.5% this month.
Home Information Packs were blamed by most estate agents for the problems in the housing market. All sellers must buy a pack, which deters many of them from putting their home on the market just to 'test the water'.
Before the introduction of HIPs, many homeowners advertised their house for sale with no intention of selling, but were persuaded by a good offer.
Tuesday 15 January 2008
Northern Rocks Future In Shareholders Hand's
Northern Rock Shareholders meet today in Newcastle to decide the company's future. With some shareholders backing moves to restrict the board's ability to offload the company without prior shareholder approval.
But analysts are warning that if such a move is approved, then the ability of a rescue deal to go through will be harder to achieve and this could result in the Government taking steps to nationalise the bank, reducing the worth to the shareholders.
The Government would prefer an existing interested party to take over the bank, but both are struggling to raise the required level of funding to cover the purchase. This means the government are more likely to have to become involved, although that does come with questions about breaching state aid laws.
But analysts are warning that if such a move is approved, then the ability of a rescue deal to go through will be harder to achieve and this could result in the Government taking steps to nationalise the bank, reducing the worth to the shareholders.
The Government would prefer an existing interested party to take over the bank, but both are struggling to raise the required level of funding to cover the purchase. This means the government are more likely to have to become involved, although that does come with questions about breaching state aid laws.
Monday 14 January 2008
No Home Insurance For Floods
Insurers have warned that government spending on flood defences is too little and that they may not insure home owners in at risk areas against flood damage. If insurance firms decide not to cover high risk areas from flood damage, 570,000 properties could be left susceptible to loss if they were hit by further flooding.
The Government's latest spending review announced it would spend just £2.15bn on flood defences, which is not enough according to the Association of British Insurers and they have warned that much more is required.
Stephen Haddrill, director general of the ABI, said: 'Government spending for the next three years is less than we were asking for, even before the floods.' and said the spending plan shows that Chancellor Alistair Darling has 'completely failed to grasp the importance of improving Britain's flood defences'.
The ABI had urged the government to spend £2.25bn over 3 years, but it believes that there is a need for more investment. Insurers have so far spent £3bn putting right the damage caused by this year's floods.
An ABI spokesman said: 'We have committed to continue to provide cover for households in high risk areas, but we will now have to review this.'
Norwich Union, the UK's largest insurer, warned in August that its premiums for homes with increased risk of flooding would be hiked by 10%.
The Government's latest spending review announced it would spend just £2.15bn on flood defences, which is not enough according to the Association of British Insurers and they have warned that much more is required.
Stephen Haddrill, director general of the ABI, said: 'Government spending for the next three years is less than we were asking for, even before the floods.' and said the spending plan shows that Chancellor Alistair Darling has 'completely failed to grasp the importance of improving Britain's flood defences'.
The ABI had urged the government to spend £2.25bn over 3 years, but it believes that there is a need for more investment. Insurers have so far spent £3bn putting right the damage caused by this year's floods.
An ABI spokesman said: 'We have committed to continue to provide cover for households in high risk areas, but we will now have to review this.'
Norwich Union, the UK's largest insurer, warned in August that its premiums for homes with increased risk of flooding would be hiked by 10%.
Thursday 10 January 2008
Pressure To Reduce Interest Rates
The Bank of England has again come under mounting pressure to annouce an interest rate cut after retailers and house builders have been left struggling. Both sectors have been affected by trading figures and share prices are down on major players.
Tuesday 8 January 2008
Shock Leap Prompts Warnings
The latest Halifax house price indexed shows that the average cost of a house increased by 1.3% (£2,500) to £197,000 in December. This follows 3 months of drops. The brings the annual rate of increase to just 5.2% in 2007.
In contrast, the Nationwide's figures showed a fall of 0.5% in the same month. The Halifax's 3 month figure showed a drop of 0.8% in the fourth quarter of 2007. This is the first quarterly drop since mid 2000 and the largest since 1995.
Halifax said a mix of monthly rises and falls was typical of a subdued property market and said it expects house prices to be flat during 2008.
In contrast, the Nationwide's figures showed a fall of 0.5% in the same month. The Halifax's 3 month figure showed a drop of 0.8% in the fourth quarter of 2007. This is the first quarterly drop since mid 2000 and the largest since 1995.
Halifax said a mix of monthly rises and falls was typical of a subdued property market and said it expects house prices to be flat during 2008.
Monday 7 January 2008
Calls to Cut Interest Rates
The Bnk of England this week faces calls to cut interest rates to save the UK economy. Financial experts are calling for the bank to cut rates as they claim the economy is on the brink, but the Bank of England (which announces it's decision on Thursday) will also be considering rising inflation, fuelled by rising oil prices. Generally, analysts predict the interest rate remaining untouched.
Wednesday 2 January 2008
Interest Repayment Rates Soar
A study by USwitch has revealed that Britain's interest repayments have increased by almost 16% - up £12.7bn to £93bn per year. This suggests that millions are struggling to keep up repayments and some could end up bankrupt.
The average family is paying £3,744 per year in interest charges. This is in part caused by the series of interest rate rises, but the December interest rate reduction has not been passed on by all lenders.
The report also showed that 38% of credit card applicants in the previous 6 months had been turned down and 19% of personal loan applicants were also unsuccessful, as the lenders take a tougher line on who they will lend money to.
The average family is paying £3,744 per year in interest charges. This is in part caused by the series of interest rate rises, but the December interest rate reduction has not been passed on by all lenders.
The report also showed that 38% of credit card applicants in the previous 6 months had been turned down and 19% of personal loan applicants were also unsuccessful, as the lenders take a tougher line on who they will lend money to.
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