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.'
Wednesday 30 April 2008
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.
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