Cooling Housing Market

The British Bankers Association (BBA) said there was fresh evidence of a cooling housing market after reports of mortgage lending slowing further in November.

The UK's leading Banks lent £500m less than in October. This even while the level of mortgage approvals has recovered 4% to almost 45,000 in November, against the record low recorded in October.

BBA figures also showed consumer credit growing at 4.6% in November. Although against this, repayments continue to outstrip new spending. The annual growth figure has dropped from almost 10% to just 4.3% as borrowers find it harder to take out loans.

Interest Rates Could Drop 1% In 2008

A prediction of rate cuts comes in reports from financial analyst, the Centre for Economics and Business Research and the European bank.

It is predicted that there will be a rate cut of quearter of a percent in January 2008, followed by 3 further rate cuts throughout the year. This would return the interest ate to 4.5% - the same as when the rates started to be put in August 2007.

Whilst not good for those with Savings Accounts and certain types of mortgages, for example fixed rate mortgages, those looking for new mortgages and on tracker mortgages should benefit.

Shop Prices Could Fall

An EU rulling has left credit card companies with the message to cut card fees charged to retailers. Currently these fees amount to an equivalent of £40 per household per year in the UK and the Office of Fair Trading and leading retailers have described them as an 'unfair tax'.

The ruling applies to charges on consumers travelling between EU countries, but should set a legal precendent for consumers within their own countries. Top retailers have promised to pass on savings made to consumers.

More Reports Of House Price Drops

Property website Rightmove found asking prices fell to an average of £232,396 (down £7,590), blamed on the 'Hip effect' along with the traditional slowdown in December.

Hip rules now cover one and two bedroom properties since last Friday adding an extra 1.1% to the fall and brought 'further confusion at a sensitive time for the property market,' said the group. London properties suffered most as a surge of cheaper-than-average one or two bedroom properties came on to the market.

Prices dropped by 6.8% in the last month. Rightmove reported this would have been reduced to 4.5% without the HIP deadline. Its data showed that the percentage of one and two bedroom sales increased from 38% of new sales this time last year to 48% in the first week of December this year.

Fresh support for Northern Rock

The Government has offered fresh support to Northern Rock by obligations with taxpayers' money.

The Treasury extended its guarantee on £24bn of savers' deposits. The guarantee now also covers a range of unsecured financial arrangements. The taxpayer has also lent Northern Rock £25bn through the Bank of England. The new guarantees cover uncollateralised and unsubordinated wholesale deposits, payment obligations under derivative trades, and payments under Northern Rock's Granite mortgage securitisation programme.

Nearly A Million In Credit Crunch Difficulties

Up to a million families are struggling to pay off their mortgages, a report reveals today, with a further 1.8 million people saying they have hit problems 'at least occasionally'.

The Bank of England survey shows that increasing interest rates have lifted homeowners' annual mortgage payments by a total of £3.6bn in the past year. The situation is expected to worsen as the global credit crunch prompts banks to tighten the supply of money even further to shore up their own finances.

HIPS For All

As of today sellers of all 1 and 2-bedroom homes will be required to provide a HIPS pack containing an energy performance certificate, title evidence, standard searches and freehold or leasehold details.

This is the last groupf of properties affecting by the phasing in of the scheme.

Sub Prime Crisis In Britain

Citizens Advice (CA) report that firms who specialise in loans to those on low incomes or with risky credit histories are taking a hard line when customers fall behind on payments.

It was the problems with the sub prime mortgage market in the USA that started the credit crisis. Some analysts have suggested that repossessions could reach 70,000 in 2008 - the highest since 1991.

The CA balmes the crisis on finance companies selling expensive home loans that were 'doomed to fail'.

The CA report looked at 1,200 cases and reveals how difficult the target of home ownership is for many on low incomes. Its research found that as many as 770,000 people have missed at least one mortgage or secured loan payment in the last 12 months.

It claims sub-prime lenders have handed out loans to many people on low incomes or with a patchy credit history that they cannot repay.

Interest Rates Cut

0.25% was cut off the base rates yesterday, much to the relief of hard pressed mortgage payers. This is the first interest rate cut for 2 years. But economists fear that the rate might have to be reduced to 4% within the next 12 months to revive the economy.

But not all banks have cut all of their rates. Those on Base Rate Trackers should see immediate relief - about 30% of borrowers. And in some cases Standard Variable Rates have been cut, but not across the board.

Interest Rates Could Drop Today

The possibility of the first interest rate cut since August 2005 emerged yesterday after further evidence of a slowdown in housing and consumer confidence.
However, the Bank's Monetary Policy Committee will be wary about cutting rates too early and pushing inflation beyond its 2% target. The decision will be announced at noon today.

Some experts say there is even an outside chance of a half-point rate cut from 5.75%to 5.25%.

Credit problems have bitten again in the last month, effectively tightening monetary policy after the rate at which banks lend to each other - known as Libor - soared. If the Bank cuts rates today, a quarter-point reduction to 5.5% could knock around £16 a month off the cost of a typical £100,000 mortgage. Good news for borrowers, not so good for those with savings accounts.

Third Month Of House Price Falls

The Halifax reported that house prices fell by 1.1% in November, the third consecutive month of falling house prices. This is the first time since 1995 that they have reported 3 months of price drops.

The Bank Of England Monetary Policy Committee will meet today to discuss whether interest rates should be altered tomorrow. Pressure is on for a rate cut to prevent the economy heading towards a recession next year.

House prices have been affected by rising mortgage payments and the effective lowering of salaries due to inflation. It is this inflation problem that could cause the Bank to hold interest rates at their current level into next year. Whilst this may be bad news for borrowers, net savers are benefiting.

House Price Drop Ahead

Morgan Stanley chief UK economist has warned that house prices could drop by as much as 10% over the next year. This would mean that buyers who bought this year with 95% mortgages could face the prospect of negative equity - where the amount they owe on their house is greater than the value of the property.

And the pain won't end there. He also predicted further price drops in 2009. These predictions are caused by the mixture of interest rate rises and the credit problems with the banking system, which have combined to make mortgage rates more expensive and mortgages more difficult to come by.

Too Many Empty Houses

A Halifax Bank report has shown 289,000 properties are sitting empty for more than 6 months. This is more than the Government's aim for new properties being built per year - 240,000.

Lack of available properties is generally blamed for house price rises and the figure unoccupied long term has fallen slightly. But critics are saying that the house price problem is caused by too many new builds targeting the wrong buyers, leaving a shortage of family homes.

Will December Bring Interest Rate Cut?

Economists think that interest rates will not be cut in December, with the Bank of England prefering to keep a rate cut until January or February. Therefore the pain of higher Mortgage Rates may continue for some time.

The survey concluded there was a 1 in 3 chance of a quarter percent rate cut. This is because inflation continues to rise, even though other economic indicators would otherwise push towards a rate cut.

House Selling Prices Fall

Figures from the Nationwide Building Society show an 0.8% fall in house prices during the month, the largest single month drop since June 1995.

This took almost £1.5k off the price of the average house, now down to £184,099. The effect was to reduce inflation from 9.7% to 6.9%. This still leaves the average price £12k higher than a year ago.

The 3 monthly figure also dropped from 1.8% to 1.5%. You can check lastest House Selling Prices in your area for free by signing up to the Our Property service.

10m Brittons Falling Into Debt

A survey commission by uSwitch.com has found that 23% of British adults are facing money troubles fearing that their financial situation is or is about to become unmanageable.

Almost half of this number have missed payments in the previous 6 months on debts or bills, with almost that same number having experienced bounced direct debits or cheques. 3% of those surveyed feared they are about to loose their home.

A double whammy of banks taking more care in their lending whilst interest rates are higher is causing the problems, adding £100 per month to the average mortgage repayment.

Graduates Struggling Into Housing Market

The 4th annual Scottish Widows Bank graduate first-time buyer survey has shown that only 44% of graduates leaving higher education in the past 10 years have been able to get onto the property ladder and that 72% of this number have needed assistance from a family member, partner or friend to buy the property. But 69% of these are now stuck in these agreements, unable to afford o buy out the other person if they needed to.

With average house prices rising from £69k in October 1997 to £198k today according to the Halifax House Price Index, the chance of buying your first home is becoming bleaker. Analysts have warned that these factors may combine to slow down the rise in property prices.

Lenders have tried to help the situation by making more 100 per cent mortgages available, but this means higher levels of debt and buyers more likely to struggle to pay other bills.

Northern Rock Shares Slump

Northern Rock's share price dropped by 7% on the back of news that 70% of it's mortgages are owned by a Jersey based trust company. This means the level of assets it holds for its creditors such as the Bank Of England has been reduced.

Northern Rock does insist that this is the normal situation for the bank and not to do with the recent crisis. This is because the bank is mainly a lender and does not hold as much savings account money as other banks.

The bank has also been hit by a high normal of defaults caused by rising interest rates. As one of the biggest UK lenders it is being hit hard because of this.

Free Credit Checks

Following yesterday's report that the Child Benefit Agency lost data records, it is believed that credit reference agencies are in talk with the government about providing free credit checks to the 25 million people affected to detect any ID fraud.

It is still unclear as to who will foot this bill, but Credit Expert by Experian does offer a free 1 month trial. People who are worried that they might have been affected can apply to Experian for this service and view all recent credit applications to ensure there are no stray applications.

If any are detected, these can then be followed up and the banks informed to cancel the credit agreement before any further harm takes place.

Protect Your ID - Child Benefit Agency Loses Data

In light of today's news that the child benefit agency has lost it's records of 25m people, we thought it well timed to provide some basic information.

If you think you could be at risk, take these simple precautions as soon as possible.



1. Check your bank statements carefully. With your account data and basic personal information, criminals could try to get hold of your money. If you spot any unfamiliar transactions, tell your bank immediately and explain the circumstances.

2. Look at your credit report. The information in the Child Benefit Agency records is enough for a criminal to apply for loans, credit cards and even mortgages in your name – as well as other forms of credit such as mobile telephone and catalogue accounts. Your credit report lists all your credit commitments and recent applications for credit, so you can instantly see if someone has been trying to use your ID and put a stop to problems before they can develop.

3. Minimise the information you post on social networking sites. Organised gangs are now focusing on ID fraud as a profit centre and they know that many people give away useful snippets that could be passwords or key dates giving access to your bank and card accounts. Edit out the names of pets, mother’s maiden name, where you went to school and anything else you might use as a password or PIN.

4. Watch out for hoax calls, letters or e-mails. Taking advantage of your distress in the wake of a data breach, criminals may call, e-mail or write pretending to need further information in order to protect you. In fact, they hope to rip you off more thoroughly – so don’t give away information to people you do not know. Check with organisations that might have a genuine reason for contacting you before you part with your data. View a sample of Phishing Emails.

5. Ensure that your bank and credit card account passwords do not relate to the data that could be compromised. Many of us tend to use details such as children’s names and memorable dates as passwords to protect our bank and credit card accounts. Fraudsters are likely to make a good guess at these passwords which will give them access to your finances for further theft and much more. Make sure you update your passwords on a regular basis and use unique words that do not relate to data that could be compromised in a data breach.

Credit monitoring is such an effective method of protecting yourself that it is recommended by the Home Office and many responsible organisations automatically offer it to customers and clients who have been affected by a data breach.

You can see your Experian credit report for free with a 30-day trial of CreditExpert, the UK’s leading credit monitoring and identity fraud protection service. Then keep on checking regularly, to give yourself peace of mind and make sure that criminals haven’t taken their time in impersonating you.

Experian Credit Report - 2 Strikes And Out???

Credit reference agency Experian has launched a new credit service for lenders. This new service will alert lenders when customers are showing early signs of struggling to make payments.

This could allow lenders to call in debts quicker and prevent any further borrowing. The service will trigger a message when customers miss a second payment or exceed credit limits and the likes.

Experian will also be watching for triggers such as high number of credit applications, which could not only indicate financial difficulties, but also identity fraud.

Experian will provide daily alerts based on 20 different factors it is monitoring. Lenders are expected to react by calling the customer to ask if they are in difficulty to reducing credit limits or asking for earlier repayments.

This service should help consumers by flagging potential identity theft cases and preventing them running up excessive debt over a number of lenders.

Worried about what data Experian hold on you? Ask for a free Experian Credit Report.

Shock For Fixed Rate Buyers

The Council of Mortgage Lenders is concerned that home buyers could face a huge rise in repayments when the deals on their existing fixed rate mortgages come to an end.

Due to hikes in interest rates, some buyers could be left paying up to 60% more than current payments. Analysts fear this could lead to a surge in homeowners unable to keep up repayments resulting in repossessions.

This in turn could lead to a confidence blow to the property market. The Council of Mortgage Lenders is mainly concerned about 1.4m borrowers who's deals end in the next 12 months and face payment rises between 30% and 60%. Many will be able to switch to new deals, but others depending on recent credit history and mortgage conditions will have no choice other than variable rate deals.

If you are one of the affected and wish to see how you could be affected, try some mortgage calculators using different interest rates.

Unsecured Loans More Expensive

MoneyExtra.com have revealed that just 4 loan providers offer loans of £5,000 at below 7%, with the number increasing to 7 providers if you are borrowing £7,500.

The recent credit problems have led to lenders becoming tougher on applicants or even pulling out of unsecured lending fully. If you are looking for a loan, you can compare unsecured loans for a variety of purposes.

Lenders seem to be taking the view that there is less risk in lending higher sums of money and are therefore willing to offer the higher amounts with lower rates. But borrowing less becomes more expensive as lenders see these amounts as higher risk and need to recover their lending quickly.

Lloyds TSB In Trouble For Changed Charges???

Lloyds TSB could receive a slap on the wrist from the FSA for changing its bank charges, although it will not receive a fine or have to reverse its decision.

Lloyds TSB has to explain why it has introduced account charges for 11 million customers. The bank claims that the majority of customers are better off under the new scheme, but it is the minority that are worse off that has caused the concern.

House Price Rises To Stall

Nationwide Building Society has predicted that the annual house price inflation rate could drop from it's current 9.7% to 0% next year as the housing market undergoes a 'significant slowdown'.

Lack of available properties and the hopefully anticipated rate cuts could provide some support to prices it further added.

But the effects will be very regional. The Building Society predicted overall a drop of 5% in Northern Ireland against a claim of 4% in Scotland. Scotland does the best as house prices are lowest there - the average first time buyer's property costing just 4 times annual wage, whereas increases of 40% in the third quarter have made Northern Ireland the least affordable area of the UK, with first time buyers houses costing 8 times annual wage.

Fionnuala Earley, Nationwide's chief economist, said: 'House prices recorded another strong year in 2007, underpinned by significant economic momentum, ongoing housing shortages and strong buy-to-let demand. That being said, momentum is now fading, and a number of factors suggest that house price inflation will drop from its current rate of 9.7% to 0% by this time next year.

'The main reasons for this more subdued outlook lie on the demand side of the market, where a slowing economy, tighter credit conditions, stretched affordability for first-time buyers and lower house price expectations appear likely to reduce the level of activity.'

Rates to Fall?

The Bank of England has reported in it's quarterly inflation report that it has become more concerned about the slowing pace of the British economy. This is due to the turmoil in the world's financial markets. This means there is a risk of a 'bigger downturn' than previously expected.

City analysts predict that this could mean interest rates dropping from 5.75% to maybe as low as 5.0% next year. This would bring much needed relief to mortgage payers, who have seen mortgage rates climb from 4.5% over the last year and a bit.

Many mortgage payers are also just about to end fixed rate deals set much lower than the current 5.75% and could end up having to pay as much as 40% more in monthly payments. Any rates cuts would be welcomed by this group.

The first rate cut might be as early as February, but will be dependent on official figures backing up expectations particularly in the housing market.

Better To Rent Than Buy?

A report by Abbey shows that the savings made over 25 years by owning rather than renting a house has fallen a massive 75%. Last year's report showed the calculation as having a saving of £24,000 over the term, whereas this year's has reduced that saving to just £5,811, or little over £230 per year.

The report presumes the buyer to be taking out a standard rate mortgage for 90% of the property value and includes maintenance of the property.

This example gave an average cost over the 25 years of £437,925 against £443,736 for renting the same property. The report did not take into account and house price changes, which over the long term may help house buyers to make further profits.

The other benefit is that after 25 years the home owner will own the property outright and have only maintenance to pay, whereas the renter still continues to pay rent.

Is it better to rent or buy?

Inflation Up, No Rate Cuts On Horizon

Official figures for October put the rate of inflation at 2.1%, above the 2% target. This is mainly due to increasing fuel costs.

This means that a cut in interest rates is very unlikely before the spring, hitting mortgage payers hard. With fuel prices continuing to rise, it's unlikely that there will be a sudden change in the situation.

Woes For HSBC

It has been suggested by Lehman Brothers that HSBC could about to make further allowances for it's USA market on Wednesday. It has been suggested that the bank could face loses of up to 15% of bnook value on the USA Sub prime market.

Buy-To-Let For The Rich Only???

Buy-To-Let could become something that only the rich can afford, a report by Royal Institution of Chartered Surveyors indicates.

Banks are requiring deposits of 15% and monthly let incoming to exceed mortgage expenditure by 25%. This means potential landlords buying an average home needing deposits of £65,000 compare to only £10,100 five years ago.

A slow down could be avoided though as existing landlords are able to expand their portfolios further by using their current investments.

If you are considering a Buy-To-Let property, find today's lowest rates in our Compare Buy To Let Mortgages table. Please be aware that buy to let mortgage are not typically regulated by the FSA.

Government Does Yet Another HIPS U-Turn

The government postponed the requirement for newly built properties to have an Energy Performance Certificate (EPC) until April 6 2008.

The introduction of EPCs for new builds was meant to January 1 2008. This is the latest in a series of government U-turns on the implementation of Home Information Packs.

As of April 6 it will be the responsibility of the builder to provide an EPC when a home is constructed and physically completed. This also applies after a conversion into a different number of units with changes being made to the heating, hot water provision or air conditioning / ventilation services.

Base Rate Unchanged At 5.75%

The Bank of England has not changed the base rate, leaving it at 5.75%.

Peter Charles, chief economist at Mortgage Express, says

Money markets and economic analysts are all agreed that the next move in base rate will be a cut but, clearly, the MPC does not want to move too early. Many of the economic data over the past month have confirmed that, away from capital markets and the housing and mortgage sectors, the UK economy has remained remarkably robust, with GDP growth in Q3 having remained at 3.3% pa. Given its focus on the control of inflation, the MPC is not likely to cut base rate until there are clear signs that the economy is slowing. Unless Christmas spending is woefully weak, there is little prospect of rates falling until February.

House Prices Drop For 2nd Month

The Halifax has announced that house prices have fallen for the second month in a row - the first time this has happened since May 2005.

Halifax reported that prices fell by 0.6% in September then 0.5% in October.

House Prices Could Drop

A report by the credit reference Experian suggests that house prices could fall for up to half the country by the middle of 2009.

Mortgage lenders are making it much harder for buyers to get new mortgages by being more selective and more careful over amounts lent. This is reducing the amount of buyers in the market. Further, buyers are refraining from buying in the expectation of house price falls.

Rate Change Unlikely

The pound hit a new 26-year high against the dollar as it is expected that the Bank of England will keep interest rates unchanged, in contrast to the US Federal Reserve announcing a few weeks ago that US interest rates were to drop.

It had been feared that interest rates could rise further this year, but the recent problems in the market make that look unlikely. With oil prices rising and causing inflation to rise, the Bank of England is expected to leave rates unchanged. This will not be good news for many mortgage payers who are desperate for a rate cut to reduce current payments.

Northern Rock Takeover Blocked

The Bank of England has reported that the takeover of the Northern Rock by Lloyds TSB has been blocked by the Chancellor. Lloyds TSB had asked the Bank of England for a £30 billion loan to finance the takeover.

It is expected to be several months before the banks return to normal following the recent crisis.

Avoid The Banks!!!

A survey by MoneyFacts has revealed that just 30% of the best 250 fixed, discounted and variable rate mortgages were offered by banks, with the top banks only supplied 27 of these.

The majority of home buyers can find best deals with building societies if they take the time to shop around for the best offers. Click on the links above for lists of today's best mortgage rates on offer.

Bigger companies are not always the best option when it comes to taking out a new mortgage or remortgaging. Sometimes the smaller organisations have far better offers. Taking time now to research the market - or getting a mortgage broker to do that for you - could save you thousands over the term of the mortgage.

Shoppers Rely On Credit

Credit cards will supply the cash required for Christmas for millions of shoppers. The Bank of England has revealed that the number of people using cards is increasing, with credit card debt up by £310 million in September.

This is the biggest single month increase for 18 months, taking the total outstanding debt up to £54billion.

Loans Crisis Devalues Banks

Almost £14billion has been wiped off the value of Britain's top 3 banks in the previous 2 days due to fears of a looming crisis.

The FTSE 100 also dropped over 55 points, losing 2% in just a week.

Worldwide load markets are still feeling the crunch from the USA's property market problems.

Mortgage Rates Unlikely To Drop

A cut in interest rates is unlikely before next spring, warned the Confederation of British Industry.

It is expected that the surge in oil prices would add a quarter of a point to the consumer price index, pushing inflation above the Bank of England's target. This would prevent the Bank of England from reducing base rates before Spring, leaving mortgage payers continuing to have to find the extra repayments.

The pain on mortgage interest rates is expected to hit retailers in the run up to Christmas.

Surprise Increase In House Prices

The Nationwide building society has reported an unexpected rise in house prices. It said that house prices rose by an average of 1.1% in October, taking the yearly increase up to 9.7%, compared to 9% in September.

Analysts have warned that current mortgage application difficulties could be altering the statistics and reducing the number of property sales cocmpleting.

These results may prevent the Bank Of England from reducing interest rates