Archive for March, 2008

Homeowners expected to pay £1.3bn bill run up by reckless mortgage lenders

Saturday, March 29th, 2008

British homeowners will find themselves paying an extra £1.3billion per annum (which calculates roughly at an extra £110 a month in payments) as a result of mortgage lenders’ increased profit margins in an attempt to recover some of their losses which have arisen as the result of bad debts.

Statistics show that lenders have increased their margin fourfold within this last year – a move which consumer groups have called “reckless” and accuse banks of “plundering” homeowners.

Chief executive of the Independent Banking Advisory Service says, “They all got into this position and now the customer is going to pay for it.”

The Deutsche Bank have compiled the new figures and they have analysed the margin between the rate at which the lending company borrows money and the fixed-rate deals it offers. There are even examples whereby the margin has increased eightfold in a year.

Take the example of a homeowner in 2007 who was on a standard 2year fixed-rate deal with a small deposit. Typically they would have aid an interest rate a mere 0.2% higher than the rate at which their lender borrowed the money. Now, that mark-up has increased to more than 1.6%.

This increase is not good news for the estimated 1.4m homeowners whose fixed-rate deals are about to finish this year. The selection of mortgage products available has been considerably reduced and despite falling interest rates, they will be more than likely to have bigger monthly repayments.

Only a year ago, Halifax was so keen to attract new business that it offered a 2 year fixed-rate deal at 5.14% This figure was actually lower than the rate at which it could borrow the money (which was 5.64% at the time). Now the “swap rate” (which is the cost of borrowing for lenders for fixed-rate deals) has been lowered to 4.89%, yet Halifax’s 2 year deal is currently stands at 5.99%.

Homeowners expected to pay £1.3bn bill run up by reckless mortgage lenders

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England and Wales see house prices fall

Thursday, March 27th, 2008

The thriftyScot reports the rate of house price falls are gathering pace.

Experts have stated that house prices have been falling at their fastest pace since records began across England and Wales. According to officials from the Royal Institute of Chartered Surveyors

house prices have plummeted at the fastest pace since 1978, when records first began.

Every region of England and Wales is being affected by the problem, partly fuelled by the credit crunch.

Homeowners have also reported that they have experienced difficulties in selling their homes, as the credit crunch takes its toll on affordability and accessibility to funds for potential buyers.

Many sellers are finding that when they do get offers they are way below the asking price, which is resulting in more properties staying on the market for longer. It is thought that the level of properties remaining on estate agent books is at its highest in ten years.

One industry expert said that the build up of houses remaining on the market gave potential buyers the leverage to put forward lower offers, stating: ‘The build-up of unsold properties will encourage buyers to negotiate lower asking prices.’

An estate agent stated: ‘Sellers are having extreme difficulty finding buyers. The market is just not performing as it should be as we approach the prime selling months.’

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First time buyers unsure whether to buy

Thursday, March 20th, 2008

The Thirfyscott reports on Considerations first time buyers need to think about

Potential first time buyers are unsure whether to take the plunge and purchase a property according to a recent report, with many wondering whether they should take a wait and see stance due to predictions that both house prices and interest rates will fall over the course of this year, which would increase affordability.

One industry official said that whilst interest rates were set to fall, those looking at taking the plunge may want to consider a fixed rate mortgage in order to stabilise repayments and increase security for themselves.

He also said that would be buyers needed to remember that getting a mortgage may not be all that easy due to tight credit conditions.

He also offered some advice, stating: ‘The days of buyers scrambling to get on to the housing ladder at any cost are well and truly over. ‘Buyers should think hard about why they want to purchase. That is not to say they shouldn’t buy, but they should ask themselves whether it is the right place they are purchasing and whether they are paying the right price.’

He added: ‘Given the current climate of stagnant house prices and rising mortgage costs, it is more important than ever to take a long-term view of any purchase. The days of quick capital gains are gone.’

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