Category Archives: Mortgage & Finance

Register Now For Help To Buy

Home buying, especially for first time buyers, has been a political hot potato since the housing boom went bust. Irresponsible mortgage lending, to people who could not keep up the repayments or found themselves in negative equity, was one of the main triggers for the economic crisis of 2008.

Since then, home ownership has been difficult to achieve; with less money to lend, lenders have been cautious about who they give it to. The result has been a stagnant housing market, which has only just been starting to show signs of recovery. For many would-be first time buyers, the impact of these broader structural problems has been a condemnation to a life of renting, whilst trying to save enough money for a deposit, commonly around 20 percent of the property price. Especially in expensive areas, such as the south-east, renting and trying to save has been an impossible task for many potential buyers.

The Government’s announcement in October 2013, that they had made plans to roll of out a new help to buy scheme, was met with enthusiasm. The details of the scheme were well-publicised; buyers need a five percent deposit. The Government underwrites the five percent. The scheme differs from the existing scheme, which has been available for a year, because it is available on all properties, so new build and resale ones, whereas the existing scheme was only available for new build properties. Under the existing scheme, the Government have provided a 15 percent deposit.

The mortgage is available on both new build and older properties. It is available to existing homeowners and also first time buyers. The scheme is available from January 2014, and is intended to run for three years. The scheme is available on properties up to the value of £600,000, although lenders can decide on which properties they will lend on. Although the scheme is not yet operational, the main lenders are already taking expressions of interest. It is expected that, once the scheme launches, other lenders such as Accord and Virgin Money might sign up.

Mortgage providers such as RBS, HSCB and Lloyds Banking Group have signed up to the scheme, and Barclays and Santander have expressed interest. Lenders who have announced their fees have placed their products competitively, with fees from as little as around £1000. NatWest and RBS have unveiled two-year, fixed-rate mortgages with a starting rate of 4.99 per cent. Halifax will charge 5.19 per cent for a two-year fixed term.

By early November, RBS, NatWest and Halifax had received over 2000 applications in advance of the scheme starting in January 2014. Halifax claimed that around 8- percent of their applications were from first-time buyers. These mortgages are competitive- not in comparison to those buyers who have large deposits themselves, but in relation to the other options available for first time buyers.


Landlords Mortgage Costs To Rise

A buy-to-let lender has written to 6,700 borrowers– one quarter of its entire landlord loan book – telling them it will be hiking their rates by 2% this December.

The move has evoked fury, with concerns that the extra costs will simply be passed on to tenants in the form of higher rents.

The West Bromwich Building Society is targeting the hike at ‘professional’ landlords only – those owning three or more properties – on ‘lifetime’ tracker deals.

They took out loans which are meant to track the base rate by a set premium once their fixed-rate period has ended – as, in the case of the 6,700 borrowers, all have done.

Those paying1.09% (0.59% above base rate) will soon be paying 3.09%. Those paying 2.69% will be paying 4.69%. It means that on a £150,000 interest-only loan, payments will go up by £250 per month to £386.25 and £586.25 respectively.

West Bromwich Building Society’s move follows that of Bank of Ireland, which hit 13,500 borrowers, including buy-to-let landlords, with a rates hike even though they too thought their tracker mortgages were at a set premium.

The financial ombudsman has received some 300 complaints about Bank of Ireland, which has defended its action saying that it was able to raise the rate thanks to a term and condition in the small print.

It is now thought that other lenders will follow the example of both Bank of Ireland and West Bromwich.

The building society, which has 36 branches, lost £9.4m in the last financial year and is unlikely to return to profitability before 2016, although it is due to move into smart new headquarters in 2015.

West Bromwich says that its hiking of rates for ‘professional’ buy-to-let landlords will generate an extra £15m a year – less if borrowers take their business elsewhere. The society is waiving exit fees until next March.

BTL Mortgages Top £5bn In Quarter Two

Lenders advanced 40,000 mortgages, worth £5.1billion, to buy-to-let investors in the second quarter of 2013, according to data published by the Council of Mortgage Lenders.

Both the number of buy-to-let loans, and the value of lending, were the highest since the third quarter of 2008.

Buy-to-let lending is continuing to recover strongly, but from a low base. The number of loans advanced in the second quarter was 19% higher by volume and 21% higher by value than in preceding three months (when lenders advanced 33,500 mortgages, worth £4.2billion). Year-on-year, buy-to-let lending was 19% higher by volume and 31% higher by value (33,600 loans in the second quarter of 2012, worth £3.9billion).

Lending for house purchase accounted for around half the loans advanced, and increased by 15% by volume and 19% by value over the preceding quarter. But the growth in remortgaging was stronger, with an increase over the same period of 24% by volume and 29% by value. This growth in remortaging partly reflects improved conditions in funding markets and more widespread availability of mortgage credit.

By the end of June, buy-to-let mortgages accounted for 13.3% of outstanding lending in the UK (up from 13.1% in the preceding quarter and 12.9% a year earlier). The number of outstanding mortgages totalled 1.48 million, worth £168.5 billion.

Buy-to-let mortgages in arrears of over three months accounted for 8.4% of the total, up slightly from 8.3% in the preceding quarter but down from 9.7% a year earlier. The possession rate, at 0.09%, was higher than the 0.07% in the wider mortgage market, but fell from 0.11% in the previous quarter.

CML head of policy Jackie Bennett said: “Strong rental demand is contributing to the continuing expansion of the buy-to-let sector, but growth is also being helped by improved conditions in funding markets and more widespread availability of mortgages.

“These conditions are creating more opportunities for landlords to remortgage, as well as helping to fund increased activity in the mortgage market more generally. This spring, we have seen the highest levels of lending to first-time buyers since 2007, alongside the continuing recovery in the buy-to-let market.”

Mortgage Approvals Up 24% Say Banks

Mortgage approvals for both house purchase and remortgaging by high street banks shot up last month, boosted by Government schemes.

The latest data from the British Bankers’ Association is in line with other reports, and is the clearest evidence so far of a housing market upturn in the second quarter of this year.

According to the BBA, approvals for house purchase were 24% higher than in May last year, helped by Funding for Lending and Help to Buy – and ahead of analysts’ expectations.

Remortgaging approvals also rose, by 17%.

The average house purchase approval rose to £159,200, up from £156,200 in April.

After a poor start to the year, the number of house purchase approvals stood at 36,102 compared with 32,952 in April and 32,491 in May last year.

Remortgage approvals went up to 20,675, a rise from 19,535 in April and up from 17,739 in May last year.

However, net borrowing declined as people apparently used low interest rates to concentrate on paying down their mortgage debt.

* Further evidence of the market’s growing strength comes from Sequence, part of the Connells group, which says that house prices across their 300-branch network in May grew 3% in comparison with April, and are up 4% on a year ago.

Average prices in London went up 4% during May, says the company.

Sequence says that according to its data, the average price of a UK property at exchange is now £197,598.

It also says that transactions have gone up 12% annually, despite dropping 1% in April. In London, transactions last month were 19% up on a year ago, despite the same 1% drop in April.