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Posted by: themortgagenews     

 
Despite the Bank of England base rate being at an all time low, at least three million UK borrowers (28 per cent) do not know the rate of interest at which they are currently repaying their mortgage, according to a poll of 2,000 Brits for the Post Office.

Over a third (35 per cent) of borrowers are currently repaying their mortgage at their lender's Standard Variable Rate (SVR), possibly because they believe that they are on the lowest monthly repayments on offer. For these 35% of homeowners on standard variable rates, the lack of knowledge of their rate means a better mortgage rate could be available or they could have been hit by a stealth SVR hike.

Yet nearly a third (29 per cent) of these do not know their mortgage rate, and are only assuming that their SVR is the best rate for them. In reality there could be a much lower rate available elsewhere. Furthermore, 49 per cent believe they can overpay but are not taking advantage of this facility at present.

Post Office Personal Lending Director, Marco Hughes, said:

"Although it might seem that staying on your current SVR is the easiest thing to do, you are much more vulnerable to interest rate rises. Some providers have increased their SVRs quite significantly even though the Bank of England base rate has not moved and as a result many borrowers are seeing their monthly mortgage repayments increase more quickly than they thought."

"If you're thinking about switching mortgage, now is the best time to do it, before rates rise further. With many SVRs at or above 4% there are already better deals to be had out there.  Switching mortgage does not have to be a stressful experience and spending a bit of time searching and comparing deals could save you a significant amount of money in the long term."

Post Office Mortgages recently announced improved rates across its 80% LTV and 60% LTV range of mortgage products and has also launched a new range of 75% LTV mortgages, all these include base rate trackers, two, three and five year fixed rate deals.

All Post Office Mortgages come with a low fixed arrangement fee of £599 while the tracker products offer low revert rates linked to the Bank of England base rate.

Tags: Mortgage, Rate, Bank, Borrowers, SVR
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Santander has launched new fixed and tracker deals for those with a 30% deposit. The rates are 3.44% and 2.49% (base rate plus 1.99%), respectively, both with £995 fees.
 
Both have early repayment charges, the fix at 3% and the tracker at 2%, and a maximum loan size of £250,000. The deals are only available to new Santander customers and will revert to the banks standard variable rate, currently 4.24%.
 
A five-year fix at 5.44% for those with a 25% deposit is also available with a £795 fee.
 
This is Money says: Santander's rates are attractive, but once again only for those with a large deposit of 30%. One concern over the bank's tracker is that borrowers are locked in by a 2% early repayment charge for two years, so if rates rise they will have to pay to move.
 
Those who think interest rates could move up significantly over the next two years may be better off with a mortgage that does not lock them in.
 
Santander:
 
Santander boosted UK profits 30% last year after grabbing a lion's share of the mortgage market.
 
The Spanish-owned bank, formerly Abbey, made £1.5billion despite a 44% leap in bad debts to £784million.
 
It boosted its net mortgage lending by a quarter to £7.6billion. Bosses reckon that was close to half the total as many rivals pulled out of the market.
 
It was helped by a huge £15billion inflow of cash from investors looking for a safe haven. Santander also opened 1.1 million new current accounts as it moved from Abbey's focus on savings and mortgages.
 
But it is remaining cautious about who it lends to, with a near 20% drop in new credit cards issued.
 
Personal loans fell by 36% with business restricted to existing customers.

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Tags: Santander, Profits, Mortgage, Rates, Fixed
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In its report “Lending to Individuals 2009”, published on November 30th, the Bank of England showed that mortgage approvals in the United Kingdom reached their highest level in 19 months in the month of October and that the pace of debt repayment by UK borrowers is extremely fast.
 
According to the report, the number of mortgage approvals in the UK grew to 57,345 in October, up from 56,205 in September. Bank of England's estimates, which apparently differ from the estimates of the British Bankers’ Association, which we published earlier, suggest that UK mortgage approvals not only hit their 19-month high, as the figure is the highest ever since March 2008, but also marked 11th consecutive month of growth.
 
Bank of England also said that the number of mortgage approvals at the same time last year was 78.5% lower.
 
In addition to data on mortgage approvals, the report published by the Bank of England featured information on debt repayment in the UK. According to the Bank's figures, UK borrowers, being concerned with potential job losses and deepening recession, tend to repay their debt very fast.
 
In the month of October, total unsecured debt was reduced by the Brits by as much as £579 million; this includes loans, credit card and overdraft debt. The figure represents the highest debt reduction ever since 1993 – the year when the Bank of England began to keep its records in the modern form. Also, October marked the second month in the history of Bank of England's records, when loan repayments outperformed new borrowing.
 
In the opinion of Howard Archer, leading IHS Global Insight economist, Bank of England's data suggests that the recovery of the UK economy is continuing at a rapid pace as the increased level of mortgage approvals, coupled with low interest rates and house prices, indicates firm mortgage activity.

Tags: Mortgage, UK, Reports, Figures, Lending, Rise, Ri...
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Buy-to-let mortgages should be regulated by the Financial Services Authority, according to the British Property Federation. 
 
It said a "crackdown on reckless lending" would help refinance the housing market.
 
Currently, the federation said, buy-to-let mortgages are treated like business loans, whereas most other mortgages – such as owner-occupier or equity-release products – are controlled by the financial watchdog.
 
"The black hole of irresponsible lending has damaged both the housing sector's reputation and the ability of banks to lend. As a result, professional landlords cannot expand their portfolios when demand for renting is insatiable," it added.
 
Ian Fletcher, the BPF's director of policy, said: "Many lenders simply threw money at buy-to-let borrowers during the boom without sufficient checks on who they were lending to or what they were lending for.
 
"Consumers have suffered as their buy-to-let dream turned sour and many buy-to-let lenders were at the root of our economic problems as organisations such as Bradford & Bingley found themselves overexposed to bad loans.
 
He added: "We need to make sure the property-fuelled meltdown doesn't happen again. Professional landlords have suffered as a result of banks refusing to lend. If landlords can't expand or invest in new homes, it hurts all areas of society.
 
"It's vital that we learn from our mistakes and don't constrain future housing investment."
 
In a report entitled 'Responsible Regulation', the BPF also called for tenants living in properties repossessed by banks to be given a minimum of two months to secure alternative accommodation.
 
"People renting homes bought on a buy-to-let mortgage generally escape immediate eviction, given that lender would have expected to have tenants in the property," the federation said. "However, where properties bought on a normal owner-occupier mortgage have been rented out without permission, tenants have less right to remain."
 
Property investment clubs should also come under the City regulator's remit, the BPF said.
 
"We would like Government to go beyond existing regulation – which, via the Office of Fair Trading, is reactive in closing down clubs that are acting unlawfully – to a regime where property investment clubs are regulated as intermediaries for the advice they provide and investment properties they source."
 
Tags: Mortgage, Buy-to-Let, Regulation, BPF, FSA, Reckl...
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There are at last the positive, if tentative, signs of a recovering mortgage market. 
 
Mortgage lending in the UK rose in August by £1bn and mortgage approvals by the major banks increased 81% compared to the year before — when confidence in the financial markets was a severe low.
 
Despite these strong indicators, it is not all good news. The most strongly capitalised banks — particularly HSBC — are increasing their lending provision.
 
But it is more difficult for some building societies that are limiting lending because of difficulty in attracting savings and the need to meet tougher rules on retained reserves. This helps explain why lending by UK building societies fell last month.
 
There was also bad news for remortgaging, which was again down last month. Lenders have been reluctant to approve loans for remortgages when current property values are in many cases little more than the outstanding loan balance — or when owners may even be in negative equity.
 
Property agents and others within the industry argue there can be no genuine market recovery until lending rates increase.
 
Although prices have now stabilised, sales remain far below normal levels. It is only when sales, and lending, recover that it will be clear what will happen in the medium term to house prices.
 
“Demand is strong, but there are plenty of people who remain frozen out by the banks,” says Michael O’Flynn, director of the property website FindaProperty .com. “We’ve seen record numbers of visitors to our site over the last couple of months, yet we know that tight lending restrictions will prevent many responsible borrowers from gaining finance. Before we see any change of pace in recovery, lenders must become more reasonable in their lending criteria.”
 
Despite these criticisms, the overall picture is that the financial markets are steadily recovering and this is feeding through into greater availability of mortgages, with more competitive rates and charges now becoming available. 
 
 
Discounts 
 
The most headline-grabbing announcement by mortgage lenders has just come from HSBC. On top of recently launching a 1.99% discount mortgage, the bank is putting an additional £500m into lending for first-time buyers. Mortgages geared towards first-time buyers start at 3.89% for a two-year discount mortgage.
 
An improvement to the availability of first-time buyer borrowing is desperately needed, both for the borrowers and for the housing market generally. With borrowers having to find much higher levels of deposits than in the past, lending to first-time buyers has shrunk dramatically.
 
Analysis conducted by Moneynet is instructive. Two years ago a typical UK property cost £130,000, but is now £104,000.
 
Yet the minimum deposit required has jumped from £6,500 to £10,400, the best fixed rate mortgage is actually 0.2% more expensive (despite the cuts in base rate) and the arrangement fee for the best buy mortgage has risen by £200. Although there is a stamp duty holiday (which finishes at the end of the year), the initial outlay for a first-time buyer has risen from £7,800 to £10,400.
 
So it is welcome that lenders are addressing the difficulties in this market. Ulster Bank has improved products aimed at the first-time buyer market several times in the last year.
  
The bank is now offering a range of other product improvements, reflecting the fact that, says Mike Bamber — its chief executive of retail markets — “we welcome more demand”. Discounted interest rates are being cut, there is an improved offer for remortgage customers and an increase in the loan to value (LTV) for remortgages to 90%. Ulster's two-year discount mortgage is now down to 2.99% for borrowers able to provide deposits of 25% of purchase price. 
 
 
Sustained 
 
And, according to leading mortgage broker John Charcol, discounted variable rates are at present the most popular type of mortgage being sold.
 
Borrowers expect the base rate to remain low over a sustained period, making variable rate products more attractive. But lenders’ margins on new fixed rate mortgages have increased, making them less appealing.
 
Less than half of borrowers are now opting for fixed rate mortgages, says John Charcol. And discounted standard variable rate mortgages have advantages over trackers, argues the firm.
 
“Nearly 10% of our clients choosing a variable rate went for a discount off SVR rather than a tracker, reflecting in part some very cheap discounts,” says Ray Boulger of John Charcol.
 
While headline rates of SVRs are mostly between 4% and 6%, he expects these to fall closer to base rates — reducing the risk for borrowers of being stuck with high SVRs once the discount period ends. 
 
Tags: Northern Ireland, Mortgage, Rates, Rise, Recovery...
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