What the heck are REMORTGAGES??

Are You At Risk? A Free Ebook Report By Stephen Pierce

2010-01-12T04:18:00.000-08:00

Are You At Risk? A Free Ebook Report By Stephen Pierce

Good time to re-mortgage for those who can do it

2009-04-07T00:12:00.000-07:00

Stricter guidelines, but good deals now available for some

By Paul Delean, Canwest News ServiceMarch 9, 2009

Six months ago, before the credit crunch bit and risk became a cutting four-letter word, obtaining or renegotiating a mortgage was pretty much a formality.

It's harder now. Financial institutions haven't necessarily changed their lending criteria for mortgages, but they do apply them more strictly. "Grey-area" borrowers who would have received the benefit of the doubt a year or two ago might need to apply several places now before finding a taker.

The doors are still wide open, though, for clients with steady income, significant assets and/or a solid credit history. They are, in fact, the object of keen competition between lenders, and as such are in an excellent bargaining position in what is normally the biggest month of the year for mortgage transactions.

With interest rates near historic lows, housing prices plateauing, and both provincial and federal governments offering tax incentives for renovation and higher RRSP withdrawals for home purchases (now a maximum of $25,000 per person), a compelling case can be made for buying, or converting existing home equity into cash now.

That's provided you feel secure enough about your own situation, the overall economy and resiliency of the real-estate market to take the plunge.

Apparently, many people still do. In RBC's annual home-ownership survey, conducted in January and made public this week, 22% of Quebec respondents said they intend to purchase a home over the next two years, up from 21% in 2008 and 19% in 2007.

Though the housing market has cooled in recent months as consumer confidence waned, there's been a noticeable surge in refinancing because of the low rates. Christine Lemieux, assistant vice-president of sales at Multi-Prets, said it started in October and has become more pronounced in 2009.

With low rates expected to linger through the end of the year, "we expect this trend to continue for at least six more months," CIBC World Markets senior economist Benjamin Tal commented this week.

Even with penalties (typically about three months' interest), it can make sense to switch lenders or refinance mortgages at the lower rates, Lemieux said. It all depends on the specific terms of your mortgage agreement.

More than half of Multi-Prets' clients still opt for a five-year fixed term because they'd rather get it over with, have peace of mind and not preoccupy themselves with interest-rate fluctuations, Lemieux said. "It's a question of risk tolerance. They have to be able to sleep at night."

source

Help! We need to remortgage but are in negative equity

2009-04-06T00:12:00.000-07:00

Q My partner and I took out a fixed-rate 100% mortgage for £123,250 in July 2007, which ends in March 2010. We then revert to the lender's standard variable rate (SVR). Ideally, we would like to remortgage to another fixed-rate as we are not earning enough to cope with big hikes in interest rates. The problem is our house is now only valued at around £115,000. How do we stand in terms of remortgaging? I know it is a year away, but it's already starting to worry me. LF

A The time to start worrying is about three months before your current fixed-rate deal comes to an end. At that point you should find out what fixed-rate deals are available, both from your current lender and other lenders.

However, sticking with your current lender may be the only option. When you apply for a new mortgage a new lender will want to value your property. So if your house is worth less than the amount you need to borrow to repay your current mortgage – which is what you need to do when remortgaging – a new lender may not be prepared to offer you a loan.

Your current lender, on the other hand, is unlikely to require a new valuation and so you should be able to get a new fixed-rate deal from them. However, to guard against the possibility that 100% mortgages are no longer available in March 2010, if you can possibly afford it try to put money aside so you can put down a deposit for the new loan.

source

Low interest rates 'offer incentive to remortgage'

2009-04-05T00:11:00.000-07:00

Current low interest on standard variable rate (SVR) mortgages could provide "a little incentive" for those considering remortgaging, according to a spokesman from Moneyfacts.

He explained that while historically, standard variables used to be around two per cent higher than other rates on offer, the current rate cuts have made these products "a good, reasonable deal".

Furthermore, he said that while previously customers were inclined to shop around for a better deal when their two-year fixed-rate deal came to an end, current rates mean that individuals may actually revert to a rate lower than their original deal.

"Some people are coming off deal rates of 4.5 per cent and reverting to an SVR of 2.5 [per cent] - bargain," he said.

The spokesman added that while mortgage rates cannot go lower than their current value, they represent an affordable deal for consumers.

A further base rate cut to 0.5 per cent on March 5th represents the lowest rate set by the Bank of England since it was established in 1694.

source

Remortgaging rises as homeowners look to tracker deals

2009-04-04T00:10:00.000-07:00

The number of homeowners remortgaging has risen, with many turning to tracker products, new statistics have revealed

The number of homeowners being granted remortgages has risen, new statistics have revealed, despite the overall level of home loan lending plummeting over the last year.

Figures disclosed by the Council of Mortgage Lenders (CML) show that the number of remortgage loans being awarded rose by eight per cent in January this year over the previous month - a trend which could bring about a similar rise in the number of individuals disposing of unwanted investments they took out alongside their initial loan.

What is more, the council also discovered that the volume of tracker deals has increased to 38 per cent of the total market for homeowner loans, suggesting that lenders are increasingly looking to remortgage onto cheaper deals.

Remortgaging has been the catalyst for people looking to dispose of an investment such as an unwanted endowment to realise more cash.

A senior marketing executive for aap noted that the majority of their customers have used them to buy their endowment off them following a remortgage.

If they make an offer, aap, Britain’s biggest endowment buyer will always pay more than the surrender value for an endowment.

According to a prominent financial advice website, opting to change mortgage arrangements now could come with a number of advantages.

"Your mortgage deal may have been the best deal at the time you got it, but lenders often limit their special rates to a fixed-term, leaving you with increasing interest rates and diminishing benefits," wrote a spokesperson for Fool.co.uk.

"Remortgages allow homeowners to access great introductory lending rates again."

Statistics published by CML showed that overall mortgage lending declined by 51 per cent during the last 12 months, with the number of new loans being granted plummeting to less than 9,000.

source

Have Your Mortgage Cake and Eat It

2009-04-03T00:10:00.000-07:00

It’s inevitable interest rates will start to rise at some stage, but when and how quickly is something even the experts can’t agree on.

Fixed rate mortgages are low, particularly for those with at least 25% equity, but will they/can they get any cheaper?

Tracker mortgage rates mirror any change in bank rate, but with mortgage lenders increasing tracking margins, and with bank rate at 0.5%, have you missed the boat?

Unusually, standard variable rates may also look attractive, but are lenders passing on any change in interest rates, as they struggle to retain savers?

If you are unsure what to choose, here are some L&C tips on how you could hedge your bets.

A mix and match mortgage is where you take part on a variable rate and part on a fixed rate. This gives you some security but will also mean you don’t completely miss out if rates fall again. The downside is that you’re likely to pay an arrangement fee for both schemes.

Drop lock mortgages, offered by lenders such as Halifax, Nationwide and C&G, allow you to take a tracker deal, but switch to a fixed rate in the future without penalty.

This might seem the perfect solution but timing your switch will be tricky, and is likely to involve your home being revalued. With house prices continuing to fall, a revaluation could see you move into a higher loan to value band with higher rates, so even if fixed rates generally fall, you could end up paying more. Any switch is also likely to mean a new arrangement fee.

You could also consider a capped tracker mortgage. The tracker means you don’t miss out on interest rate cuts, and adding a cap means there is a maximum rate you can pay, so if rates rise above the cap, you don’t need to worry.

The Coventry and Yorkshire Building Societies and Woolwich have all recently launched capped trackers.

www.lcplc.co.uk/best-buys section of the L&C website.

Whatever you do, L&C’s advice is don’t delay. With lenders reserving their best deals for those with up to 40% equity, and falling house prices eroding your equity, any delay could cost you dear.

For more information and no-fee advice, borrowers should call free on 0800 373300.

-Ends-

Notes to Editor:
London & Country (L&C) is the UK’s leading no-fee mortgage broker. Based in Bath, it provides whole of market advice via telephone and post to clients nationwide. As well as residential mortgages, it also specialises in the Buy-to-Let and adverse-credit sectors.

L&C is a Climate Neutral company and for the last seven years has invested in climate friendly projects and tree-planting to help offset its emissions and those of its customers. For more information, go to www.lcplc.co.uk/green

L&C has won numerous awards including:

Best Mortgage IFA/Adviser of the Year – Money Marketing, 2004, 2005, 2006 and 2008
Best Technology Adviser – Money Marketing 2007
Best Mortgage Broker outside London – Mortgage Strategy, 2004 and 2005
Best National Broker – Mortgage Introducer 2005, 2006 and 2007
Best Overall Broker – Mortgage Introducer 2005
Overall broker of the year – Pink Home Loans, 2006 and 2007
Top 100 company in the Sunday Times Fast Track 100 for 2004 and 2005
Business of the Year – The Bath Business Awards 2005
Growth Strategy of the Year – National Business Awards (Wales and West) 2008
Business Leader (Broker) – British Mortgage Awards - 2008
Online Mortgage IFA of the Year – Financial Adviser - 2008

Press Contacts:

Richard Morea,
Office: 01225 341312
Mobile: 07970 885168

David Hollingworth, Head of Communications
Office: 01225 341211
Mobile: 07710 634044

www.lcplc.co.uk

source

How monetary policy influences mortgage decisions

2009-04-02T00:09:00.000-07:00

Variable or fixed? It's the question homeowners and homebuyers ask most often and inevitably elicits an unsatisfying answer.

Whether it's worth paying the penalty to terminate a fixed-rate mortgage to obtain the lower rates available on variable-rate mortgages is a calculation that forces assumptions about future monetary policy even the Bank of Canada is hedging its bets on.

Over the past few years, the focus of monetary policy has been inflation control. What this has to do with mortgages is that the principal tool for controlling inflation is the interest rate lever. The bank has set an inflation target of two per cent and interest rates are raised or lowered to increase or reduce borrowing, which in turn stimulates or depresses demand. In this way, the bank ensures demand doesn't overwhelm the economy's capacity to satisfy it and inflation is held in check.

Since December 2007, as the economy has slid into recession, the central bank, in concert with other industrialized nations, has cut its overnight lending rate by 400 basis points to 0.5 per cent in an effort to bolster demand. Clearly, it can't go much lower.

The bank has also been trying to encourage lending by injecting liquidity into the financial system. There has been concern that this infusion of money will be inflationary, raising the threat of stagflation -- inflation with no economic growth.

However, the bank is not "printing money" to carry out this task. Rather, it is purchasing assets, such as commercial paper and bankers' acceptances, from financial institutions that have been unable to trade them because of tight credit markets and replacing them with cash or more liquid government securities.

These purchase and resale agreements are temporary and unwound after 28 days so they are, in effect, simply exchanges of assets with no increase in the monetary base.

Similarly, the federal government's infrastructure spending program should have no significant impact on inflation since government demand is replacing private sector demand. In other words, there is no increase in aggregate demand.

For inflation watchers, this should be good news. And it gets even better. In January, the bank said it expected inflation to return to the two-per-cent target in the first half of 2011 as the economy returns to its potential. It has since hinted that it might be later, sometime after mid-2011.

Variable rate mortgage rates are derived from the prime rate, which financial institutions usually, but not always, set in accordance with Bank of Canada interest rate adjustments. But negotiations on mortgage rates are getting tougher. Lenders are beginning to set variable rates at a premium over prime instead of the past practice of a discount to prime.

Fixed-rate mortgages are based on bond yields, which are market driven and largely independent of central bank moves. Higher yields increase funding costs for financial institutions which raise fixed mortgage rates in response.

As it happens, bond yields have been bumping record lows in a slumping economy, making fixed rate mortgages a better deal than they've been for decades.

So, variable or fixed? It's up to you.

henchin@vancouversun.com

source

The Halifax Should Be Ashamed of Its Misleading Advice

2009-04-01T00:09:00.000-07:00

The Halifax has started a campaign for two year fixed rate mortgages. " move to our two-year fixed rate mortgage deal. It'll keep you sheltered from future interest rate rises." it says.

This really is outrageous as the implication is that for the next two years there is great risk of interest rate rises and all will be fine once the two-year rate fix expires. Quite the opposite. They state that no knows what the future has in store but an organisation like the Halifax should have a considered view and clearly doesn't. The considered view should be that rates will be relatively low for the next two years but after that there is significant risk of higher base rates and mortgage rates to counter the inflationary effect of quantitative easing on the economy. Do not be surprised if interest rates rise substantially within a few years time.

Taking a two-year fixed mortgage rate locks you in until the beginning of the most dangerous period for mortgage rate rise potential by which time it could be too late for you to remortgage on a decent rate. Don't believe the Halifax's advertising department - try to get fixed rate mortgages of between 5 and 10 years duration over the next few months. Swap rates may come down a little bit further but there isn't much left to go and swap rates are the basis of fixed rate mortgage pricing.

This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.

source

Pink goes mainstream with Platform

2009-03-31T00:08:00.000-07:00

Pink goes mainstream with Platform

25 March, 2009

Pink Home Loans has launched an exclusive mainstream product in association with Platform.

The initial interest rate is fixed at 4.19% for three years and is available to 60% loan to value. The product also enjoys a £250 cashback for remortgages and free valuation.

Neil Hoare, Pink’s sales & marketing director, commented: “Pink has a strong relationship with Platform which has allowed us to work together and produce this fantastic product for our appointed representatives, especially for those with client’s wishing to remortgage.”

Jason Berry, Platform’s head of sales commented: “Platform’s entry into the mainstream mortgage sector is a historic and exciting venture for us and we are delighted that our continuing strong relationship with Pink has allowed us to bring this exclusive product to market. We are confident that the competitive attributes of this offering will prove extremely popular with Pink’s network of brokers and we look forward to working closely with them in the near future as we continue to expand our proposition.”

source

When is the right time to remortgage your property?

2009-03-30T00:07:00.000-07:00

As more and more UK homeowners struggle to make ends meet a number of people are looking at the opportunity of possibly remortgaging their home. As UK base rates continue to fall further, with some suggesting that rates could fall to around 0%, is now the best time to remortgage your home?

It has to be said that with base rates under 1% and possibly set to fall further in the short term, in a perfect world now would be the right time to seriously consider remortgaging your home on a long-term fixed rate. However, the UK mortgage industry is still struggling with increased repossessions and increased write-offs resulting in a significant drop in capital being made available to the market. Those who have ventured into the fixed-rate mortgage market are requesting deposits of up to 40% which those in financial trouble will find impossible to accommodate.

However, all is not lost because as and when the UK economy starts to recover there is likely to be a period prior to expected interest rate rises during which some homeowners will be able to remortgage their homes on more beneficial terms. However, it has to be said that the decision to remortgage your property should not be taken lightly and professional advice should be sought at all times.

source

How to remortgage your home

2009-03-29T00:06:00.000-07:00

Would you like to cut you monthly repayments, pay off debts or reduce the term of your mortgage? You probably need to remortgage. Here's how

Remortgaging is the process of moving your mortgage from one lender to another. There are four main reasons to do this:

• to reduce your monthly repayments by securing a cheaper mortgage

• to release some of the value built up in your property for other spending, such as home improvements or paying off debts

• to reduce monthly repayments by extending the term of your mortgage, which will mean it takes longer to pay off the loan and could cost more

• to reduce the mortgage term – by finding a cheaper deal and keeping repayments the same you could be mortgage-free sooner.

Due to the credit crisis, however, banks and building societies have tightened their criteria for mortgage lending. They now typically demand deposits of 15%-20% before they will consider your remortgage application, and a deposit of 40% will widen your options and find you a cheaper interest rate.

If your original mortgage was taken out with a small or no deposit, you may find there is not enough (or any) equity for you to remortgage. This means you may have to put up with your lender's standard variable rate (SVR) until conditions improve. If you can switch, here's what you should do:

Step one: Get your paperwork together

You should start to think about remortgaging three to six months before your current deal ends. Gather together your latest mortgage and bank statements to see how much you are paying for your current mortgage. If your deal is a tracker or other variable rate deal, it has probably gone down in recent months so you may want to check how much you were paying before rates started to tumble so you have an idea how much you can afford to pay each month.

Step two: Find out how much it will cost you to move

Check your small print for any early redemption charge (ERC) – especially on discounted, fixed, cashback or capped deals – which may make remortgaging too expensive. Note too the exit fee, which a lender charges for closing your mortgage (this covers releasing the deeds and Land Registry costs). Call your lender to get a quote for paying off the amount you owe, plus any charges. Check that the exit fee you are quoted matches the one in your mortgage agreement – lenders are not allowed to hike up these fees once you have signed up for a loan.

If you have a fixed-rate deal and are still in the period where you will be charged an ERC, you can check whether it is worth switching using our stick or twist mortgage calculator.

Step three: Be aware of your loan's restrictions

Don't assume that ERCs automatically end when your fixed or discount rate ends – some loans have overhanging tie-ins. You may find you need to pay the lender's SVR for a set period after the initial deal ends. When interest rates are low, this is not necessarily a bad thing as some SVRs are lower than the fixed-rate mortgages on offer, but when rates start to rise lenders tend to put up their SVRs, so being stuck on the rate could prove expensive.

Step four: Find a mortgage you want

Use our factsheet to help you decide on the type of product – for example, a fixed rate, tracker or variable rate. Then track down a deal. Speak to lenders directly, use best-buy tables in the financial pages of newspapers, or try a comparison website such as moneysupermarket.com or moneyexpert.com

If you don't want to do the legwork on your own, you could use a mortgage broker. Bear in mind some lenders do not offer the best deals through brokers, or if they do the charges may be higher. However, a broker can be very helpful if you have a small deposit, are self employed or have a bad credit record. The Guardian's mortgage service gives you free access to broker lender London & Country.

Step five: Work out what fees are involved

The deal you want to switch to may not come cheaply – you may need to pay legal fees (typically £400, according to mortgage broker London & Country), application/arrangement fees (upwards of £300) and a valuation fee (£300). Sometimes fees can be added to the loan but remember you will pay interest on that amount for the remainder of the mortgage term. It can sometimes save money if you use the lender's legal service.

Fee-free deals, where lenders pay for or refund legal and valuation costs, do exist although they usually come with a higher interest rate. Weigh up whether you will really save money before choosing one of these deals. Similarly, beware excessive extra charges. The lowest rate loans tend to come with sky-high arrangement fees, sometimes as much as 2% of the value of your mortgage and often high redemption penalties.

When you know how much switching will cost, you can work out whether it is worth moving loans. This will be easy if your current deal has no ERCs and your new deal has no fees; if there are charges on either the old deal or new deal (or both) you will need to get your calculator out – or ask your broker to do the sums.

Step six: Ask your lender to match or better your chosen deal

Even if you like the look of the new deal you have chosen you should see if your current lender is willing to match it. If it offers something similar, moving to that will save you hassle and time – and could save you money too.

Step seven: Apply for the new deal

If your existing lender does not come up with something worth staying for, you need to apply for the new deal you have found. You can generally do this around three months before your existing special offer rate expires. Starting early is worthwhile, as if you are turned down you have chance to look elsewhere. At a time when house prices are falling it also means you maximise the equity you have as a deposit.

You will need to complete the lender's application form and provide proof of income (such as bank statements or accounts if you are self-employed) and proof of identity.

Step eight: Wait to hear from your new lender

It will send you an agreement in principle based on the details you have provided, then commission a survey of your home to ensure it is happy to accept it as security for the loan. Once all the fees are paid and the lender's survey is completed, your new lender will send you a mortgage offer and then deal directly with your current provider. When the deal is done, you should receive a completion statement. The process will take at least a month – longer if you are borrowing extra when you switch.

source

Property remortgage may no longer be an option

2009-03-28T00:06:00.000-07:00

UK homeowners are struggling to dig themselves out of debt because of a sluggish property market and a reluctance of banks to lend to cash-strapped consumers, a claim suggests.

Brits who needed to get their hands on credit could, in the past, have searched for the best remortgage loans, according to Debt Free Direct.

But now people are "locked within their property" and can no longer rely on such a cash lifeline to plough through their debts.

Take advantage of money-off vouchers

Those Brits who do own a home should consider renting a room out to cover the costs of a mortgage, the debt organisation advises.

Derek Oakley, Operations Director at DebtFreeDirect.co.uk, states: "In the last 12 months we have seen a 25 per cent increase in people with serious debt problems with annual earnings of over £35,000."

Indeed, many Brits might be facing repossession after it has been revealed Northern Rock gave out £800 million-worth of 125 per cent mortgages in the months after the government had to support it with taxpayers' money.

source

Mortgage approvals rise third month in a row

2009-03-27T00:05:00.000-07:00

Mortgage lending to homebuyers ticked up for the third consecutive month in February, new figures showed today.

High street banks approved 28,179 home loans for house purchase last month, up from 24,278 in January, and well above the six-month average of 22,068.

However, this was still more than 30 per cent lower than the number of loans approved in February last year. And hopes that this could signal a pick up in the housing market were dented as the British Bankers’ Association, which compiled the figures, downplayed the rise in approvals.

David Dooks, statistics director at the BBA, said: “The higher number of loans approved for house purchase simply reflect the banks’ greater market share.”

Some of the major banks, which have received multi-billion pound bailouts from the Government, have been urged to step up their lending in a bid to ease the liquidity crisis currently gripping the country.

Lloyds TSB has said it will lend an additional £14 billion this year, while RBS said it would extend an extra £25 billion in lending.

Meanwhile building societies have been forced to rely more heavily on savers’ deposits to fund their lending - a difficult task as interest rates remain at historic lows.

The lack appetite amongst savers for accounts offering meagre returns was illustrated as the BBA said that deposits into bank savings accounts fell by £73 million in February, following January’s record fall of nearly £2 billion.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said that while the BBA’s figures showed that the increase in buyer inquiries was now feeding through into actual transactions, there was no turnaround in the market.

“The actual level of activity still remains not that far away from historic lows and it would be premature to conclude that some semblance of order has returned to the housing market,” he said.

The number of re-mortgage deals approved by banks fell to 28,746, down from 30,336 in January, as more homeowners opted to switch to their lenders’ standard variable (SVR) rate rather than choose a new fixed-term mortgage. SVRs have dropped to new lows as the Bank of England has slashed the base rate in recent months.

There were also signs that consumers were cutting back further on spending, repaying £269 million more on overdrafts and personal loans than they borrowed during the month, the BBA said.

The property market showed signs of stabilising during February but any recovery is being held back by the mortgage drought, the UK’s biggest estate agent said today.

Your Move said new buyer registrations had boomed during January and February, while internet traffic was back up to 2006 levels and house price falls were beginning to slow.

Overall, it said interest from potential buyers was at its highest level during February since Easter last year.

source

Increase in bank lending drives rise in mortgage approvals

2009-03-26T00:04:00.000-07:00

The British Bankers’ Association (BBA) has reported a third monthly rise in mortgage approvals for February.

The number of mortgage approvals rose from 24,278 in January to 28,179 in February.

Despite this rise, the volume of approvals was still nearly 31% down on February 2008.

In terms of mortgage lending, there was a rise from £3.4 billion in January to £3.9 billion in February.

The number of remortgages approved was slightly down compared to January.

The main reason for the reduction is that, rather than remortgage and take out a new mortgage deal, more people are opting to stay on their lender’s low standard variable rate when their mortgage deal comes to an end.

source

Further rise in mortgage approvals

2009-03-26T00:02:00.000-07:00

The number of mortgages approved for house purchase increased for the third month in a row during February, figures have shown.

A total of 28,179 loans for people buying a home were approved during the month, up from 24,278 in January and a low of 17,878 reached in November, the British Bankers' Association said.

But the figure was still 31% lower than it had been in February last year, and the group cautioned that the rise reflected the greater market share of the high street banks, rather than an increase in demand from consumers.

There was also a rise in net lending, which strips out redemptions and repayments, with this increasing to £3.9 billion during the month, up from £3.4 billion in January, although it remained well down on the £5.1 billion recorded 12 months ago.

But the total value of all mortgages advanced, including people remortgaging, fell slightly to £9.2 billion - its lowest level since June 2001.

There was also a slight fall in the number of loans approved for people remortgaging, with 28,746 mortgages arranged for people switching to a better deal, 5% fewer than during the previous month and 59% down on a year earlier.

Remortgage volumes are being hit by record low interest rates as many homeowners find it is cheaper to stay on their lender's standard variable rate when their current deal comes to an end, rather than take out a new mortgage.

David Dooks, director of statistics at the BBA, said: "Most new mortgage lending is being done by the high street banks but demand is, of course, being moderated by the impacts of the recession.

"Remortgaging activity has slowed in recent months, while higher numbers of loans approved for house purchase simply reflect banks' greater market share."

Estate agents have been reporting a rise in Inquiries from potential buyers, who are being attracted back to the market by low interest rates and the house price falls seen so far.

source

Barclays' John Varley expects 30% house price crash

2009-01-04T21:11:00.000-08:00

The Barclays CEO is predicting more bad economic news in 2009 - but he is boosting business lending...

John Varley clearly isn’t brimming with Yuletide cheer – the Barclays boss has added to the general gloom with some dire predictions about the UK economy’s fate in 2009. Rather than the worst being over, he seems to think we ain’t seen nothin’ yet – he expects house prices to fall by up to 30% from their 2008 peak (which means that we’ve got another 10-15% to go) and unemployment to hit 7.5% by the end of 2009. Christmas dinner must be a barrel of laughs round the Varley household…

In an interview with Sky News, Varley said that Barclays was expecting house prices to fall by ‘something like 25-30%’ from peak to trough. ‘I suspect we’re about halfway through that at the moment,’ he suggested, implying a further 15% fall in 2009. This would take the average value of a house to £140,000 (based on the latest figures from the Halifax), and would send another raft of homeowners into negative equity. Not exactly the kind of comment that will restore confidence to the battered market…

Varley also indulged in a spot of self-flagellation, admitting that the banks’ irresponsible lending policies were partly to blame for the current downturn. ‘I think the last 10 years will be seen as an anomaly rather than a normalcy,’ he said – or, as you or I might put it, lending 100%-plus mortgages to people who couldn’t really afford it was ‘madness’ (like, duh). Now, he said, it was time for banks to say sorry and ‘take their share of responsibility’ for our current woes. All very admirable, though whether this will extend to going easy on all those homeowners when they try to remortgage in the next 18 months remains to be seen.

Varley was equally gloomy about the jobs market, which he’s expecting to get worse before it gets better. ‘Unemployment tends to be a lagging indicator… I think an additional 700,000 people unemployed over the course of the next 12 months is certainly possible to contemplate.’ That would leave about 7.5% of the working population out of a job by this time next year.

On the plus side, he does expect the economy to start recovering in 2010. And he did have some good news for SMEs in the meantime: after a bit more arm-twisting from the Government, Barclays has increased its small business lending pot from £15bn to £16.5bn. ‘Today’s commitments are aimed at helping SMEs in the UK cope with the difficult environment,’ said Varley. But for mortgage holders, there was absolutely nothing to shout about...

source

Reduce homeowner costs with the Remortgage reminder

2009-01-03T21:10:00.000-08:00

Whole of market mortgage brokers, North Mortgages in Manchester has revealed a new Remortgage Reminder Service in a bid to help home owners reduce their costs.

[UKPRwire, Fri Nov 14 2008] North Mortgages, Manchester's whole of market mortgage broker, has revealed an innovative Remortgage Reminder Service to help home owners reduce their costs.

Most UK homeowners pay more than necessary to buy their home due to a reluctance to actively manage their mortgage when it comes up for renewal. Staying with a lender after the end of the agreed term of the mortgage could mean reverting to the lender’s Standard Variable Rate (SVR), which is often more expensive than the more competitive fixed rate or tracker deals that maybe available.

North Mortgages' new Remortgage Reminder service provides a prompt three months before your current mortgage deal comes to an end. It is easy to sign up - simply by entering the date the current mortgage ends.

The three month window allows home-owners to consider their options: either to stay with their existing lender, or save money by looking for another mortgage provider.

North Mortgages' chief mortgage broker, Jonathan Smith, said: "The economic climate is forcing home owners to review their outgoings. Most people regularly shop around for the best deal on car insurance, phone and utility bills but they don't do the same research for their mortgage. There are huge potential savings to be made by reviewing mortgages early, as the mortgage is typically the biggest outgoing that a homeowner has. Even a 0.25% reduction on a mortgage interest rate will dwarf the savings the borrower can make on home and car insurance."

Use the Remortgage Reminder today: http://www.northmortgages.co.uk/mortgage-reminder.

About North Mortgages – http://www.northmortgages.co.uk

Established in 2007, North Mortgages has built up a reputation as a whole of market mortgage broker with access to the best deals on the market.

North Mortgages has helped thousands of people obtain independent advice on Mortgages and Remortgages in Manchester and the UK. For more information visit www.northmortgages.co.uk or contact the whole of market mortgage brokers now on 08000 949 595.

source

There goes the neighbourhood ... and the cheap loan

2009-01-02T21:09:00.000-08:00

As valuations are dragged down by a stagnant market and forced sales, homeowners hoping for a good deal when they remortgage may be in for a shock.

Homeowners looking to remortgage could be facing valuations 30 per cent lower than their homes were worth in autumn 2007, when the market was at its peak – even though average prices have only fallen by around 15 per cent during this time. This harsh reality was revealed last week by Energy Reports and Surveys (ERS), the valuation arm of conveyancing giant LMS.

The widening gulf between homeowners' price expectations and the reality is down to growing numbers of forced sales or repossessions, which are pushing down estimates of what all homes are worth, says ERS managing director Paul Staley.

"To achieve a valuation for mortgage purposes, a valuer is required to take several factors into account: the area; the size and type of the home; and the guide sale price they have been given or the last valuation. But valuers will also need to find three comparable properties and what they recently sold for. And as there is virtually no activity on the open market, forced sales and repossessed homes being sold at auction are being thrown into this basket of averages," Mr Staley said.

Repossessed homes are currently selling at up to 50 per cent less than their peak value, which means valuations on open-market homes are being dragged down by up to 30 per cent – a lot more than most homeowners are prepared for.

Mark Blackwell, sales director at xit2, a data-management firm for the property industry, reports that the lack of comparable homes sold recently makes this market one of the toughest ever for surveyors. "They are finding there is little to back up their local judgement, and where the nearest benchmark is a repossessed home sold at auction, the considerable discount is putting other property values out of kilter." He adds that this is happening all over the UK.

One look at the most recent property market figures and it's easy to understand how "standard" valuations can be so skewed. Estate agents sold an average of 10.9 homes in the three months to October, according to the latest housing report from the Royal Institution of Chartered Surveyors, which equates to little more than a dismal three a month. But the Council of Mortgage Lenders says repossessions are set to rise by 50 per cent this year.

Compounding the problem of pessimistic estimates is that valuers are erring on the side of caution as they expect prices to slide further, adds Mr Staley at ERS. "When the market is going up, surveyors factor in these rises and give a generous valuation. But, of course, the same happens in reverse when the market is falling.

Ballooning repossession figures are becoming an issue for other sets of property statistics too. The Government's Land Registry figures, which are based on completed sales of homes, have been criticised as they exclude repossession sales at auction on the grounds that they do not reflect the "full market value" of the property.

Other house price indices, such as those from Nationwide and the Halifax, are based on approvals of mortgage valuations. These will factor in homes repossessed or sold quickly at auctions, as the valuation requires this "basket" of comparables.

As a result, the Land Registry figures published on 28 November showed a 10.1 per cent annual fall in prices across England and Wales – considerably healthier than the indices from Halifax and Nationwide, which revealed prices dropping by 15 and 13.9 per cent respectively.

A lower-than-anticipated valuation can have a big impact on homeowners' remortgage choices and may even put a new deal out of their reach. Andrew Montlake, partner at broker Cobalt Capital, says: "The biggest issue of a low valuation is that homeowners looking to remortgage may not get the rate they thought they would.

"Since the last time they may have remortgaged, lenders have gone on a 'flight to quality' and now employ three main tiers of loan to value (LTV). The cheapest deals are below 60 per cent LTV and then there is a 60 to 75 per cent tier and a 75 to 85 per cent tier. If your home is downvalued, your LTV will go up and may place you in the next bracket."

Ray Boulger, senior technical manager at broker John Charcol, says the most significant threshold to cross is the 75 per cent LTV. "As well as the interest rate you pay becoming considerably higher at this point, some types of deals – such as two- and three-year fixed rates – are no longer available with some lenders."

But if you don't qualify for your chosen mortgage with a new lender, at least you will be armed with a realistic valuation when it comes to knocking on the door of another bank.

If your mortgage valuation pushes you above 90 per cent LTV, it's highly unlikely any new lender will want your business. That said, though, it's now a lot less painful to stay put and revert to your existing lender's standard variable rate. If you are with Nationwide, for example, the current SVR is 4.69 per cent – so low that the lender announced last week it would not make any more mortgage offers based on this rate. Existing customers due to revert to its SVR at the end of their deal will still be able to do so.

As well as finding new deals, managing valuation expectations on behalf of clients is becoming a more important role for mortgage brokers, according to Mr Boulger.

"Clients often come in with hazy ideas of what their home is worth," he says. "They may base their knowledge on a valuation they received from an estate agent last month, for example – but find that actually it's 10 per cent under this.

"Basically, even homeowners who have carried out research on house prices, and factored in what would seem an appropriate fall, could still find that their final valuation is a lot lower than they thought."

source

Steve Forbes speaks in Edison

2009-01-01T21:08:00.000-08:00

Steve Forbes, editor in chief of Forbes magazine and former presidential candidate, gave Wardlaw-Hartridge High School students a crash course in economics on Dec. 1 at the north Edison school.

He discussed the current sagging economy, the presidential election, the Federal Reserve, monetary policy, the Internet and the job market of the future, and he did it with enough jokes to hold the students' attention and keep them laughing.

Forbes, who was born in Morristown and graduated from Princeton University with a bachelor's degree in history, talked about the publishing empire created by his Scottish immigrant grandfather, B.C. Forbes, who started Forbes magazine in 1917. Nine years later, William Randolph Hearst offered to buy the company, but B.C. Forbes turned the media mogul down.

"Then during the Depression, the company [Forbes Inc.] went broke," Steve Forbes told the crowd of 200 students, faculty and board members. "Today's success does not mean tomorrow's success. In the 1960s, GM [General Motors] held back on sales because it feared an antitrust suit. Now it's going to the government with a tin cup."

The economy has upswings and downturns, he said, and he predicted the demise of yet more "big names" in media and other industries. The key to surviving the tough times is "to fall back on discipline … and be prepared. Nothing is going to stay the same."

Change is necessary, which is why Forbes has pushed his company into webzines and launched new publications to tap into different markets. It's a matter of providing a unique brand or source of information.

Forbes laid most of the blame for the country's current poor economy on mark-tomarket and explained the term to students. Mark-to-market accounting is when companies value the assets on their books at the price they would currently sell at. When the credit crisis began, mortgage-backed securities plummeted in value as the underlying mortgages failed. The housing market was booming, the government had printed too much money, and investors poured money into housing, creating "a classic bubble."

"Nobody cares about mark-to-market except accountants," Forbes said.

"People thought you couldn't lose" when it came to real estate, he said. Then banks, Freddie Mac and Fannie Mae started writing "crazy mortgages." To make matters worse, Wall Street turned a blind eye to the situation and the federal government made more mistakes.

Forbes explained, "Most of the losses you read about are not a shortage of cash … . A company can be making money and it still goes broke — only in America.

To make matters worse, the Securities and Exchange Commission (SEC) eliminated some stock market rules, allowing "naked short selling," he said.

"Short selling allows you to pound stocks into oblivion," Forbes said. "It allows you to sell what you don't own."

Forbes said the answer is to eliminate mark-to-market, regulate Fannie Mae and Freddie Mac (nicknames for the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation) and for the federal government to help people remortgage their homes to get lower rates.

He continued, "We'll get out of it …. This thing will turn around, but the stimulus package doesn't help. It won't be government spending that pulls us out of it."

Students asked him questions about how to survive a market downturn, how to succeed in a tough job market, and which market sectors he'd watch for growth.

He told them to ask themselves, "How can I do something no one else has thought of? If people say 'It's a dumb idea,' you may be on to something."

After his speech, he told the Sentinel that he hopes the students learn "to take risks, because a lot of good things are happening, and if they have versatile minds they'll do well."

"I know this stuff is boring, but it's affecting your parents and it'll affect you when you go out in the world," Forbes told the students as he explained monetary policy.

They weren't bored.

"It was interesting when he said you can't trust your emotions and about the stock market," Abigail Rogers, a freshman from Plainfield, said after Forbes left the school. "My dad's talked to me about it, but I never really understood it until now."

source

Have you seen your mortgage repayments rise?

2008-12-31T21:08:00.000-08:00

Repayments for fixed-rate mortgages have increased by around £68 a month, it has been reported.

The Bank of England found that the 1.4 million households coming off such a mortgage deal in 2008 were subject to this 10 per cent increase.

And 80 per cent of people with mortgages think their homes have dropped in value over the past 12 months, the report by the Bank shows.

Do you need to remortgage in the next 6 months? Get a free quote and advice from a FSA authorised advisor

Meanwhile, 4 per cent of mortgages are now in negative equity, although this figure looks set to increase.

Available monthly income has declined by £100, according to 30 per cent of households questioned.

The report notes: "Around 40 per cent of mortgagors reported that they owed more than £90,000 and almost 15 per cent said they owed more than £150,000."

Furthermore, one per cent of those surveyed claim that they will consider a property remortgage in order to cope with bills and credit commitments.

In related news, uSwitch.com recently claimed that three million Brits on tracker mortgages could see themselves with an extra £260 a month because of the latest interest rate cut.

source

More brokers assisting clients, says AMI

2008-12-30T21:07:00.000-08:00

The Association of Mortgage Intermediaries has revealed that brokers unable to assist clients due to lenders offering better deals direct decreased from half to a third in September 2008.

AMI says this downward trend is set to continue. AMI director general, Chris Cummings says: “It is extremely positive that brokers are again getting access to the best products. Consumers wish to deal with mortgage intermediaries and record numbers have done so during the course of 2008.

“It must always be remembered that consumers want help and advice to find the most suitable mortgage for them – they put ‘service’ as the number one reason to use an intermediary, not ‘rate’.

“We welcomed the intervention of the government in the mortgage market. We now need to see a concerted effort from lenders to kickstart the market and ensure the slump we are currently in does not become worse.”

Although client approval is on the rise, the number of brokers who expect to see fewer lenders operating in the intermediary market over the next 3 months has gone up from a half to three quarters. Also, ‘Maximum LTV reached’ dominates the reasons for brokers being unable to assist both purchase and remortgage.

Also, more than a half of mortgage broker business is now dedicated to other services aside from mortgage and remortgage procreation.

Cummings adds: “There are clearly still real difficulties in the market and intermediary firms are looking at how they can weather the storm.”

source

What good are colleges if we can't afford them?

2008-12-29T21:06:00.000-08:00

My bills this month include payments to the colleges of my two older children.
Together, the amount due exceeds my husband's monthly take-home income.

Yet we fall into the "very, very lucky" category because both children have scholarships that cover most of their costs.

Honestly, I don't know how the average family does it.

No college student or parent could have been surprised by last week's report by the National Center for Public Policy and Higher Education, which gave 49 states flunking grades on college affordability. In Michigan, the report says that even after financial aid, the average poor or working-class family has to pay 48 percent of its income per year to cover costs at a four-year public college.

The problem has gotten substantially worse over the years. My senior-year tuition at Michigan State University in 1980-81 was about $1,500, or $3,400 in today's dollars when adjusted for inflation. This year's MSU juniors and seniors are paying about three times that amount, more than $10,000.

For families without college nest eggs, the options are grim. Kids take out a crushing amount in loans, or parents remortgage their homes or empty their savings accounts, or kids work more than they really should or simply drop out, overwhelmed by spiraling bills.

At the same time, there's a constant drumbeat about the importance of a college degree in today's job market. Yet there's no guarantee that a degree will result in sufficient income to cover student-loan obligations.

Talk about your lose-lose dilemma.

It's true that college graduates have, on average, substantially higher lifetime earnings than nongraduates. It's also true that America has the best university system in the world. The United States has 14 of the world's top 20 colleges, according to a recent ranking by U.S. News and World Report. (No. 18 on the list was the University of Michigan.)

But American colleges also tend to have, by far, the highest price tags. Tuition at Cambridge University, which is Great Britain's equivalent of Yale or Harvard, is about $5,000 this year. In many European nations, college is free or tuition is minimal because of government subsidies.

Is it any surprise that Americans are falling behind in college attendance rates?
President-elect Barack Obama has made investing in education one of his top priorities. That's welcome news if he delivers. It's not good enough to have the best universities in the world if most people can't afford to go.

source

Repossessions bringing down remortgage valuations

2008-12-28T21:05:00.000-08:00

Homeowners looking for remortgages are suffering lower valuations due to increased numbers of repossessions and forced sales.

Energy Reports and Surveys (ERS), the valuation part of conveyancing company LMS, explained to the Independent newspaper that valuers have to take several considerations into account, including the recent selling prices of three comparable properties.

ERS managing director Paul Staley said that since the open market has stalled, forced sales and repossessed homes are being used to calculate averages.

As they are selling for as much as 50 per cent below their peak values, open market homes are suffering falls in valuations by as much as 30 per cent.

Friends Provident head of protection Mark Jones has also noted that people seeking remortgages may suffer from fewer available deals and stricter lending criteria.

Writing on ifaonline.co.uk, Mr Jones also said that people with faulty credit records and smaller deposits would find the situation particularly problematic.

source

Why It's Vital To Overpay Your Mortgage Now

2008-12-27T21:04:00.000-08:00

With the Bank of England base rate down to a tiny 2%, many of you on tracker and standard variable rate mortgages will now be enjoying lower monthly repayments.

If you’re smart -- and you can afford to -- you may already be following my Foolish friend, Rachel Robson’s advice. In her recent article: Make The Most Of The Base Rate Cut, Rachel tells us why it makes sense to continue to make the same monthly mortgage repayments, even if your interest rate has been cut. This means you can overpay your mortgage without actually spending any extra money every month.

Overpayments allow you to do two things: One, clear your mortgage early. And two, save heaps of interest to boot. In fact, you would be a fool not to!

On the other hand, fellow Fool writer, Cliff D’Arcy reckons if your mortgage repayments have been reduced following the recent base rate cuts, it could be even better to save the surplus in a high-interest savings account. As he explains in Save More Or Pay Off Your Mortgage, this could work out well if you can earn more interest on your savings (after tax) than you’re paying on your mortgage.

Why overpay?

Both ideas have their own merits, but overall I’m more convinced overpaying is the best solution right now. Here’s why:

We all know the dreaded credit crunch has played utter havoc with the mortgage market. A couple of years ago, a 10% deposit or equity stake in your home would have been more than sufficient to secure a decent mortgage deal.

But these days the most competitive home loans are reserved for borrowers with a whopping 40% to put down. That’s one reason why it’s so important to get your loan-to-value (LTV) -- which is your mortgage loan as a percentage of the value of your home -- as low as possible. And the quickest way to do that is to pay your mortgage down as quickly as you can by overpaying.

Take a look at the table below which shows how much mortgage interest rates differ depending on the borrower’s LTV:

Two-year fixed rate remortgage deals from the UK’s biggest mortgage lenders

Lender	Lowest Fixed Rate With 10%+ Equity (90% LTV)	Lowest Fixed Rate With 25%+ Equity (75% LTV)	Lowest Fixed Rate With 40%+ Equity (60% LTV)
Abbey	5.84% *	4.49%	4.29%
Barclays (Woolwich)	No deal available	4.99% **	4.39%
Halifax	6.44% *	4.79%	4.69%
HSBC	6.99%	5.79%	5.19%
Lloyds TSB/C&G	5.69%	4.59%	4.29%
Nationwide	6.68% *	5.78%	5.38%
Northern Rock	6.69% *	5.19%	4.79%***
RBS NatWest	6.64%	4.99%	4.99%
Average	6.42%	5.09%	4.75%

LTV = Loan to value. *Based on a maximum LTV of 85%. ** Based on a maximum LTV of 70%. *** Based on a maximum LTV of 65%.

The table compares the lowest rates on offer to remortgagers with equity stakes of 10%, 25% or 40%.

Borrowers with a 60% LTV -- in other words, those who have a 40% equity stake -- could pay an average rate of 4.75%. This is 0.34% lower than the deals available at 75% LTV, and a whopping 1.67% lower than the average rate on offer to borrowers with just 90% LTV.

Having a 60% LTV is a fantastic position for any borrower to be in. But a 61% LTV normally puts borrowers up into the next category, making interest rates more costly, even though the difference in equity is just 1%.

Falling house prices

When you next come to remortgage, you’ll put yourself in the best possible position for a competitive mortgage deal if you manage to get your LTV down. But the trouble is, as house prices continue to fall, reaching that all-important low LTV is becoming increasingly difficult.

According to research by Savills Estate Agents for The Sunday Times, even people who bought homes ten years ago could see the level of equity in their properties slump dramatically by 2010. These homeowners currently have 51% equity, but Savills reckons this could drop to just 25% (or a 75% LTV).

If Savills are right, when these borrowers next come to remortgage, the best deals -- like those shown in the table -- will no longer be in reach.

Indeed, brokers at The Fool’s Mortgage Service say the average LTV for borrowers who have remortgaged in the last three months is 51%. Right now these homeowners should be able to access the best mortgage deals, but it could be a very different story if house prices do indeed fall significantly by 2010.

So that’s why I think it’s really important to overpay your mortgage if you can. This will help you to combat collapsing house prices and reach a lower LTV.

Even if you haven’t just had the benefit of an interest rate cut, it still makes sense for all homeowners to overpay. After all -- credit crunch or not -- the sooner you become mortgage-free, the better!

source

Remortgaging at a better rate?

2008-12-26T21:04:00.000-08:00

Ever thought of remortgaging at a better rate?
Ever thought of releasing equity from your French home?

Validus Financial Services (part of the VEF Group) have some interesting news for you. Their phones lines have been buzzing over the past few days with clients anxious to take advantage of the new, low interest rates in France. Maybe its time you thought about it too!

Equity Release:
Maximum loan to value is 80%. All loans will be subject to a valuation of the property.
Rates are as as low as 4.7% (fixed for 3 or 20 years on repayment mortgages) or 5.25% for interest only.

The lender will need to know what the funds from the equity release will be used for. They prefer:

•Renovations
•Donations
•Renovations
•Inheritance taxes
•Repurchase of shares
•Financing of other projects (boats, other properties, planes etc..)
•Cross border investments

This form of mortgage is best suited to owners of second homes/holiday homes/buy to lets in France. France hasn’t yet ‘got its head around; equity release on principal residences.

Just think: as you will be receiving the loan in euros and can avoid any exchange loss by taking advantage of some of those bargain properties on offer in France at the moment.

Remortgages:
You can remortgage your existing property in France and you can even apply for a larger amount (for example to cover renovation costs), subject to status. 70-80% LTV is the maximum loan amount possible and interest rates are the same as the equity release mortgages.

Although there are usually notaire fees payable on securing a new mortgage on a property, in many cases, the charges can be absorbed into the loan itself.

source

Plan remortgages 'well ahead of time'

2008-12-25T21:03:00.000-08:00

Landlords looking to remortgage should get ready to do so after three to six months.

This is the advice of Kate Faulkner, managing director of Designs on Property.

Noting that mortgage costs increases are "pretty horrendous", she said that seeking a remortgage must be started "really early".

She also recommended that landlords obtain valuations of their properties as early as possible.

"You need to know how much more money you are going to have to give now rather than later on," she stated.

According to research carried out for Cheltenham & Gloucester, published in September, 32 per cent of people would opt to stay with their current mortgage lender with a higher rate than risk being rejected by another.

The survey, conducted by Tickbox and Opinion Matters, also revealed that 42 per cent of homeowners are concerned about the lack of choice within the mortgage market.

Recent figures form the Council of Mortgage Lenders have shown that while 41,000 home loans were approved in August, this dropped to 35,000 in September.

source

Remortgaging warning issued by expert

2008-12-24T21:02:00.000-08:00

Commercial mortgage and home mortgage customers looking for a new loan should move quickly in the current financial climate, new analysis has indicated.

According to independent property experts Designs on Property, recent increases in the cost of mortgages mean that customers should start looking for a new deal "really early".

The loans market has been affected recently by the credit crunch, which has led to a 50 per cent contraction in the market over the past year according to the Council of Mortgage Lenders (CML).

This increases the impetus behind mortgage holders taking the initiative, Kate Faulkner, managing director of Designs on Property, said.

"If you are going to remortgage you must get on to this really early," she commented.

"It's not something that you can do six weeks before you remortgage; it is something you need to be thinking about six or three months into… you [could] get a professional valuation of your property as soon as possible just in case you have to remortgage and you are asked for more money."

Figures from the CML show that, over the three months to September, there were 11.69 million outstanding mortgages in the UK.

source

Remortgaging not a short-term venture, expert warns

2008-12-23T21:02:00.000-08:00

This article was brought to you by Rentman the premium rent management software.

Landlords using property software should think about remortgaging sooner rather than later, an expert has warned.

Kate Faulkner, managing director of Designs on Property, commented that following the effects of the economic downturn on the residential lettings market and the wider economy, increases in mortgage costs have been "pretty horrendous".

However, property owners looking to remortgage must get on to the process long before their current deal ends, she suggested.

"It's not something that you can do six weeks before you remortgage, Ms Faulkner said.

The effect of recession on UK property prices and interest rate cuts from the Bank of England might lead to improved mortgage finance in the near future.

According to research by Tickbox and Opinion Matters fro Cheltenham & Gloucester, published in September, some 42 per cent of homeowners were concerned about the lack of choice available in the mortgage market.

source

Five Advantages to Choosing a Remortgage

2008-12-22T21:01:00.000-08:00

Remortgage Advantage 1: Reward for Credit History

Like most individuals or couples, you probably got your original mortgage earlier in your life. This means you did not have as long to rack up a decent credit history at the time you signed your contract.
However, you probably have built quite a nice credit report over time, especially if you have made all or almost all of your payments in full and on time.
Thus, as a reward for your good credit, why not check out a remortgage. You will be eligible for a lowered interest rate, as noted in the advantage listed directly below…

Remortgage Advantage 2: Lower Interest Rates

Yes, that is right… even if you have what you consider a decent interest rate on your mortgage, you may be able to beat that interest rate by a considerable amount with a remortgage.
Imagine taking out a remortgage in the same amount that you are paying now, but with lower monthly payments. That is like earning a raise overnight… and who would not want cheap land for sale Its the perfect way to find extra money without nosing around your sofa cushions and counting the change that has fallen there

Remortgage Advantage 3: Debt Consolidation Possibilities

Do you have a number of bills that you are obligated to pay each month. Are creditors starting to call on you at all times of the day and night. Do you feel crushed by the amount you owe companies and organizations.
If you are in this type of situation, a lender may be able to help you with a remortgage debt consolidation package. That way, you will be given the opportunity to pay only one bill each month instead of many.

Remortgage Advantage 4: Liquification of Equity

Depending upon the number of years that you have had your mortgage, you have no doubt built up a certain amount of equity i.e., the amount you have paid that has been put into your principle balance.
You can, in turn, take out a remortgage in an amount of MORE THAN your current mortgage, essentially temporarily getting back the equity in your home or property. This way, you can use the lump sum for emergencies cheap land for sale expenses and with lowered remortgage interest rates, you may still end up paying the same monthly repayment that you had been

source

Homeowners use remortgages to maintain lifestyle

2008-12-21T21:01:00.000-08:00

According to a study conducted by researchers at Durham University, the lifestyle and living standards of many homeowners depend upon remortgage cash from the increasing property values of the last decade or so.

They believe that if there were a freeze on releasing equity from the home, which in many cases is what is happening now that property values have started to fall, this will plunge thousands of homeowners into what they term a ‘welfare nightmare’.

Although many have used remortgage cash for luxuries such as a new car or to improve their home, many more have used it for necessities and they believe that by 2005, many were actually relying on this cash.

“The credit crunch is a welfare disaster for struggling households who have previously relied on the option to borrow up against the value of their home,” said Susan Smith, a housing expert at the university. “In the early years of this century we saw a form of self-administered welfare payment develop where homeowners cash in on their homes in boom times: to support children, smooth over a fall in income or meet the costs of relationship breakdown.”

Many cases like this will soon be in negative equity if they are not already. Although remortgaging for extras like a new car or home improvements can make financial sense as it is cheaper than taking out a personal loan, reputable mortgage advisors will have advised their clients that they should increase their mortgage payments to avoid paying for these items over a longer period and ultimately paying more for them. If clients are remortgaging to pay for lifestyle necessities, it is important to establish whether this is sustainable or a temporary move.

The study surveyed more than 8,000 customers across the UK from 2001 to 2005.

source

Mortgage holiday

2008-12-20T21:00:00.000-08:00

Mortgage re-payments

As two million people consider taking a mortgage payment holiday, a new report has a stark warning

Taking a mortgage holiday may not b the ideal answer for homeowners battling the credit crunch - it could push up monthly repayments by £54 million and total interest by £7.2 billion.

Louise Bond of price comparison website uSwitch.com said: "Mortgage payment holidays are a great facility for consumers that are looking to take a short break in order to get married, have a baby or generally chase their dreams.

"However, in this climate the facility should not be used by people that have been struggling to pay their mortgage or keep up with general living expenses for a long period of time.

"A holiday will not make the underlying financial issues disappear. In fact, both the repayments and the debt will actually go up after the holiday and, if anything, it could actually make the problem worse.

"These holidays are simply an agreed deferment but it is by no means a 'freebie' and the interest and the repayments still have to be made at some point.

"Just last month, two leading mortgage providers, Nationwide and Halifax, did the right thing and reviewed their policies on payment holidays. Halifax no longer offers this facility to those who have been made redundant and Nationwide is considering a new rule that will only allow consumers with at least 25% equity in their property to take a payment holiday.

"This is something every mortgage provider should now be addressing to ensure people do not end up in a worse financial situation after the holiday. With house prices expected to fall further in the next 12 months, this could just push homeowners over the edge into negative equity making it really difficult to remortgage."

Mortgage misery

Despite the Government's promise to defer interest payments on mortgages for up to two years, 729,054 people in fear of redundancy are taking matters into their own hands by considering or applying for a mortgage payment holiday

Over one million (33%) people are thinking about or have already frozen mortgage payments to keep up with the cost of living - one in five (19%) to cover holiday costs
A 12 month payment holiday on £150,000 will increase the total interest by more than £10,000 and monthly repayments will go up by £80 after the break

With house prices predicted to fall by up to 15% next year from an average of £158,442 to £134,675, the cost of a payment holiday could push consumers closer to negative equity

Payment holiday

Over 800,000 consumers (7%) have already taken a payment holiday, these people have seen their total interest increase by £2.8 billion and monthly repayments shoot up by £21 million

Following a 12 month holiday, a mortgage for £150,000 will increase by more than £10,000 and the monthly repayments will go up by £80 - this means that consumers with low levels of equity in their homes could find themselves struggling if they need to remortgage.

This may provide a quick fix for these consumers, but with banking experts predicting further house price falls of up to 15% in 2009, this will bring the average house price down from £158,442 to £134,675. For consumers that have anything less than 25% equity in their property, the costs incurred from the payment holiday coupled with falling property prices could push them into negative equity.

Historically, this facility has been used by consumers embarking on a life changing project such as a wedding, a new baby or an extended overseas trip. Unfortunately, today's financial climate is pushing three million more consumers down this road just to keep up with the cost of living (1,046,034) or to cover holiday costs (602,262). However, 1.4 million consumers think that the interest is frozen during this holiday and 6% think it's completely free so it's unlikely these people will fully understand the long term financial implications of this decision.

Every mortgage customer has to 'apply' for a payment holiday and most providers stipulate that the customer must have successfully paid the mortgage for a specific period of time. With some flexible mortgage customers already being asked to make a lump sum payment to their provider as the value of their property value has dropped below 90% of the mortgage amount, people could find themselves in hot water if they don't fully understand the financial implications of a payment holiday.

Four month holiday

Already, 7% (821,800) of mortgage holders have taken a payment holiday and 2% are in the process of applying. With the average holiday at around four months, these consumers have already seen their monthly repayments increase by £26 and their overall mortgage go up by £3,436. Collectively, these consumers will be paying £21 million more on their monthly repayments and their total interest will have gone up by £2.8 billion.

source

Remortgage cash 'for necessities'

2008-12-19T20:59:00.000-08:00

Most homeowners who remortgaged while house prices were going up did not blow the cash they raised but used it for the necessities of life, according to new research.

Housing expert Prof Susan Smith said the credit crunch will now affect similar families who will not be able to use any equity in their homes to raise finance.

The Durham University expert said remortgaging was more popular than previously thought, and acted as a safety net for struggling families, rather than a way of funding big holidays or a new car.

Researchers looked at the borrowing patterns of more than 8,000 households in the UK from 2001-2005 and found that in any one year, two in five homeowners ended up with higher mortgages than in the previous year, even though they had not moved home.

Instead they had remortgaged or extended their home loan and, on average, these households borrowed an additional £5,000 to £7,500 in a given year.

Some of them tapped into as much as three quarters of their home equity in this way, they found.

Prof Smith said: "The credit crunch is a welfare disaster for struggling households who have previously relied on the option to borrow up against the value of their home.

"In the early years of this century we saw a form of self-administered welfare payment develop where homeowners cash in on their homes, in boom times - to support children, smooth over a fall in income, or meet the costs of relationship breakdown."

She added: "This suggests that the credit crunch is not just precipitating a crisis in the finance community; it could produce a crisis of welfare too. Without the option to use mortgages to channel housing wealth into spending money, families under pressure lose access to their most significant asset base for welfare and are forced to look at other ways of getting by.

"The figures show that housing equity withdrawal has provided a lifeline for struggling families but the credit crunch threatens what has become a new form of self-administered welfare."

source

Remortgaging now could avoid future mortgage debt

2008-12-18T20:58:00.000-08:00

Press Release Summary: Financial solutions company Think Money have said that remortgaging in the near future could help homeowners to reduce their outgoings and avoid falling into mortgage arrears – an increasing problem for British households – and added that mortgage rates could become even lower if the Bank of England lower the base rate further, as predicted.

Press Release Body: Financial solutions company Think Money have advised existing homeowners that now is a good time to remortgage, following the recent Bank of England base rate cut to 2% that has prompted some mortgage lenders to act more competitively with regard to mortgage rates.

They added that there is a strong possibility that the base rate may be cut even further in the coming months – with economists predicting a base rate as low as 0% – meaning tracker mortgages may become a particularly attractive option to homeowners as interest rates fall further.

The Bank of England’s base rate cuts in October and November led to several lenders passing on the full cuts to their variable-rate mortgages. Combined with the September’s base rate cut of 0.5%, that represents savings of £255 per month (£3060 per year) on a typical £150,000 repayment mortgage.

Tracker mortgages, by default, benefited from the base rate cut – and should economists’ predictions of further base rate cuts be true, these homeowners should stand to benefit from even lower mortgage repayments.

A spokesperson for Think Money said: “Existing homeowners could potentially save a lot of money if they remortgage now – and they will be even more pleased to hear that interest rates may fall even further in the coming months.

“Two years ago, typical mortgage rates were around the 6% mark - now we are looking at closer to 4.5% or 5%. A 1.5% fall may not look like a lot on paper, but it represents substantial savings on monthly mortgage payments.

“However, it’s important to take into account the costs of remortgaging – the mortgage arrangement fee, for example – as well as the more limited availability of mortgages and the higher loan-to-value ratio required by a lot of lenders.”

The spokesperson added that while fixed-rate mortgages have seen no widespread interest rate cuts so far, further base rate cuts may encourage lenders to consider their rates.

“Since fixed-rate mortgages represent a long-term decision, lenders have been even more reluctant to commit to lower rates. Nobody can be certain that rates are going to continue to go down, especially when they are as low as they currently are. However, a base rate cut to 1% or 2% might convince more lenders to set more competitive fixed rates on their mortgages.”

Mortgage debt has become an increasing problem amongst homeowners in the midst of the economic crisis, with the Council of Mortgage Lenders estimating that around 45,000 homes will be repossessed in the UK this year, compared with 27,100 last year.

A debt expert for Think Money commented: “The rapid rise in costs of living over the past year has led to a lot of people trying to balance their financial commitments, and in some cases that leads to mortgage arrears.

“It’s especially an issue with people who were offered 100% and 125% mortgages, since their mortgage repayments are higher compared with homeowners who put down a deposit on similarly priced homes.

“The most important thing for homeowners to do if they find themselves falling behind on mortgage payments is to contact their mortgage lenders – it may be that they can come to an alternative agreement, or some kind of payment holiday, in order to allow them to get back on track.

“If the mortgage debt is more serious than that, it may be time to seek professional debt advice. There are a number of debt solutions, such as debt consolidation and debt management plans, that can reduce monthly outgoings – which could be crucial for homeowners who are struggling to meet their commitments.

“As with anything debt-related, if you are looking to do something about your mortgage arrears, it’s always wise to seek professional debt advice beforehand.”

source

Homeowners remortgaging to help weather economic storm

2008-12-18T20:57:00.000-08:00

Homeowners are carrying out remortgages in order to help fund themselves through the current economic situation, a new study has found.

Researchers at Durham University studied more than 8000 UK households from 2001 to 2005 in a study funded by the Economic and Social Research Council.

In any given year, two-fifths remortgaged or extended their mortgages, borrowing an average of £5000 to £75000 more.

They therefore made their mortgages higher than in the previous year but had not moved.

According to the university's findings, drawing on mortgage equity is "a much more popular and frequent event than previously thought", with households securing loans against their homes for essentials rather than luxuries.

Durham University housing expert Prof Susan Smith warned that a "crisis of welfare" could result.

Recently, the Independent reported a study by Energy Reports and Surveys (ERS) which showed that repossessions are bringing remortgage valuations down.

Paul Staley, managing director, explained that valuers need to consider recent selling prices of three comparable properties and that this now includes forced sales and repossessions.

source

Woolwich and PMS launch remortgage exclusives

2008-12-05T08:45:00.001-08:00

Premier Mortgage Service has launched four new remortgage exclusives for its directly authorised channel with Woolwich.

They are an extension of the Woolwich generic fixed and tracker hybrid products.

The products are fixed until 31.01.2010 at 3.99% or 4.49% and then track at 1.99% above Barclays Bank Base Rate which is currently 3% with either a free legal service or cashback option.

They are available at 60% and 70% LTV. All have an application fee of £995.

Funds are limited and need to be booked by calling PMS' broker desk.

Martin Reynolds, corporate manager at PMS, says: “We feel these deal are an excellent compliment to the Woolwich core range and we are delighted that they have chosen us as their exclusive DA partner for these products.

"As funds are limited and the products are attractive the intermediary needs to make sure they have booked the funds with our broker desk.”

source

Britannia makes further cuts to fixed rate mortgages

2008-12-05T08:44:00.000-08:00

Britannia has further reduced the cost of some of its fixed-rate mortgages with rates falling by up to 0.60% for borrowers requiring a loan-to-value (LTV) of 80% or less.

From Friday (5 December) the highlights of the Society's range will include:

five-year fixed-rate products with rates of 4.89% (to 60% LTV) and 5.09% (to 80% LTV); and

ten-year products offering rates of 5.29% (to 60% LTV) and 5.49% (to 80% LTV).

All of Britannia's fixed-rate products are fee free, with some options also offering a free standard valuation and free conveyancing for remortgage customers.

Tim Franklin, Managing Director of Member Business, said: "In addition to some great rates, with no upfront arrangement fees, we're also allowing borrowers to choose their rate now and reserve it for up to four months. So even if their existing deal doesn't run out until next year, they can still take advantage of our current mortgage deals."

Borrowers looking for more information about Britannia's mortgage range should visit britannia.co.uk

source

You want a mortgage? Why have you come to a bank then?

2008-12-05T08:43:00.001-08:00

We asked you, the readers, for details of mortgage applications that had been turned down as we now believe it is criteria and not rates that are strangling the market. So here are the best cases you have come up with, and yes we have included mutual lenders too.

Some of you have asked for your names to be witheld, so we will not publish any, although all were supplied.

Case 1

A wonderful example which fortunately has a happy ending as it should exchange this week was a married couple just about to have their first baby. Mr works for the area’s largest and most secure employer and his wife is on maternity leave. Mr has 3 x p60 all showing £50k salary and his latest payslip is indicating he will make £53,000 this year with a pay rise in January pushing next year even higher. He has a 15% deposit and applied directly to 2 lenders with good rates advertised online. After 2 weeks the first declined him as they had a gap showing on the VR which they were worried about and the second just messed about for another 2 weeks. All he wanted to borrow was 112K a dream case 1 year ago as AAA credit score and all cards are cleared monthly in full and no loans.

I fortunately managed to get it through in a week with Abbey but at 6.44% fixed for 3 years as that is all they have to offer which is disgusting as the rate drops to 4.79 is you have a 25% deposit.

Case 2

I'm a mortgage broker and I'm assisting my wife in buying her mothers home (after probate).

Wife earns in excess of £250,000.

She has a current mortgage in her name alone of £656,000.

She has a couple of loans and credits cards as every normal woman does however she maintains them very well and regularly pays off large sums.

We have applied for a mortgage with Northern Rock as a second home remortgage, they have told her that she has a LOW credit score and therefore can only lend about £20k Both Equifax and Experian have her as a HIGH credit score!!!! We asked for 65% of £115,000 and on the product we were asking for the mortgage payment would have been well below £350pcm.

I should point out that we tried to remortgage the current home with NR but it was declined for the same reason so I elevated it and they approved £500k but we required a minimum of £656,000 to repay the existing loan. I then elevated this to Director level and they approved a remortgage pound for pound. (£656,000)

She had initially asked for 85% of the value £1.1m as on her income regardless of out goings NR affordability calculator would allow for this. (we decided not to continue with them after this)

Her current Mortgage requires an IO payment of £3600 pcm however she is awaiting completion of her HSBC remortgage which will be BBR + 0.69% Lifetime tracker which takes her mortgage under £2,000....

As you can see, affordability is not an issue.....

It seems to me that NR specifically are looking for a reason NOT to lend.

Case 3

I've recently had an application turned down to remortgage a buy to let property for a client, because "there are too many properties in local authority ownership in the area". It was a 75% ltv with rental income coverage of 140%

When I enquired as to how many was too many, they couldn't put a figure on it. They would only say there were too many.

Case 4

Client with BMS has £400k interest only mortgage on property valued £1.36m, plus unsecured debt £36k, UK income approx £75k plus earnings from abroad. Wants to buy new property £230k needs £195k mortgage. Existing mortgage to be converted to self funding BTL with confirmed rental £3600 per month (rental is actually sufficient to cover both BTL and new mortgage). According to BMS he cannot afford the new mortgage! When asked why not, as his mortgage will be 50% of what it is now - all I got was "because he can''t", no calculations or reasoning!. So presumably on that basis BMS will be starting repossession proceedings because if he can''t afford a £195k mortgage he won''t be able to keep paying their existing £400k mortgage!!! Oh well...next lender please....

Case 5

A couple of weeks ago I had the following mortgage case declined by Nationwide - Property value £210,000 - Loan Required £130,000 (62% LTV) - First income £33,000 - Second income £12,500 (Company pension & Incapacity benefit) - Credit histories clear - Loan included £25,000 capital raising to clear credit cards.

Declined "in case they take on more credit cards when we have issued the loan".

Case placed elsewhere with ease!

Case 6

I recently applied for a 70% BTL Mortgage with Bank Of Scotland, for a purchase of a flat valued at 110k, i have my existing main reidence mortgage with them at 520k, and 5 buy to let mortgages with them already, in total around 1 million pounds of borrowing with them, i also own 19 other buy to let flats, and one commercial unit, no missed payments on any of my mortgages.

i was declined, something was mentioned about multiple searches however all the searches were done by BOS, My broker pointed this out to them that this was the case, and was told we know but rules are rules, i make my living from my portfoilio and regard myself as a professional property investor, if they wont lend to me they wont lend to anyone, bottom line is the banks are simply not lending money any more to any one full stop.

My broker run another aplication with the mortgage works at 65% again declined, until this is sorted out values will continue to tumble and repossesions will grow, which they will dump for even less and spiral downwards out of control, the lenders are puting the noose around there own necks, which will be there own down fall, as jobs will go, all caused by there reluctance to lend, even to proffesional property investors.

Case 7

House values £1.2M

Re-mortgage £960K (80% LTV)

City lawyer earning £400K average. This year £400K in first six months.

Answer: No lender interest as LTV too high!!

My comment is that for any mortgages today you need 40% deposit/equity for best rates, and anything over 75% the rates and fees are untenable!

As for B2L re-mortgages........forget above 75% LTV!

Case 8

Scottish Widows bank have just rejected an application as follows:

House value £750k, remortgage on offset required £279k, Clean credit history. Latest net profit c £200k (provable), offsetting the whole £279k but occupation property manager/consultant and they 'won't touch anyone with anything to do with property as very risk averse at the moment' . That decision was by an underwriter, not computer. I fear that when HBOS is tied to LloydsTSB, their lending will fall into line with Scot Wids bank and C and G which will certainly not free up the mortgage market.

Case 9 - This one may be more about overly cautious valuations, has anyone come across valuations where those providing them would appear to be making sure that they might not end up with egg on their faces at some point in the future? Do you think this is an issue too?

I have had 2 recent cases where valuation has stopped everything dead. Client 1 needed to raise £50000 to buy into a small business to keep it running. He tried to raise the funds by remortgaging his property, valued 4 months ago at £410000. (Not unusual in the area.) Valuer put the price at £325000, thereby making the extra money inaccessible. New business goes down the Swannee. Client 2 at the opposite end of the scale, has a 1-bed flat, valued for second charge purposes 3 months ago at £85000, now wants to remortgage instead to take advantage of the better rates. Valuer puts the property at £65000, which also kills the deal. I do not understand why the lenders are downvaluing what are their only assets to such a ludicrous extent, unless it is the CEOs of the lenders making sure that they will get their performance bonuses next year, because none of us will, that's for sure!! Time to get tough with these sharks Mr Brown, and not just talking tough, but action or else tough!

source

Royal Bank of Scotland Cuts Fixed Mortgage Rates

2008-12-05T08:42:00.000-08:00

Royal Bank of Scotland (RBS) Intermediary Partners has announced reductions on its interest rate on its select two-year fixed rate mortgage deals.

If you have 25 percent deposit or 75 percent Loan to Value (LTV), First Active have reduced their online only product 2-year fixed from 5.55 percent to 5.20 percent with a £999 arrangement fee until January 31, 2011. The long term rate is 4.29 percent.

RBS Intermediary Partners said for a standard residential remortgage it will not charge a valuation fee or basic legal costs. RBS IP also added that the lender would accept up to 10 percent overpayments of the original balance per year, during the initial deal period.

If you have a larger deposit of 40 percent, you could take advantage of the reduction in the RBS IP two-year fixed from 4.99 percent lowered to 4.89 percent, this mortgage product also holds a £999 arrangement fee until January 31 2011.

Source: mortgagestratergy

Looking to re-mortgage?

2008-12-05T08:41:00.000-08:00

Many people are reluctant to consider the option of re-mortgaging given the current financial crisis, but it is something that everyone should keep in mind as there can be considerable savings to be made. Here are some thoughts when considering re-mortgaging:

1: Plan ahead – for those on a fixed term deal, keep in mind when your current package comes to an end and begin looking for alternatives a few months in advance. Securing a mortgage can be a lengthy process and making tracks in advance can be advantageous in making sure you get the right deal and at the right time.

2: Shop around for the right deal - The rise of comparison websites allows easy access to view a large number of varying types of mortgages and their specific terms and conditions. Remember that what looks like a very small percentage difference can amount to a very large monetary difference over the term of the loan – make sure all the information is given to you in plain and simple, and easy to understand, terms.

3: Once you find the right deal, make sure you secure it as the recent turmoil in the financial industry has seen lenders resort to withdrawing deals at very short notice.

4: Use any spare funds to reduce the level of your mortgage, this not only gives lenders the impression of willingness to reduce the debt but reduces the capital that the interest calculation and repayment is based upon. Overpayments can be a very good idea, especially with the mortgage interest rates as they currently stand. This can allow a buffer if difficulties are encountered when making repayments and can also drastically reduce the term of your mortgage.

5: Beware of standard variable rates – otherwise known as SVR – as these can be somewhat higher than a fixed rate offer from the same lender.

6: In the current economic climate it may be worthwhile investigating a tracker mortgage. Many believe that the Bank of England will continue to reduce rates in the coming months, and should this happen a tracker will allow your interest repayment rate to fall with the baseline. This can be very lucrative if played correctly.

7: Speak to brokers and take advice, as people in the industry can have a different angle on the information that you may have been given. Do not be afraid to ask many different sources for advice and make sure that they are suitably qualified orgainisations or individuals.

8: Take into account redemption fees, those which are payable on early completion or changing a mortgage. Different lenders have different fees, and sometimes these can be very high indeed. Be sure to check whether your new mortgage deal is not restricted by a high redemption fee or that you are tying yourself to a deal for longer than you wish.

Looking for a re-mortgage deal can be a sensible move and hope some of above basic points have helped. Seek expert advice whenever you are unsure as this is often free and carries no obligation.

source

Who Owns Your Mortgage?

2008-12-05T06:53:00.000-08:00

And this new help for the mortgage industry sent mortgage interest rates plummeting to around 5-percent, the lowest in years. But with more and more mortgage lenders struggling or folding ... Concerns around the country and in the stateline are growing about the safety of our mortgages? And who really owns them? You might be surprised.

"Transferring your mortgage from one company to another could be common place in the future."

And as the economic crisis continues....more and more mortgage companies continue to fold.... a new study says over 80 percent of the companies that service loans.. don't actually own them ... So who does? Local mortgage advisor Terry Bloom says chances are.... its not the company you send your check to.

"Especially now more than ever.. you get a mortgage... You refinance or purchase in some cases the servicing company you're with right now sells that loan to another servicing company."

But if your loan is sold.. the company you send your payments to... is legally required to notify you of the switch at least two weeks before your payment in due.... so you know your mortgage is safe.

"The company that is actually selling your mortgage is called a good bye letter.. the company who is taking over has to send you a hello letter .. basically who we are and these are our phone numbers...If you did send it to the wrong mortgage company by accident without noticing where it needed to go, they do offer a 60 day leeway for you to get that straightened out ."

Bloom says you shouldn't be worried if you're mortgage is sold because the terms... Rate... And agreement you have will not *change.

Bloom says the average stateline homeowner owes 140-thousand dollars on their homes. Mortgage giants Freddie Mac and Fannie Mae have announced they will suspend all foreclosures until after the holidays . And if you have any specific economy questions head to wifr-dot-com, and send them to us. We'll check in with some local experts and get back to you.

source

Interest rate cut: Home in on the best mortgage deals

2008-12-04T06:52:00.000-08:00

Michelle Pughe-Parry recently arranged a new home loan and reports on her experience – as well as offering 10 top tips to ease the process.

Homebuyers keen to benefit from this week's reduction in Bank of England base rates may have to remortgage to do so because not all lenders have cut costs immediately.

But shopping around for the cheapest home loan is not always straightforward because of exit penalties on some fixed-rate, fixed-term deals and hefty arrangement fees imposed on many of the cheapest loans.

These costs can seriously erode savings, as Sean Gardner, a director of the comparison website MoneyExpert.com, pointed out: "When some providers are charging arrangement fees approaching £1,500 borrowers need to consider the total cost of the mortgage and not just the short-term savings available."

When the initial mortgage deal on our two-bedroom flat in Putney, south-west London, came to an end in July we were reluctant to take on another fixed rate as interest rates seemed to be on the way down.

Our broker advised that we move on to our lender's standard variable rate and bide our time. At a whopping 7pc it resulted in an increase of several hundred pounds in our monthly repayment and took a huge chunk out of our disposable income. Still not tempted by any of the deals on offer, we decided to wait for the market to improve.

Then, after two months we could no longer bury our heads in the sand and decided to find a product that was flexible but capped our exposure to market volatility and still allowed us to benefit from further rate cuts. So a tracker seemed best for us. Unfortunately, several lenders then took their tracker products off the market.

Last month, we settled on a two-year tracker with Nationwide. It had a higher arrangement fee than some of the other products we looked at and has a floor, meaning it can't go below a certain rate regardless of how low the Bank of England rate goes, but it gives us the flexibility of being able to change or renegotiate in two years or switch to a fixed rate at any point without penalty.

Armed with some market savvy and the willingness to grab a good deal when you see one, there is no need for you to be floundering on your lender's standard variable rate, wallowing in wait-and-see sentiment. Here are 10 tips to find the best possible remortgage deal:

1. Leave plenty of time – but act quickly on a good deal when you see one

Melanie Bien, director of independent mortgage broker Savills Private Finance, said homeowners start shopping around for a new mortgage at least three months ahead of their existing mortgage deal ending to avoid a rush decision. Ms Bien noted that some lenders will let you reserve a rate up to six months before you need it.

"When you come to remortgage, if rates have risen you can take out your reserved rate, but if they have fallen you can simply opt for the best deal available at the time. There is no commitment to take out the reserved rate – all it will cost you is the valuation and possibly a booking fee, depending on the lender," she said.

2. Shop around, but don't forget to contact your existing lender

Mike Cullen, of MFS Independent Financial Advisers, said that while the internet has many uses, he did not know of a single public search engine that allowed enough filters to accurately tell anyone what product to apply for.

"If you want to know the cost of a five-year fixed mortgage, then you need to add up all the arrangement fees, legal costs, valuation fees and interest charged over five years and then the leaving fees such as sealing fees," he said.

Nathan Wallis, of Halifax Mortgages, advised homeowners to contact their existing lender first. "Some lenders, including Halifax, offer product transfers to existing customers which are part of their 'retention' product range," he said.

3. Speak to a broker

Ms Bien said it is important to search the whole market to find the right mortgage for your circumstances and an independent mortgage broker will be able to help you do this.

Ray Boulger, of John Charcol, suggests you ask your broker to confirm that they recommend mortgages from the whole market, not just from a panel. "If you don't feel your adviser is being totally honest with you or can't answer your questions to your satisfaction, then find another adviser."

4. Don't forget the loan to value

While interest rates are coming down, criteria remain tight and the best deals are still available to those with significant deposits of at least 25pc – or in other words loans to value (LTV) of less than 75pc.

Ms Bien said: "If you don't have this level of deposit or equity in your home but have savings sat in an account that you don't need for anything else, consider reducing the LTV to gain access to a wider range of cheaper rates."

Katie Moore, of Nationwide, said borrowers also need to look at how their interest is charged. "If the interest rate is the same, deals that have interest charged on a daily basis will be cheaper than those that charge on an annual basis. To compensate for this some lenders charge you a higher rate of interest on daily interest deals. Check how the interest is calculated when comparing it to similar products."

5. Valuation – get it done sooner rather than later

Mr Boulger said: "Mortgage valuers are cautious in this market. If you've had a valuation from an estate agent expect the mortgage valuation to be lower."

One reason for starting to look for a new mortgage at least six months in advance is that as property values are falling and getting the mortgage valuation done early may make the difference between being deemed to have enough equity in your property to qualify for a remortgage or missing out.

6. Track now, fix later – but read the small print

Ms Bien said: "Consider a tracker but watch out for potential problems –- such as floors limiting how rates will go – in the small print."

She added that with some economists predicting interest rates falling as low as 2pc, the only way to take advantage of this is a variable-rate deal. "If you do not need the security of a fixed rate then a tracker is a better option than a discounted variable rate as the latter is linked to the standard variable rate, which is set at their discretion. A tracker is more transparent."

Many lenders, including Halifax, are offering features such as "Rate Guard", which allows homeowners to switch from the trackers to fixed rates with no penalty. Nationwide provides borrowers with the option to "switch and fix" their mortgage. This enables customers to switch from their tracker product before the end of their deal to a fixed-rate product, should their circumstances change, or interest rates rise.

Mr Cullen said that when the Bank of England rate dropped by 0.5pc earlier this year, lenders had no choice but to withdraw a large number of tracker products because interbank lending rates were little changed.

7. Look after your credit history

Mr Boulger warned that lenders are becoming increasingly fussy about blemishes on your credit reference files, such as late payments on a mortgage or even a credit card. These can deter lenders from offering you the most attractive rates because you may be regarded as a high-risk borrower.

He said: "Make sure you have set up direct debits for the mortgage and to at least pay the minimum on any credit cards."

8. Make sure you're on the electoral roll

"One of the most common reasons for creditworthy people getting a lower than expected credit score is that they are not registered to vote anywhere," said Mr Boulger. You may not care which party runs the town hall or Parliament but it worries lenders if there is no record of your existence on the electoral roll.

9. Boost your credit score

Lenders are looking for dependable borrowers more keenly than ever, as they struggle to survive the credit crisis and avoid making bad loans. So, the longer you have lived at your current address, been with the same employer and had your bank account, the better your credit score will be.

Mr Boulger said: "Try not to change your employer just before you need to remortgage. If you have more than one current account, provide details on the mortgage application form of the one you have had the longest."

He added that borrowers usually got more points in their favour if they put a land-line telephone number rather than a mobile on their application form.

10. Overpay or save for a bigger deposit

Savings may increase the choice of mortgage deals available to you and you might qualify for a lower interest rate. Abbey is formally restoring the link between saving and borrowing but many other lenders now recognise savings as an indicator of a reliable borrower.

Similarly, if you can afford to overpay your existing mortgage before seeking a new deal this will increase your equity – the portion of your home you own in excess of any debts – and consequently improve the choice of loans available to you.

source

Lower Mortgage Rates Are Not the Answer

2008-12-03T06:49:00.000-08:00

On Tuesday, the government announced an $800 billion plan to stimulate the economy by buying $600 billion worth of mortgage-backed assets and $200 billion in consumer-debt securities. The intent is to make it easier for consumers to buy cars, pay for college tuition and get credit cards. Mortgage interest rates fell about a half-percentage point on the news. (See "Fed Aid Sets Off a Rush to Refinance")

Will the effort finally get the economy moving again? Frankly, I doubt it.

Lower mortgage rates can help people buy housing, but only if they feel secure enough in their jobs, and confident enough in their financial future to take the plunge. Given that consumers are drowning in debt -- especially housing debt -- fearful of layoffs, and waiting for housing prices to hit bottom, it's unlikely that they'll react to this initiative with a spending spree.

Consumers don't react to debt like companies, though the government is behaving like they do. Giving companies better access to credit allows them to meet payrolls while they adjust their production and expenses in response to tighter economic condition. But families who can't pay their bills can't lay off a spouse and kids. For them, debt grows from burdensome to monstrous as interest charges accumulate. Eventually, the load becomes overwhelming.

Testifying before the Senate on July 28, Harvard law professor Elizabeth Warren noted that the situation for the middle class has worsened during this decade. She explained that, adjusted for inflation, median household income fell $1,175 from 2000 to 2007, while expenses increased $4,655, pushed primarily by higher costs for mortgages, gas, health insurance and food, in that order. Families with children have borne an additional $3,180 in expenses for day care, after-school care and college tuition. To help cope with these rising costs, families turned to home equity lines of credit and refinancing -- effectively sucking the equity out of their homes -- as well as credit card debt. Nearly 44% of American households now carry a balance on their credit cards, she testified; to retire it, a family earning the median income of $48,201 would have to turn over every paycheck for nearly three months.

Foreclosure or bankruptcy will take a toll on a certain portion of these families, even though, as Ms. Warren points out in her book "The Two-Income Trap" (Basic Books: 2003), that's something most people desperately try to avoid. After studying 2,200 families that had filed for bankruptcy, she found that families that fail financially are most likely to be ones with children, who are struggling to buy and maintain homes in decent school districts, not flippers or status-seekers out to make a quick buck. For every family that officially declares bankruptcy, she writes, there are seven more whose debt loads suggest that they ought to file. But they don't, given the stigma that financial failure still holds in society.

Many Americans are so indebted that a job loss, illness or divorce inevitably pushes them over the financial precipice These days, I'm inundated with pleas for help from readers who were coping with their bills until they were blindsided by bad luck, like the Utah real estate agent who was hit with both diabetes and a falling home-sale market that destroyed her business, or the California man who got behind on mortgage payments after a heart attack, or the Massachusetts woman who lost a high-paying job and took on a lower-paying one that forces her to choose between going without food and heat and paying her mortgage. These readers aren't trying to game the system; they're trying to find ways to hold on to their homes, and failing that, their dignity.

While emergency relief measures and loan modifications may help the hardest cases, there's clearly not enough money in the federal budget to help everyone. Temporary stimulus measures like mortgage rate cuts and easier access to credit are limited, too, since they only work when people feel rich enough to buy something. Ultimately, it will take more permanent solutions, like the proposal recently unveiled by President-elect Barack Obama to boost job growth, to restore confidence enough to get the economy moving again.

In the meantime, expect some relief in the form of more affordable home prices, which continue to fall even with massive government intervention: In the third quarter, they declined a record 16.6% from a year earlier, according to the latest home price index by Standard & Poor's/Case-Shiller. As painful as this deflation is to those who are forced to sell, in the long run, lower home prices will help family budgets to come into balance, and personal debt levels to become more manageable. That will help the economy far more than trying to entice tapped-out consumers to buy bigger houses and more stuff.

source

Borrowers get gift of lower mortgage rates

2008-12-02T06:48:00.000-08:00

Mortgage rates plunged after the Federal Reserve announced that it would buy up to $500 billion of securitized home loans.

Rates on 30-year, fixed-rate, conforming mortgages fell well below 6 percent after the Fed announced Tuesday morning that it would buy up to a half-trillion dollars' worth of mortgage-backed securities over the next year to year-and-a-half. Bankers and brokers say rates will fall as far as 5.25 percent, at least for a while. Last week, the 30-year fixed averaged 6.33 percent in Bankrate's weekly survey.

The rate reduction is exactly what the Fed intended: "This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally," the central bank said in its announcement.

"It's pandemonium around here right now," says Bob Walters, chief economist for Quicken Loans. "This is going to have a major effect on refinancing opportunities and it should absolutely translate into increased home buying."

The Fed's action helps not only buyers, but also homeowners with adjustable-rate mortgages who want to refinance into fixed-rate loans.

The mortgage and real estate industries look upon the announcement as a gift from Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson.

Ryan Kennelly, a mortgage banker for Residential Mortgage Services Inc., of Bedford, N.H., says the Fed's action is huge for two reasons. "First, with lending institutions getting the much-needed support of the U.S. government, (lenders) will ease some of their most restrictive lending rules -- opening the door to more consumers to get loans," he says, adding that more qualified borrowers mean more home sales.

Second, Kennelly says, "This news also couldn't be better for current homeowners who want to stay in their homes but can no longer afford the payments due to their adjustable-rate mortgage increasing. By interest rates coming down, combined with lenders easing some of their qualification requirements, more and more homeowners in this situation will be able to refinance."

The Fed's decision to cut mortgage rates won't help people who can't refinance because they owe more than their houses are worth. And people who already are two or three months behind on their home loans probably won't get much out of it, either, says Dean Baker, economist for the Center for Economic and Policy Research, a Washington think tank.

Baker worries about lack of accountability or transparency: The Fed and the Treasury have not disclosed details about their purchases under the Troubled Asset Relief Program, setting a precedent for secrecy about the Fed's purchases of mortgage debt under the plan announced Tuesday.

"We don't know who they're going to be buying bonds from, or how much they'll pay -- or if they'll overpay," Baker says, adding that if the Fed pays a dollar for a security that's worth 20 cents, "that's the same as handing (the seller) 80 cents."

By buying mortgage-backed securities, the Fed will be taking direct action to reduce mortgage rates.

source

Home shoppers rush in as mortgage rates fall

2008-12-01T06:48:00.000-08:00

Telephones are ringing — and ringing — at mortgage brokers' offices around the country after this week's sharp drop in mortgage rates.

Average rates on 30-year fixed-rate mortgages fell to 5.97%, down from 6.33% the week before, according to Bankrate.com. Some brokers report rates as low as 5.25%.

Borrowers with a $200,000 loan, for example, would save about $63 a month if their interest rate dropped to 5.5% from 6%.

Credit the Federal Reserve's announcement this week that it will buy $500 billion in mortgage-backed securities held by Fannie Mae and Freddie Mac, helping the two mortgage-finance giants increase the pool of money available to banks and other lenders to make new mortgages.

"It is pretty remarkable stuff," says Bob Walters, the chief economist at Quicken Loans, where applications quadrupled Tuesday from Monday.

"Some people might be trying to hold out for even lower rates," he says, "but in 30 or 40 years, we haven't seen them go much beneath these levels. They could, but you're betting against history."

Mortgage professionals used to 10 applications a day may have gotten 200 on Tuesday, says Brian Koss, a managing director of Mortgage Network in Danvers, Mass.

"This is really craziness," Koss says. "This news broke the logjam on interest rates that allowed rates to drop significantly."

Koss recommends that borrowers who find an attractive rate move fast to lock it in.

"If the number works, lock it, and lock it in for 60 days. Drop everything you are doing, get the mortgage professional all of the paperwork they need, so you don't run out of time," he says.

Other mortgage professionals say they're seeing an uptick in applications, but the rates should remain low so people can apply when they're ready.

"Any time you have action like that taking place in Washington," said Jim Sahnger, a mortgage broker with Palm Beach Financial Network, "it takes awhile to get to Main Street. As we're going into the holidays, people are more focused on buying turkeys than filling out a mortgage application."

But the customer surge comes to an industry decimated by business failures and job losses. There are fewer people to handle loans and less money to lend. Lending standards are higher, too.

"It's like someone saying, 'Hey there is free food around the corner!' You don't realize it is free food for 50 — not 500," Koss says.

source

What is it like to be a mortgage broker?

2008-11-30T06:46:00.000-08:00

"I think we had it pretty good, and now we haven't," says Julia DeBattista.

Ms DeBattista, a mortgage broker in Cardiff, has felt the downturn for some time now.

Her work, with Castle Court consultants, is in the centre of town, opposite the museum.

The stairwells are decorated with signed shirts from the professional sportsmen who are among their clients.

But even helping wealthier borrowers to choose a mortgage has become more difficult as lenders keep withdrawing their products.

It is a tendency that makes life harder for mortgage brokers across the country.

"There's much more running around to get mortgages submitted on time before they're withdrawn," says Simon Pritchard-Jones, the Manchester and Cardiff-based head of WH Ireland's financial advice business.

Inundated

Lenders have been raising rates and withdrawing products because it is getting more expensive for them to get the money that they lend to homebuyers.

Smaller lenders are also having to withdraw because if they have a product that appears on a best-buy table they are inundated with more business then they can handle.

It is not just the products being withdrawn that makes life tough for brokers.

The lenders also regularly change the terms and conditions of mortgages so, for example, a borrower would need a bigger deposit to qualify for a rate or it would no longer be available to customers who self-certify their income.

"Sometimes we come to complete and the lender says 'sorry we don't lend on new-build properties any more' and they withdraw the offer," Ms DeBattista says.

"It's really much more work for the same pay."

Strange market

The problem for many brokers is that they work on a commission paid by the lender when a mortgage is taken out by their clients.

But the mortgage market has become so strange that it does not always work like that any more.

So many products have been withdrawn that people with mortgages of more than 90% of the value of their home, for example, or some people with buy-to-let mortgages, are struggling to remortgage at all and their best option may be to stay with their existing lender.

Ms DeBattista has found herself in the extraordinary position of having to recommend that some clients should stay on the lender's standard variable rate (SVR), but of course that does not earn her any commission.

"You do the review, put in the work, give best advice and don't get paid anything," she says.

"I've been broking for six years now and I'd never, ever recommended staying on an SVR before."

Another problem for brokers has been the introduction of dual pricing, which offers borrowers better rates of interest if they approach the lender directly instead of going through an intermediary.

"I can't do anything other than recommend that the client goes to the lender directly because they are going to get a better deal," she adds.

Driving instructors

In such circumstances, brokers are having to find other ways to make a living.

Ms DeBattista has heard that a number of brokers have started retraining as driving instructors to supplement their income.

Others are trying to make money offering services such as advice on home insurance, debt management or investments.

An alternative is to start charging fees for mortgage advice. While there are few new mortgages being taken out as the housing market is slowing, there is still business helping people remortgage.

"At the end of the day we're professional advisers and you wouldn't go to a solicitor or an accountant and expect them to work for you for free," Julia DeBattista says.

She has started charging an upfront 'commitment fee', which is refunded when the new mortgage has been completed.

Changing behaviour

But it is not all bad news for brokers.

Some of them say that the financial crisis has changed the behaviour of customers who would normally just go to the bank where they have their current account for a mortgage.

Now, because so many high street banks have been in trouble, they are shopping around and taking independent advice.

"The banks in some cases have said 'no' or the products they've got are so dreadful that it's completely unappealing so they turn to people like us," says Mr Pritchard-Jones.

"So in a way this whole credit crunch has been quite a good thing."

Clients also now understand that there is a degree of urgency in the process, because there is a danger that a rate will be withdrawn if the application does not go in quickly enough.

"You send paperwork to the client and sometimes it can just sit on the coffee table, so putting that pressure on them does gets it moving," Ms DeBattista says.

But sometimes, things happen that even the fastest application could not overcome.

"I opened my mailbox this morning and unfortunately an e-mail from Principality Building Society had been put into my junk mail box, so I got a message at 8:30 this morning that they're going to withdraw products at 5:30 yesterday afternoon," she says.

Advice for remortgagers

2008-11-29T06:45:00.001-08:00

Homeowners needing to remortgage may be able to take advantage of the low base rate by going for tracker or discount mortgages.

Writing on finance website Fool.co.uk, Alison Hunt said that borrowers on variable rates or those needing to remortgage should make such a switch in order to make the best of any future cuts in the base rate, explaining that there has been speculation that more reductions could be on the way.

She noted that people on expensive fixed-rate deals probably should not switch if they have small deposits.

But those with deposits of 25 per cent or more may be able to save by changing products, even taking the added costs of penalties and fees into account.

But Ms Hunt did warn that the base rate cannot be predicted with certainty.

Meanwhile, Christina Jordan of Moneysupermarket.com offered advice on MSN Money to borrowers who needed to take up their lenders' standard variable rates (SVRs) when they could not find any remortgage deals.

She said that recent falls in interest rates had been good news for such borrowers and that people reverting to an SVR would not pay for remortgaging.

source

HOME TRUTHS REMORTGAGING: The agony of cheap loans.(Features)

2008-11-26T08:34:00.000-08:00

IT CAN be one of the most refined pieces of financial torture ever invented. You take out a mortgage, only to watch interest rates fall again and again while you still seem to be paying just as much.

Last week the Bank of England Monetary Policy Committee added to such misery by cutting its key base rate to 4 per cent, the lowest since 1963. And many commentators are convinced that will not be the nadir. Further cuts may be on the way.

There are hundreds of pounds a month to be saved by constantly scanning the "best-buy" tables and moving to a lender offering a more competitive mortgage rate.

But the remortgaging game has reached epidemic proportions, accounting ...

source

How to remortgage

2008-11-25T08:33:00.000-08:00

Depending on how long your mortgage deal lasts, it is fairly likely that there will come a time when you will need to remortgage to a different deal to avoid higher repayments on your lender's standard variable rate (SVR).

But remortgaging is not a straightforward swap. There are usually fees involved and your loan will be subject to a new property valuation. Follow our guide to make the process as pain-free as possible.

Think ahead

It is possible to book a mortgage rate with a lender up to six months in advance. This can be useful if you think that interest rates are likely to rise by the time you come to remortgage, or if the mortgage market looks volatile. Otherwise, brokers recommend that borrowers allow six to eight weeks to secure a new loan before the old one expires.

Research the market

Finding the best rates requires a three-pronged attack. Ideally, you should ask a broker, as well as approaching two or three lenders directly and using price comparison websites, such as Moneyfacts.co.uk and Moneysupermarket.com. There are also a number of online mortgage brokers, such as mform.co.uk.

Reduce your loan size

If you have a mortgage worth more than 75 per cent of your property's value, you will miss out on the best rates. However, the lower the proportion you owe, the better the rate you can secure. At the end of the current deal it is worth using any spare savings to pay off some of the loan. This will improve your chances of finding a competitive rate. Alternatively, most lenders will allow you to pay off an extra 10 per cent a month.

Choose wisely

Your circumstances may have changed since the last time you took out a mortgage, so it is important to reassess what type of loan you need. For instance, if you were previously on a tracker rate but your budget is now being squeezed, you may be better off taking a fixed rate this time around. Or if you are planning to move soon, you may prefer to take out a shorter-term deal. Anyone who has managed to build up some savings could benefit from an offset loan, which reduces the interest you pay on the mortgage, thus decreasing your mortgage term.

Don't waste time

Waiting until you are already paying your lender's SVR can be a costly mistake.

The SVR is the default mortgage rate that lenders charge all borrowers when they come to the end of a lower-rate deal. It is usually much higher than the rates on deals, so even though you may have to pay a fee to remortgage, it is almost always cheaper over time to pay the fee than remain on the SVR.

The average SVR is currently 7.11 per cent, about 1 percentage point higher than average fixed-rate deals. On a £150,000 loan, repayments on an SVR would cost an extra £94 a month.

Be decisive

Depending on market conditions, you can have anything between a few weeks or a few seconds to decide whether to take a deal. This is because lenders first offer you a decision in principle. This is not a binding offer - the lender is committed to lending the money only after it receives your application and makes a formal offer.

Sometimes demand can be so high that a lender is able to offer a deal in the morning, only to withdraw it in the afternoon and replace it with a higher rate. This is where having a broker, who usually has a relationship with lenders, can come in handy.

Mortgage offers come with expiry dates, too, so check when it runs out because delays could mean that you have to go through the whole application process again a few months later.

source

R.E. Mortgage Corp. Re-elects Quinter President

2008-11-24T08:32:00.000-08:00

At the annual meeting of the stockholders of the Real Estate Mortgage & Guaranty Corporation on Thursday the retiring board of directors was re-elected. The following officers for the coming year were elected by the board: L.E. Brenninger, chairman, Ralph D. Quinter, president; Wilmer F. Stickle, executive vice president and treasurer; Thomas Somerville 3d and Horace G. Smithy, vice presidents; Robert E. Hazell, secretary; Roy E. Bebermeyer, assistant secretary, and L. Harold Sothoron, general counsel.

source

Surge in remortgaging helps UK lending hit record high

2008-11-23T08:31:00.000-08:00

Mortgage lending soared to a record high in July, despite a squeeze in the sub-prime end of the market. The Council of Mortgage Lenders said yesterday that borrowers were rushing to remortgage in a climate of rising interest rates.

However, at least seven British sub-prime lenders have raised their interest rates or withdrawn products, according to Money Marketing magazine. Victoria Mortgages , GMAC-RFC, Unity Homeloans, Infinity Mortgages, Mortgages plc, Preferred and DB Mortgages (a subsidiary of Deutsche Bank) are affected. The "sub-prime" sector in the UK accounts for about 10 per cent of home loans; its American counterpart has become infamously associated with the global financial crisis.

In Britain's mainstream home loans market, things seem much rosier, for now at least. The Council of Mortgage Lenders announced yesterday that gross mortgage lending reached a new record for the month of July, at £34.4bn, down by 1 per cent on June, but 13 per cent higher than in the same month last year.

A spokesman for the council stated that "mortgage lending remains robust despite the five interest rate rises since last August. Lending is being fuelled by a large number of people remortgaging to better deals in case rates go any higher. As we move into the autumn the cumulative effects of these rate rises will become more pronounced, and we expect this to feed through to lower levels of mortgage lending as the year progresses". Remortgaging in the "specialist sector", typically for buy-to-let properties, has seen especially strong growth.

The picture was confirmed in data from the British Bankers' Association, which said mortgage lending rose £5.7bn last month, up from £5.4bn in June and above trend. "July's strong rise was surprising, given the expected cumulative impact of higher interest rates", said David Dooks, BBA director of statistics. "This resilience shows the popularity of home ownership and also reflects more remortgaging activity". Underlying credit card lending fell for the fifth month running, down £73m.

Meanwhile, the Building Societies Association suggested that mortgage lending growth for traditional residential purposes (as opposed to buy-to-let and other purchases) was easing. The BSA said seasonally adjusted mortgage approvals - also a more forward-looking indicator of housing demand - amounted to £3.6bn in July, down from £4.9bn in the same month last year. "This is a tale of the five interest rate rises in the last year feeding through to the market," said Adrian Coles, BSA director general. "The strong start to the year has fallen away."

source

The best remortgage options

2008-11-22T08:33:00.001-08:00

As mortgage costs rise, finding a good deal can be a hard slog

Mortgage costs are at their highest for seven years and it is getting more difficult by the day to get a decent deal – not helped by several lenders refusing to pass on December's base rate cut.

Not surprisingly the number of people remortgaging is slipping. Remortgage volumes declined by 21 per cent in November compared to October with more borrowers deciding to stay with their existing lender at the end of fixed rate loans, according to the Council of Mortgage Lenders.

It blames unattractive loans, the increased costs of remortgaging but also suggests that many homeowners are lying in wait - anticipating further rate cuts in the New Year. If you are coming to the end of your current deal, moving to your lender's variable rate is the cardinal sin as rates will be northwards of 7 per cent.

But there are thousands of offers on the market – and the one offered by your lender may not be the best deal in town. We asked the experts which deals they rate for homeowners looking to remortgage.

Melanie Bien, director at independent mortgage broker Savills Private Finance, says that when choosing a remortgage deal it is important to look beyond the headline rate. Many lenders offer low rates in order to propel themselves to the top of the 'best buy' tables but once you factor in the fee or other restrictions such as low maximum loan-to-value (LTV), the deal looks far less attractive.

She adds: "In order to compare mortgages, which is essential in ensuring you get the right one for your circumstances at a competitive rate, borrowers must work out the total cost - rate plus fees and any 'freebies', such as free valuation and legal fees, which often come with remortgage packages."

Jonathan Cornell, managing director at Hamptons Mortgages also warns homeowners against being dazzled by freebies such as a free valuation or free legal fees. Borrowers may find that when the overall value is weighed up, a deal with a very attractive interest rate could end up costing more than a deal carrying a 'freebie' package.

"There is no such thing as a free lunch," says Cornell. "With most remortgage packages, lenders tend to give away extras but by taking these means you have to pay a higher rate of interest. Borrowers must decide if the interest rate savings is greater than their cost. Normally the larger the mortgage the more likely you are to be better off taking the lower rate."

David Hollingworth of mortgage brokers London & Country agrees that picking the right remortgage product is all about looking at the whole package.

"Arrangement fees can amount to well over a thousand pounds or even be calculated as a percentage of the loan size. These are not the only fees that borrowers may encounter when remortgaging with valuation and legal fees often payable. However some deals will offer help with some or even all of these fees and incentives of free valuation and legal work for those remortgaging are common."

Mr Hollingworth says much will depend on the size of the mortgage. Those with a large loan may find that they are better off seeking the lowest rate that they can find even if it brings a larger fee. The impact of the fee will be less on a larger loan, so those with a more modest loan would be best to look for products offering assistance with the switching fees.

"Most lenders offer a range of products with differing rate and fee structures so there are often something to suit everyone. However while a broad choice is a good thing to have it becomes harder to wade through the huge number of deals and find the right one," adds Hollingworth.

Some of the best remortgage deals have relatively low LTVs because many homeowners will have built up significant equity in their homes. For example, Savills Private Finance has a semi-exclusive funded by Abbey fixed at 5.57 per cent for two years with £1,999 fee which is available up to 90 per cent LTV.

Woolwich has a tracker at 0.14 per cent over base for two years giving a pay rate of 5.64 per cent with £995 fee but an even lower LTV of 80 per cent.

Ms Bien adds: "For borrowers with higher LTVs, of 95 per cent, remortgage deals are available but there is less choice.

Ms Bien said: "The Co-op has a tracker at 0.01 per cent under base for two years, for example, giving a pay rate of 5.49 per cent with £999 fee and available up to 95 per cent LTV. All of these have free valuation and legal fees, which helps keep costs down."

Mr Hollingworth reckons that people with small mortgages may be well served by a longer term product, offering good ongoing value rather than incurring the cost of switching every couple of years. Lifetime trackers could therefore be a potential solution, he says.

"For example, Hinckley & Rugby Building Society offers a lifetime tracker at 0.24 per cent above base with initial pay rate of 5.74 per cent and it is also capped at 5.99 per cent - there is a fee of £845 and free legal work for remortgages," says Hollingworth.

"For a completely fees-paid lifetime tracker, Woolwich offers a deal at 0.47 per cent above Base with no fee, free valuation and legal work for remortgage. Neither carries early repayment charges at any time. For borrowers looking at shorter term deals, Mr Hollingworth suggests Co-op's tracker at 5.49 per cent with a £999 fee but offering a free valuation and legal work. Mr Hollingworth also recommends First Direct's 2-year fix at 4.99 per cent has to be worth considering for the rate despite the fee of £1498 because it does offer free legal work for remortgages."

Ray Boulger, senior technical manager at John Charcol "Swap rates have fallen sharply recently to around 5 per cent but fixed rate mortgage pricing has not yet caught up with these lower rates, although this week Leeds Building Society launched rates of 5.25 per cent with a £999 fee, but only available up to 80 per cent LTV, only up to £250,000 and on annual interest and without remortgage freebies. However, there is a remortgage option at 5.85 per cent fixed which is good value for smaller mortgages, say up to £125,000, despite the higher rate because it has no arrangement fee, a free valuation up to £335 and free legal fees, although again it is on annual interest."

Mr Boulger said the size of the LTV would not be a major factor in what type of rate to choose, what is more important is the Bank Rate. He said: "A tracker will be better value in the short term, although some borrowers will always prefer the comfort offered by a fixed rate if their monthly mortgage payment represents a high proportion of their income."

source

Reduce Costs with the Remortgage Reminder

2008-11-22T08:30:00.002-08:00

North Mortgages, Manchester's whole of market mortgage broker, has revealed an innovative Remortgage Reminder Service to help homeowners reduce their costs.

Most UK homeowners pay more than necessary to buy their home due to a reluctance to actively manage their mortgage when it comes up for renewal. Staying with a lender after the end of the agreed term of the mortgage could mean reverting to the lender’s Standard Variable Rate (SVR), which is often more expensive than the more competitive fixed rate or tracker deals that maybe available.

North Mortgages' new Re-mortgage Reminder service provides a prompt three months before your current mortgage deal comes to an end. It is easy to sign up - simply by entering the date the current mortgage ends.

The three month window allows home-owners to consider their options: either to stay with their existing lender, or save money by looking for another mortgage provider.

North Mortgages' chief mortgage broker, Jonathan Smith, said: "The economic climate is forcing home owners to review their outgoings. Most people regularly shop around for the best deal on car insurance, phone and utility bills but they don't do the same research for their mortgage. There are huge potential savings to be made by reviewing mortgages early, as the mortgage is typically the biggest outgoing that a homeowner has. Even a 0.25% reduction on a mortgage interest rate will dwarf the savings the borrower can make on home and car insurance."

Use the Remortgage Reminder today: http://www.northmortgages.co.uk/mortgage-reminder.

About North Mortgages – http://www.northmortgages.co.uk

Established in 2007, North Mortgages has built up a reputation as a whole of market mortgage broker with access to the best deals on the market.

North Mortgages has helped thousands of people obtain independent advice on Mortgages and Remortgages in Manchester and the UK. For more information visit www.northmortgages.co.uk or contact the whole of market mortgage brokers now on 08000 949 595.

source

Customers face remortgage nightmare as nationalised Northern Rock sheds ‘flexible’ deals

2008-11-22T08:30:00.001-08:00

THOUSANDS OF Scottish borrowers could struggle to find a mortgage following the nationalisation of Northern Rock. If they cannot switch to another lender, they could eventually lose their homes.

The government last week announced its decision to take over the running of the beleaguered bank, amid fierce criticism from the shareholders. But borrowers could also lose out.

Northern Rock has about 800,000 borrowers, up to 10% of whom are in Scotland. The bank often won customers with its flexible deals. So, it might lend a customer more than five times his or her salary compared with the more typical income multiple of three-and-a-half times. Its Together mortgage was also a big seller. It allowed customers to borrow up to 125% of the value of their house, so more than the property was actually worth.

But Northern Rock no longer wants as many mortgage customers because it needs to pay back its debts. It therefore upped the rates on its home loans when the troubles started last year. Katie Tucker of John Charcol, a mortgage broker, says: "Northern Rock's mortgages are currently extremely uncompetitive, with rates, in some cases, more than 1.5% higher than other lenders."

Northern Rock hopes that the higher rates will deter new customers. It also hopes they will push existing borrowers to switch lenders when they come to the end of a fixed deal with the bank.

But experts are worried that some borrowers might not be able to find another lender when they come to switch. The global credit crunch that sparked the crisis at Northern Rock has rippled through the market. People with bad credit records now struggle to find a mortgage. Lenders are also more wary of borrowers with big loans - and that could be bad news for some customers of Northern Rock.

Last week, Alliance & Leicester pulled the plug on its controversial 125% deal, quickly followed by Abbey and Coventry Building Society. Tucker says: "Only a few lenders still offer deals at more than 100%, so anyone with an existing mortgages in excess of 100% should overpay as much as possible now, as their chances of having a remortgage option when the time comes are slim."

The same is true for people with big income multiples. David Hollingworth of L&C, another mortgage broker, says: "If you aren't a standard borrower, it might not be as easy to find a good mortgage deal, so you should take every opportunity to reduce the size of your debt."

Borrowers who cannot switch will be stuck with Northern Rock - and their payments could soar. For example, someone with a £100,000 interest-only loan at a fixed rate of 5.19% would currently make monthly payments of £432.50. If they had to stick with Northern Rock when the deal expired, they could end up paying the lender's standard variable rate of 7.59%, and their monthly payments would shoot up to £632.50.

Richard Brown, chief executive of Moneynet, says: "Unless they can persuade a different lender to offer them an affordable alternative, thousands could face losing their homes when their fixed-rate deals revert to Northern Rock's standard variable rate. Many Northern Rock customers are going to lose out in the worst possible way."

source

PMS reveals Woolwich remortgage exclusives

2008-11-22T08:29:00.000-08:00

Mortgage exclusives continue to slowly return to the market with the latest deal between Premier Mortgage Services and Woolwich.Last week Woolwich launched a 3.99 per cent rate for new borrowers, but now it has launched a remortgage option with the mortgage club.

The Woolwich generic fixed and tracker hybrid products will be fixed at 3.99 per cent or 4.99 per cent they then track at 1.99 per cent above the Barclays Bank Base Rate, which is currently just 3 per cent. The deals are available at 60 per cent and 70 per cent LTV.

PMS corporate manager Martin Reynolds says: “We feel these deal are an excellent compliment to the Woolwich core range and we are delighted that they have chosen us as their exclusive DA partner for these products.”

source

Remortgage market suffering as diversity declines

2008-11-22T08:28:00.000-08:00

Remortgage business is under threat as the diversity of products in the market continues to decreae, advisers have warned.

Peter O'Donovan, a mortgage adviser for London-based IFA BestInvest, said the reduction in the number of lenders offering competitive product choices in the current market had meant many clients were now better off remortgaging with their existing lender.

If this were to continue, he said it could have a significant impact on the level of income acquired by advisers from remortgage business.

Mr O'Donovan said: "I have only really used five lenders this year and so in two or three-years time, when the products start to mature, unless someone has come back in to the market it might well be that we are still saying to people stay where you are.

"So the remortgage business in the future might start to drop off for intermediaries. It will be a lot harder for those used to the two to three-year churning in the future because there is going to be fewer lenders who are taking the business."

Ronan Marrion, a mortgage adviser for Truro-based IFA Worldwide Financial Planning, said for people coming off fixed rate deals it was looking more attractive to remain on the lender's standard variable rate.

Mr Marrion said: "This is a situation that I cannot see changing dramatically any time soon. In short term, until the Libor rate is reduced to a level which is suitable for lenders to re-enter the market, the remortgage market will remain difficult and this something intermediaries should be prepared for."

Katie Tucker, technical manager for Derby-based Mortgageforce, said Mortgageforce was sending out guidance to advisers that rate is not the only reason for a client to remortgage.

She said: "In the cases where long-term risk is not compromised and there is sufficient equity, advisers should be checking if the borrower would be genuinely better off in terms of affordability by increasing their loan to consolidate other debts or carry out home improvements than increase the property value, or even give themselves a safety cushion of money overpaid straight back in to allow for payment holidays later."

source

Why You Don’t Need To Remortgage

2008-11-22T08:27:00.000-08:00

Standard variable rate (SVR) mortgages have been a huge no-no for borrowers for as long as I can remember.

That's because in normal times, you're much better off borrowing on a mortgage 'deal.' So when you first take out a mortgage, you might sign up for a three year introductory deal where you're paying a better rate than the SVR. Then when the three year period is up, you switch to another special rate deal and avoid the dreaded SVR.

But all that has changed because, bizarrely, the banking crisis has now forced lenders to price SVRs so competitively that some are now among the best mortgages on the market.

As you know, the Bank of England cut the base rate by a bold 1.5% earlier this month. Since then, the government has put serious pressure on the largest lenders to pass on the cut to borrowers. And suddenly lots of SVRs are attractive.

Here’s how the big players reacted to the base rate cut:

New standard variable rates

Lender	New SVR %	% cut	New monthly repayments*	Monthly reduction in payments*
Abbey	5.44%	1.5%	£921	£139
Barclays (Woolwich)	6.64%	No change	N/A	N/A
Halifax	5%	1.5%	£876	£136
HSBC	6.25%	No change	N/A	N/A
Lloyds TSB/C&G	5%	1.5%	£876	£136
Nationwide	4.69%	1.5%	£850	£133
Northern Rock	5.84%	1.5%	£951	£141
RBS NatWest	5.19%	1.5%	£893	£137

*Based on a £150,000 repayment mortgage over 25 years.

Most of the big mortgage lenders have indeed chosen to pass on the rate cut, reducing the SVR by the full 1.5%. But, interestingly, Barclays and HSBC -- both of which turned down help from the government’s £37 billion bank bail-out -- are yet to apply a similar cut. Although HSBC will be reducing the SVR to 5.44% from 5 December.

Nationwide is currently offering the most competitive rate on the market at 4.69%. A borrower with a £150,000 mortgage (over 25 years) would pay just £850 a month.

But, don’t forget, SVRs haven’t reduced across the board. If your mortgage deal is almost up, don’t make the mistake of assuming your lender’s SVR is necessarily a good bet.

At the other end of the spectrum, Chelsea Building Society’s SVR is far higher at 7.24%. Here monthly repayments would set you back £1,083 -- that's £233 more each month than a borrower would pay on Nationwide's SVR.

Should you choose the SVR now?

If your current lender has a brand new, cheap SVR and your introductory deal with them is due to end soon, lucky you! There’s certainly a case for sticking where you are -- at least in the short-term.

Better still, you’ll be moved onto the SVR automatically if you don’t do anything else, so it should be a hassle-free option. And you won’t normally have to shell out for an arrangement fee, or be tied-in if you decide you want to remortgage elsewhere later on.

For those of you with a relatively small mortgage, avoiding high remortgaging fees becomes even more important. It may be more cost-effective to move onto your lender’s fee-free SVR, rather than pay arrangement fees for a special rate with another lender -- even if that rate is lower. Make sure you compare mortgage deals on the basis of true cost before you take the plunge.

New borrowers

But what happens if you aren't an existing borrower? The trouble is -- even though SVRs were once the lender’s bog standard, no frills home loan -- now they're far more attractive, many are simply no longer widely available to borrowers.

Nationwide’s SVR is really tempting, but alas it isn’t open to new borrowers or remortgagers. And you won’t be able to get your hands on Lloyds TSB’s 5% SVR now either. This is becoming a pretty common story these days.

SVRs are certainly more exclusive today than they have been in the past, but it’s not impossible to find a competitive deal which is still open to new borrowers.

Bristol & West, for example, offer an SVR at an appealing 5.49% which is available to all new customers.

What’s more, there’s no arrangement fee and no early repayment charge. You will, however, need a deposit, or equity stake in your home, of at least 25% to qualify.

Just one word of warning: if you can find a competitive SVR with a new lender do watch out for the arrangement fees. With SVRs you won’t normally be tied-in, so the lender has no way of knowing how profitable you’ll be to them as a borrower, or for how long. So to boost the lender's profits in another way, arrangement fees have been creeping up.

Should you stay or should you go?

If you’re starting to think your lender’s SVR could work for you, do bear these points in mind:

Your lender will decide what rate the SVR will be set at, so there’s absolutely no certainty what will happen to your repayments in the future.
Your lender may choose not to pass on future base rate cuts. If your lender has already dropped the SVR by 1.5%, they may not be so keen to pass on further reductions to borrowers.
Other deals may be more suitable for you. If you want to know exactly how much your mortgage will cost each month, go for a fixed rate instead.
Tracker mortgages look attractive when the base is expected to fall because lenders have to cut the rates accordingly -- unlike SVRs. Further reductions are on the cards, so you may prefer this type of deal.

Choosing the right mortgage can be been tricky. If you need help, why not speak to a broker at The Motley Fool Mortgage Service.

source

Buy-To-Let Yields Remaining Stable

2008-09-03T07:22:00.000-07:00

Buy-To-Let Yields Remaining Stable

Buy-to-let yields remained stable at 6.4% for the second consecutive month in June, according to Paragon Mortgages Buy-to-Let Index. Average UK rents, which had been rising rapidly, have stabilised just short of £1,000 a month, and remain 9.3% higher than a year ago.

Regions achieving the highest yields in June were Wales (7.6%), the North (7.4%) and the North West (7.3%).

Over the coming months, the buy-to-let market will be a vital source of stability in an uncertain housing market. Returns remain attractive and strong tenant demand encourages landlords to retain property, whilst also looking for opportunistic purchases. The average portfolio gearing is less than 40% - giving landlords plenty of room to free up equity for further investment.

John Heron, managing director of Paragon Mortgages, said: For the vast majority of landlords, a slow housing market is nothing new. They recognise the counter-cyclical nature of buy-to-let and many landlords have held property through previous housing cycles. Falling prices are spooking first-time buyers and they are delaying house purchase, with tenant demand at high levels as a result.'

He added: During the downturn of the early 1990s we witnessed mass possessions because there was little alternative to house purchase and young buyers had borrowed above their means. Today's modern and vibrant private rented sector provides people with a viable alternative to owner occupation and buy-to-let provides housing for young people who would otherwise have little choice but to buy and be financially stretched.'

Lloyds TSB and Cheltenham and Gloucester reduce mortgage rates

Lloyds TSB and Cheltenham & Gloucester will reduce a number of mortgage rates on Tuesday 29 July by up to 0.38%. Both brands will also introduce a new product range for loans between £50,000 and £250,000.

Example rate reductions include:

Brand	Range	Product	New Rate	Reduction
Lloyds TSB & C&G	£50,000-999,000	2 yr fixed (75%)	6.29% (£995 fee)	0.05%
Lloyds TSB & C&G	£50,000-999,000	2 yr fixed (90%)	6.69% (£995 fee)	0.11%
Lloyds TSB & C&G	£50-999,000	2 yr tracker (75%)	5.89% (+0.89) (£995 fee)	0.10%
Lloyds TSB & C&G	£50-999,000	Full term tracker (80%)	5.95% (+0.95) (£995 fee)	0.38%

New product range £50,000-250,000:

Brand	Product	Rate
Lloyds TSB & C&G	2 yr fixed (75%)	5.99% (£1995 fee)
Lloyds TSB & C&G	2 yr tracker (75%)	5.69% (+0.69) (£1995 fee)

Advisers warn clients to come out of insurance bonds

Almost half of all advisers with clients who have Insurance Bonds are considering reviewing their policies with a view to switching them where appropriate into Mutual Funds, according to a recent survey* conducted by Fidelity FundsNetworkTM.

The findings, based on responses from over 230 advisers across the UK, revealed that over 40% of advisers are already preparing to review clients with Insurance Bonds, with a view to switching to mutual funds where this is appropriate. A further 26% remain uncertain at this stage whether to review, whereas 33% said they will not review.

Only 1% of advisers said that they believed an Insurance Bond would continue to be the best home for most, if not all their clients, which is telling, since a third of them were prepared to admit that up till now they were largely only using Insurance Bonds for 100% of their clients.

Paul Kennedy, Head of Trusts & Tax Planning Solutions, Fidelity FundsNetwork, comments: "As the research shows, advisers are already considering the benefits of mutual funds as an alternative to Insurance Bonds. It was encouraging to see the survey reveal that 90% of advisers understood that the decision whether to use a life bond or a mutual fund can have a substantial impact on the investor's ultimate return? Almost, 100% of them recognised the value that this tax planning adds to their investment service and not a single respondent thought tax considerations were irrelevant."

As we know, recent changes to CGT haven't fundamentally changed the taxation of bonds and mutual funds but they have acted as a catalyst to re-focus minds on the appropriate use of mutual funds. There remains a place for both wrappers. It is only proper that advisers continually review existing investment and where the case merits, make relevant switches, whether assets or tax wrappers. There are many things that will need to be considered and I'm sure that advisers will only recommend a switch from a bond to a mutual fund where it is in the genuine interest of the client."

Coventry cuts offset rates

Coventry will reduce the rates on its offset range by up to 0.30%, this Thursday (31 July).

The new products include a 6.39% Flexx for Term with no early repayment charges, 3 and 5 year fixed rates of 6.45% and a 10 year fixed rate of 6.19%.

Colin Franklin, Head of Sales at the Coventry said:

"Products that are ERC free are very rare in the current market and our Flexx for term product, with a competitive rate of 6.39%, offset functionality, free valuation and legal fees for remortgages, is sure to be popular!"

The Society has also made changes to its buy to let range. Details of all Coventry and Godiva Mortgages products available through Coventry Intermediaries are attached.

For more information mortgage introducers should telephone the central intermediary support team on 0845 757 3612 or log onto www.coventryintermediaries.co.uk

Source: MoneyExtra

The Cheshire slashes rates on its fixed rate mortgages

2008-09-03T07:16:00.000-07:00

The Cheshire slashes rates on its fixed rate mortgages

Cheshire Building Society has slashed the rates on the majority of its fixed rate mortgages by 0.50%, offering borrowers competitively priced options to suit a range of needs.

The Society has reduced the rates on its two, three and five-year fixed rate mortgages and two year fixed re-mortgage and buy to let mortgage.

In addition, its 10 year fixed rate mortgage has also been reduced by 0.30%.

James Taylor, Mortgage Product Manager at Cheshire Building Society, commented: "We have slashed rates across the range to provide real value to our members and new borrowers, to suit a variety of needs. As a building society, we are committed to providing our members with great deals and will continue to develop ways in which we can assist them, particularly given the challenging financial market.

"At the moment, it is cheaper to fund fixed rate mortgages over the long-term, so we are looking at a return to long-term fixed rate mortgages, from 15 to 25 years, as we believe they will offer great value and be in greater demand than previously."

Full details of Cheshire Building Society's fixed rate mortgages are shown below. Rates are correct as at 12th August 2008. Products are subject to availability and may be withdrawn, or subject to change without notice.

RBS and Natwest Give Mortgage Borrowers a Boost

RBS and NatWest announces they are to cut rates by up to 0.30% - with the prices on the majority of new fixed and tracker mortgages lowered by at least 0.10%. These deals are available through RBS and NatWest branches.

Announcing the change Andy Fell, Director of Branch Mortgages at the Bank, said "In these uncertain times, we are committed to helping borrowers who are looking for either their first mortgage or a new competitive deal. We are giving practical support by providing lower rates on all our fixed and tracker mortgages and at the same time, we still have discounts on arrangement fees of £100." The following provides some examples of the new rates available from 4 August 2008.

PRODUCT	PURPOSE	LTV	NEW RATE	FEE	CHANGE
5 year fix	Purchase	<75%	6.24%	£899	-0.30
5 year fix	Remortgage	<75%	6.34%	£899	-0.30
5 year fix	Remortgage	<90%	6.69%	£899	-0.10
2 year fix	Purchase	<75%	6.19%	£899	-0.10
2 year fix	Remortgage	<75%	6.29%	£899	-0.10
2 year fix	Remortgage	<90%	6.64%	£899	-0.15

In addition, NatWest has recently launched a 3 year step down tracker which is completely fee free, meaning there are no set up fees, no legal, valuations or CHAPS fees to pay for a standard re-mortgage. The step down tracker has a decreasing rate of interest across the 3 years and also offers customers a 'Track & Switch' facility, allowing customers to switch to a NatWest fixed rate mortgage product after 3 months if they wish.

3 Year Step Down Tracker Details: Maximum Loan to Value 90%

Year of mortgage	Rate	Early Repayment Charges	Incentives
Year 1	6.89% (base + 1.89)	3%	No set up fees, no legal fees, no valuation fees, no CHAPS fee Track & Switch facility.(for a standard re-mortgage)
Year 2	6.49% (base + 1.49)	3%
Year 3	5.99% (base + 0.99)	3%

Source: MoneyExtra

Remortgaging: Top 10 Tips

2008-09-01T05:57:00.000-07:00

Advice for Remortgaging in the UK

Remortgaging is Time Well Spent

Many people assume Remortgaging will take a long time. However, the process can be relatively straightforward. Most banks are eager to gain your custom and so will try and do most of the work for you. The whole process may take 4-5 weeks, however, this is mostly waiting for the bank to make the adjustments. It will take up little of your time.

Check out Existing Mortgage Dealer First

The easiest and painless way to remortgage is to contact your existing mortgage dealer first. As soon as you revert from an introductory rate to the standard variable rate, ask them about their best remortgage deal. The advantage of Remortgaging with your existing mortgage dealer is that:
Lower costs
Pre qualified – no income checks required and therefore less paperwork.
Easier to make the transition.
Saves time researching other mortgage deals.

Don’t throw money away.

Would you be willing to pay an extra £146 a month for an expensive gas supplier?
If your council tax was £246 a month, but you had the option of spending 1 hour to reduce it to £100 would you do it?

Remortgaging can potentially save £100s. For example, if you have a £150,000 mortgage at a SVR of 7% you would be paying £874 a month. If you remortgaged to a fixed rate or tracker mortgage of 5%, your monthly payments would fall to £728 a month. This is a saving of £146 a month.

Costs of Remortgaging

Remortgaging can incur various costs. These include, exit fees, joining fees and costs of paying a mortgage dealer. However, it is possible to find mortgage advisers who do not charge money for offering advice. Instead they get paid from the commission of the remortgage.

Low Fees vs Low Rates?

Some remortgage deals offer zero fees for making the transition. However, this will inevitably mean a higher interest rate on the mortgage deal. (they give with one hand, but take away with another) If you have a relatively small amount to remortgage, it is best to choose a deal with a low fee. If you have a large amount to remortgage it is more important to get the best interest rate; the fee will be a smaller % of the total mortgage

Remortgage for Debt Consolidation?

If you debts on high interest bearing credit cards or loans, it is advisable to remortgage and take equity withdrawal from the value of the house. This means if your current mortgage is for £150,000 you can remortgage for £160,000. Therefore, you will then have £10,000 to spend on paying off debts or buying a new car. It is better to have loans in the lowest interest paying debt. However, remember that your mortgage is secured against the value of your house. If you default your home can be repossessed. Over time you will also pay more interest.\

Remortgaging: What happens if House prices Fall?

2008-09-01T05:55:00.000-07:00

Remortgaging: What happens if House prices Fall?

In the UK, the majority of homeowners have benefitted from significant house price rises. For example, the average house price has more than doubled in the past 5 years. (why house prices have increased so much) This means that many homeowners have the option to remortgage and gain greater equity withdrawal. This means they will gain a bigger mortgage against the value of their house price.

However, some are concerned that UK house prices could fall soon. This is because they are overvalued. Why House Prices may fall soon

If house prices fall, it could mean that those who remortgage are more susceptible to negative equity. Negative equity means that the value of the house is worth less than the mortgage. The real concern over this is that if you had to sell the house, you would still owe money on your mortgage. This might be a reason to delay remortgaging. However it is worth considering these factors:

Why House Price Fall is not a Bad Thing

1. If you remortgage your house to 90% of its present value, house prices would have to fall by 10% to create negative equity. Therefore, when remortgaging it is worth leaving a safety net of 5-10% to insulate against the prospect of negative equity.

2. If you have debts on higher interest payments it is better to pay off the debts remortgaging, rather than continue to pay the high interest rates.

3. If house prices do fall it may enable the MPC to reduce interest rates. This is because if house prices fall it will reduce growth and inflationary pressures. Therefore, the MPC will be able to cut interest rates. This will reduce monthly mortgage payments and make it easier to pay back. Falling house prices are only a problem if you have to sell your house. Also, it is worth remembering if house prices do fall, it will be cheaper to buy a new one.

READ MORE AT: click here

Advantages and disadvantages of remortgages:

2008-08-08T05:20:00.000-07:00

Advantages:

a good way to enter the buy-to-let market
the sensible way to consolidate credit card and personal loan debts
you can borrow more cash
you can switch to a cheaper interest rate and lower monthly repayment amount
you can borrow extra money to improve your home

Disadvantages:

The interest charges are likely to be greater
You may incur Early Repayment Charges (ERC's) and other costs
Your home is at risk if you fail to keep up your repayments

How to remortgage?

2008-08-03T05:20:00.000-07:00

Applying for remortgages is very easy process. You have to look at your current situation and see how much cash you could save by switching your mortgage lender. When you are ready to remortgage, follow the plan:

Check out your current deal
Check out some new deals
What rate of interest different remortgages carry
Compare the monthly costs
Are there any early redemption charges (ERCs) or exit penalties
Does the mortgage carry any arrangement fees
How long will the whole remortgage process take
Can I remortgage more than once
Compare different types of remortgages

Fixed Rate Remortgages
Discounted Rate Remortgages
Capped Rate Remortgages
Flexible Remortgages
Tracker Remortgages
Bad Credit Remortgages
Shared Appreciation Remortgages
Equity Release Remortgages

Do your sums and make decision based your analyses

Reasons for remortgaging:

2008-07-29T05:19:00.000-07:00

Homeowners may choose remortgages for various reasons:

to reduce the size of repayments
to pay off a mortgage earlier
to raise capital
to consolidate other debts
to get a better rate
to release equity
to move house easier
to fund the likes of home improvements or holidays

Remortgages can save a lot of money, they are the financial equivalent of liposuction, but you have to bear in mind that they don't suit for all people and all situations, especially in the current economic climate with slowing house prices and higher interest rates and mortgage crisis, remortgages should really be driven by need rather than luxury.

Everything you need to know about remortgage

2008-07-24T05:18:00.001-07:00

Remortages are also known as refinancing and in other words it's when you pay off one mortgage with the proceeds that you get from a new mortgage using as security the same property. Remortgages are not a second mortgage on the property, not switching from one product to another with the same lender; remortgages don't involve the removal of one legal charge over a property and its substitution with another in favor of a new lender.

Choosing from different types of remortgages is a big financial decision and bear in mind if you fail to repay your mortgage repayments then you could lose your home, that's why you have to weight up the costs in detail. It's advisable to discuss with an independent financial advisor and not to rush into anything. But if you are careful in your assessment of the benefits of remortgages then there is no reason why you can't save a lot of money. Remortgaging can be a fantastic way of consolidating your outgoings, including any other debts, releasing funds for increased expenditure on your home, or just simply saving you money to save or enabling you to pay off your mortgage earlier than with your current deal.

Remortgaging with Bad Credit

2008-07-24T05:17:00.000-07:00

Low interest rates and the increase in the range of mortgage products over the past few years due to increased competition have meant that there has never been a better time to review your existing mortgage arrangements, even if you have a poor credit history caused by previous unpaid debts or late payments.

To put it simply, there is a good chance you could save money by remortgaging.

What is a remortgage?

Remortgaging means switching to a different mortgage deal. This could be with your existing mortgage lender, but more often than not it will be with a different bank or building society. If you have credit problems, or have been turned down by a mainstream mortgage lender, then a specialist adverse credit mortgage lender may be the answer.

In the past, many people never bothered to remortgage, but it looks like that situation is finally changing. According to the Council of Mortgage Lenders, in January 2003 (for the first time ever) remortgages accounted for more than 50% of the total monies advanced by mortgage lenders

Remortgages remortgages remortgages!

2008-07-24T05:15:00.000-07:00

A remortgage is a process that replaces an existing mortgage loan with a new loan from a different lender. The new lender repays the existing mortgage debt to the original loan provider. The borrower is then left with just one mortgage loan, repayable to the new lender.

The terms remortgage and refinance are sometimes confused. While the two loan processes can be similar, there is one major difference. A remortgage involves accepting a loan from a new lender, while a refinance loan can be provided by the existing lender or a new mortgage provider.

Borrowers consider remortgaging for various reasons. Often, the purpose involves saving money. Securing a new mortgage, at a lower interest rate than is afforded by the existing loan, may reduce the borrower's monthly repayments. Obtaining a lower rate may also reduce the total amount of money the borrower must repay over the full life of the loan.

Remortgaging can also serve to release equity in the borrower's home. In real estate terms, equity is the difference between the market value of a home and the amount the borrower still owes on it. When an individual's property increases in value, equity is built. Likewise, equity is increased as the borrower repays the mortgage loan. For example, if a borrower's home is worth $150,000 and he or she has repaid $30,000, the borrower has $30,000 in equity. A borrower can obtain this equity money by remortgaging and borrowing an amount that exceeds the current mortgage debt.

Obtaining a remortgage is fairly simple. Generally, the process is straightforward and similar to obtaining any other mortgage loan. The new lender reviews the borrower's application and asks for certain related paperwork. Remortgage paperwork typically includes proof of income, debts, and expenditures.

A home valuation is usually required as well. In some cases, the valuation may be less intensive than the type required for an initial loan and the surveyor may simply view the outside of the borrower's home and ask a few pertinent questions. In other cases, a full valuation is required.

There are certain fees involved in a remortgage. Often, borrowers are required to pay valuation and legal fees. Many lenders charge loan-processing fees as well. The amounts charged for a remortgage vary from lender to lender.

In general, a remortgage can be accomplished in four to six weeks or less. The length of this process depends on the lender and the specific circumstances surrounding the property being remortgaged. However, there are some lenders who specialize in rapid remortgages and promise to complete the process in a week or less.