Lenders bite the bullet and pass on full rate cut
11-Nov-2008
Several lenders have already surrendered to growing pressure and passed on the full base rate cut to borrowers on SVRs.
Brokers, trade bodies and con-sumers have been united in their response to the 1.5% base rate cut by calling on lenders to pass it on in full.
Several lenders said they will do so on Thursday and Friday. Moneyfacts.co.uk confirmed that Halifax, the Royal Bank of Scotland, NatWest, Nationwide and Abbey have pledged to pass on the full rate cut, as have Scottish Widows, Cheltenham & Gloucester, Lloyds TSB and Northern Rock.
Base rate falls by a massive 1.5%Base rate falls by a massive 1.5%
Thursday 6th November 2008
The Bank of England has slashed the interest rate by a whopping 1.5% bringing it down to just 3%.
The cut from 4.5% is the largest cut by the Monetary Policy Committee since it was set up in 1997 and the first time the interest rate has fallen to 3% since 1954.
Ben Thompson, mortgages director at Legal & General, says: “The cut today is welcome, but sadly many borrowers aren’t going to benefit.
"There’s no obligation for lenders to reduce their standard variable rates and if last month is anything to go by, most will be reluctant to cut their SVRs significantly because these rates look relatively good value at the moment.
"However, swap rates are gradually starting to come down, albeit much slower than we would like, and this should have a knock-on to fixed rate pricing.”
Number of first-time buyers 'on the increase'
Wednesday 5th November 2008
The number of first-time buyers entering the market increased between August and September, it has been claimed.
According to the National Association of Estate Agents (NAEA), the number on its members' books rose from 8.3 per cent of total purchases to 9.5 per cent.
The announcement from the NAEA comes after figures were released showing mortgage approvals increased by ten per cent during the same period to 23,422.
Mortgage lending reached an all-time low in August, according to the Bank of England.
Leslie Deans, senior partner of Leslie Deans and Co, said: "Things are now considerably better than they were six weeks ago."
Mortgage market outlook “promising”
Friday 31st October 2008
Managing Director of haart, Russell Jervis, has commented on Nationwide’s October house price index: “House prices have now been falling for twelve consecutive months. However, despite the threat of a recession knocking consumer confidence, vendors who are prepared to accept estate agents’ advice and adjust their price expectations in line with the market are having success in agreeing a sale. This is particularly true as buyers are beginning to take the opportunity to move up the ladder while prices are low, which is something that many were struggling to do in 2007.
“While there is still activity in the market, the bank bail out plan coupled with the reduction of the base rate to 4.5% has not yet had the positive impact that we would have hoped. However, the foundations have now been laid for improving liquidity and we are seeing interbank lending begin to thaw as the LIBOR continues to fall. These are promising signs that competition is returning to the market and more mortgages will be made available.”
Competitively-priced homes 'will sell'
Friday 31st October 2008
Upbeat analysis of the housing market was issued by property website Mouseprice today.
According to experts at the site, sellers can still expect their homes to be snapped up quickly - just so long as they are realistic about its asking price.
Over recent months, the credit crunch has resulted in restrictions on sub-prime and other types of mortgage loans - helping to drive down house prices.
Moreover, there have been suggestions that many sellers are in denial about the downturn - with latest figures from surveyors showing that the average home sells for nine per cent below its initial asking price.
Selwyn Lim, director of Mouseprice, said: "You get situations where if prices are going down people are almost irrationally reluctant to sell at the lower levels.
"If you price the property competitively then it is perfectly possible to get a quick sale. The length of time on the market is really dictated by how aggressively the person prices the property."
Latest house price figures from Nationwide suggest that the average home has lost 14.6 per cent of its value over the past 12 months.
Downward trend of Libor means boost for homebuyers
Thursday 30th October 2008
As yesterday marked the twelfth consecutive daily fall in the Libor rate of inter-bank borrowing, Sales Director of Independent Mortgage Helpline, Nick Rhodes, has spoken out: "The twelfth consecutive fall in the Libor rate will bring a welcome boost to homebuyers, as the freeze in interbank lending begins to thaw.
"The huge injection of cash by the Government's rescue plan is beginning to filter through the markets, giving banks the confidence to start lending to one another again. We can expect to see a positive knock on effect over the coming weeks as competition returns to the market, bringing more choice to consumers. Prepare to see lenders increasing the number of mortgage deals on the market and more favourable rates, which can only be good news for homebuyers."
Lenders 'boosting risk margins' through rate reductions
Tuesday 28th October 2008
This month's 0.5 per cent base rate cut from the Bank of England has helped to boost mortgage lenders' profits, a new report suggests.
Financial website Moneyfacts.co.uk claims that 38 per cent of savings account providers and 44 per cent of mortgage firms have pledged to reduce their rates, following the central bank announcement.
However, the report shows that, unlike the savings rate cuts, many of the mortgage reductions are not made to the full 0.5 per cent - effectively boosting many firms' risk margins.
Michelle Slade, analyst at Moneyfacts.co.uk, commented: "When base rate was cut, consumers thought they were finally going to start feeling some relief on their overstretched finances. They expected their savings rates to decrease, but thought they would feel the benefit by reduced mortgage repayments.
"Unfortunately the providers have used the cut as a way to shore up their balance sheets. Although it is well publicised that the banks and building societies need to do more to improve their current financial positions, consumers will feel bitterly disappointed that they are not feeling the benefits."
Speaking to Channel 4's Dispatches programme recently, former Bank of England policymaker Charles Goodhart suggested that the base rate might soon be cut to zero, due to the severity of the current economic downturn.
Lenders should 'wake up', expert says
Monday 27th October 2008
Mortgage lenders need to scale back their growth plans over the months to come, an industry expert has said.
The Homeowners Advice Centre also advised the firms to pass on Bank of England rate cuts to customers straight away, in order to alleviate the ongoing property market downturn.
Over recent weeks, many lenders have imposed hikes on their tracker rates, rather than mirror the Bank of England's 0.5 per cent base rate reduction.
Others have also not imposed the cuts on their standard variable rates.
the continuing credit crunch, which has largely frozen inter-bank lending - a big source of lenders' funding.
Recent figures from the Council of Mortgage Lenders showed that 42,000 loans were approved in August - down from 103,000 during the same month in 2007.
Al Elliot, advisor at the Homeowners Advice Centre, said: "This period is about consolidation of their outstanding mortgage book, not exploitation and profit chasing, and that profit margins are going to be much slimmer this coming year.
"One immediate way that would help all homeowners, particularly first-time buyers, would be for all lenders to undertake to pass on interest rate decreases straight away, allowing borrowers to benefit from the lower standard variable rate."
The Homeowners Advice Centre specialises in giving debt advice to mortgage holders who have fallen behind on payments - many of whom having taken out the loan despite having previous adverse credit.
Repossession guidance unveiled by Brown
Thursday 23rd October 2008
New plans for people threatened with home repossesson have been unveiled by the government.
Britain's judges are to ask lenders to show them that they have used all other avenues other than taking back a property, when repossession cases come before courts.
This is likely to mean that upcoming repossession actions will be stopped - and will only now go ahead if lenders prove that they have no other choice but to proceed.
The new guidance was unveiled by Gordon Brown in Parliament today.
Speaking to the BBC, head of consumer policy at Citizens Advice, Sue Edwards, said that the new rules would be a good idea.
"This timely introduction of a pre-action protocol for mortgage arrears will ...ensure that court action is only taken as a last resort where all other options have failed and no agreement can be reached," she told the broadcaster.
Mortgage repossession numbers in the UK are set to jump from 26,000 to 45,000 between 2007 and 2008, lenders have said.
Your Move calls for return of the 95% mortgage
Friday 17th October 2008
The property market in the UK can only recover with the re-introduction of very low deposit loans, Your Move said today.
New analysis from the firm suggests that only the re-introduction of mortgages which require a deposit of just five per cent will stimulate the property sector, by encouraging people to buy again.
Due to the credit crunch, these "95 per cent" deals have been pulled by high street lenders - along with still more generous deposit-free, or 100 per cent, deals.
The comments follow recent research from the Co-operative bank, which found that the average first time buyer estimated that they needed to have £19,000 saved for a deposit, in order to get on the property ladder.
Gareth Samples, sales director at Your Move, said: "The first-time buyer mortgages at 90, 95 and 100 per cent were pulled and that takes a whole sector of the market out.
"Until those things are put back in place – and I don't think a 100 per cent mortgage ever will be, but maybe a 95 per cent loan to value mortgage [might] – then it's not going to get that much better."
Lender Halifax estimates that house prices have dropped by 13 per cent in the current downturn - and research from estate agency Knight Frank forecasts a further 15 per cent fall before the market bottoms out.
Sale and rent back 'should be better regulated'
Wednesday 15th October 2008
The Office of Fair Trading (OFT) has released the results of its investigation into the sale and rent back sector.
It called for new laws to be passed in order to protect consumers, after finding that some people enter into such arrangements when it is not the "best option" for them.
Sale and rent back is commonly used by homeowners who are behind on their mortgage payments, but wish to continue living in their property.
They sell their home for a reduced sum and then the buyer pays a monthly rental fee.
However, the OFT found that some firms "mislead" customers over the value of their property - and that some oblige the tenants to leave when they do not want to.
This can either be through imposing a rent increase, or even eviction.
John Fingleton, OFT chief executive, said: "Our research shows that sale and rent back deals have potential to cause serious and permanent harm to often vulnerable homeowners.
"The unfamiliar and highly pressurised situations that these people find themselves in may leave them particularly vulnerable to misleading statements or valuations from sale and rent back firms looking to make a deal."
Bank slashes interest rates
Thursday 9th October 2008
Many mortgage deals will become cheaper as a result of the Bank of England's interest rate cut, lenders have confirmed.
At midday yesterday, the Bank announced that it would reduce the base ratee by 0.5 percent to 4.5 percent.
The dramatic move, announced a day ahead of schedule, was mirrored by identical reductions from the Federal Reserve and the European Central Bank.
So far, Halifax and Lloyds TSB - along with Lloyds-owned Cheltenham & Gloucester - have indicated that they will pass the cut on to their standard variable rates in full.
These changes go through on November 1st.
Michael Coogan, director general of the Council of Mortgage Lenders, commented: "All this decisive action augurs well for an improving market situation looking ahead, even though no one is pretending the tough times are over yet."
Despite the Bank's cut, and the announcement of the government's £50 billion plan to recapitalise banks through the purchase of shares in them, London's flagship FTSE 100 index slid by over five per cent yesterday.
This testifies to the continuing lack of confidence in the economy's prospects of recovery.
Demand for rental accommodation soars 65%
Tuesday 23rd September 2008
Buy to let landlords are benefiting from a huge rise in demand for rental accommodation, new data has revealed, as would-be buyers increasingly opt to delay their entry in to the market.
Figures from Your Move show that the number of leases taken out during August was 65 per cent higher than it was during the same month last year.
Meanwhile, in the period between January and August, the number of people signing a rental agreement rose by 45 per cent compared with the same period in 2007.
David Newnes, managing director of Your Move, attributed the rise to lenders' reluctance to advance mortgage finance to borrowers, as well as the fact that more consumers are adopting a wait-and-see approach to the housing market.
Mr Newnes explained: "Mortgages are hard to come by and would-be buyers are flooding the rental sector. If you can't get the finance to buy a house, you're forced to rent."
He added: "We might expect the huge increases in demand for rental property to have driven up rents. But demand is being met by supply - sellers who won’t accept depressed prices put their homes up for rent instead."
RBS Intermediary partners announce rate changes
Wednesday 17th September 2008
RBS Intermediary Partners will be introducing new rates on a number of its fixed rate and tracker mortgages from Wednesday 17 September.
Remortgage
- First Active 2 year fixed rate online only (max LTV 75%) will be reduced to 5.59% (7.3% APR) from 5.79% with a £999 arrangement fee until 31 October 2010.
*For all First Active residential remortgage products there are no basic legal or valuation fees. Overpayments of up to 10% of the original balance per annum are allowed during the initial deal period.
Purchase
- RBS 2 year fixed rate (max LTV 75%) will be reduced to 5.54% (7.3% APR) from 5.74% with a £999 arrangement fee until 31 October 2010.
- RBS 2 year tracker (max LTV 90%) will increase to 6.44% (BoE rate +1.44%) (7.5% APR) from 6.24 (BoE rate + 1.24%) with a £999 arrangement fee until 31 October 2010.
*Overpayments of up to 10% of the outstanding balance per annum are allowed during the initial deal period.
News Story
Agents call for serious interest rate cut to save market
Friday 5th September 2008
Reaction to the Bank of England’s decision to hold interest rates at 5% has gone down badly within the industry.
The decision was announced hours after the latest Halifax survey showed house prices plunging by 12.7% in a year – the fastest fall since the Depression of 1931.
With average house prices now back to March 2006, an estimated 200,000 householders are now in negative equity.
Lucian Cook, of Savills residential research, called for a serious cut in interest rates.
He also criticised this week’s package of measures designed to help the housing market, including a temporary raising of the Stamp Duty threshold to £175,000 ¬– a measure now widely thought to be of more help to property investors than first-time buyers.
He said: “Our reaction was lukewarm at best. By contrast, a serious cut in interest rates, fed through to reduced mortgage costs, would begin to address the issues which are really blighting the market.
“While we recognise that Inflationary factors make a meaningful cut unlikely in the foreseeable future, from the perspective of the housing market this is desperately needed, both to stimulate activity and ease the concerns of home owners.”
2 Sep 2008
Breaking News
Stamp Duty suspended up to £175k
Alistair Darling, the Chancellor of the Exchequer, has announced that Stamp Duty land tax will not apply to purchases of residential property of £175,000 or less.
The Government said this relief will apply to transactions with an effective date on or after 3 September and before 3 September 2009.
National reports have suggested further measures will be announced by the Communities Secretary, Hazel Blears, later today.
Friday 29th August 2008
Consumers overestimate life insurance costs
Millions of Britons are leaving themselves financially vulnerable because of the mistaken perception that life insurance is too costly, a new survey suggests.
Life insurance provider Legal & General quizzed almost 2,000 adults for its study and found that 65 per cent of the sample over-estimated the cost of taking out £150,000-worth of cover.
Meanwhile, 35 per cent over-estimated the cost of adding a critical illness option to a life insurance policy.
Karen Blatchford, commercial director for housing at the lender, said: "Life cover can start from as little as £6 per month, which even families on a very tight budget may be able to afford.
"We're concerned that two-thirds of people are over-estimating the costs of protection."
He added: "People may wish to consider covering not just their mortgage debt, but their family expenditure and bills. Most families would really struggle if there was an unexpected drop in the household income."
The study also revealed that 38 per cent of Britons have no life insurance cover in place.
Wednesday 27th August 2008
Stamp Duty dithering paralyses marketStamp Duty dithering paralyses market
An overwhelming 83% of home movers are either pushing back their moving date or postponing their entire move indefinitely, as a result of the Government's dithering over Stamp Duty.
Moveme, an online planning aid for people moving home, surveyed 1,500 people on its database.
Of these, only 17% said that the uncertainty over Stamp Duty made no difference to their plans, while 20% had deferred completion and 63% were postponing their move indefinitely.
Charles Wasdell, director of Moveme.com, and who has himself deferred moving home, said: "It is plain to see the devastating effect the Government is having on the housing market, as it keeps tight lipped about the possibility of a Stamp Duty holiday.
“The Chancellor must either press ahead with the legislation immediately or confirm that there will be no Stamp Duty holiday, so the people who are buying property move ahead with their purchase.”
The survey is in line with fall-throughs reported by both the National Association of Estate Agents and Royal Institution of Chartered Surveyors.
The NAEA says that the number of fall-throughs induced by the Government’s failure to say what it is going to do with Stamp Duty can be measured in thousands.
The RICS says that new buyers in August fell by 20% more than had been expected.
Friday 22nd August 2008
Major HIP company collapses
The market slowdown has claimed another victim, Hipstar.
The HIP provider, based in Chertsey, Surrey, has gone into administration.
Callers to the company are told that a liquidator is to be appointed and that anyone with queries meanwhile should email info@hipstar.co.uk
Hipstar also had a significant franchise operation and is believed to have sold 92 franchises last year and 31 the previous year. It was still aiming to sell more franchises this year.
The company came late to the market, launching in March 2006. It aimed to be a major provider and was geared up to doing 150,000-180,000 HIPs per year.
However, it was caught first by the delayed introduction of HIPs, followed by the collapse in residential sales.
Its parent company, AIM-listed Network Data Holdings, which continues in business and which also has conveyancing and mortgage operations, made a pre-tax loss of £1.1m last year after a profit of £0.3m the previous year. It is believed to have spent up to £5m getting Hipstar up and running.
This spring Network Data’s chief executive Richard Griffiths said that 2008 would be difficult for companies operating in the mortgage and property industries.
Hipstar is one of the largest and highest-profile of the HIP companies to become a casualty.
20 Aug 2008
Breaking News
Three-way split on base rate at the MPC
The latest minutes from the Bank of England’s Monetary Policy Committee (MPC) have revealed that for the second consecutive month there was a three-way split about what to do to Bank base rate.
Seven members of the committee voted in favour of a freeze at 5%, though David Blanchflower continued his long call for a cut by voting for a reduction of 25 basis points, while Tim Besley advocated an increase of 25 basis points.
The minutes note that Besley argued: “Although there were considerable downside risks to growth, particularly those arising from the tightening of credit conditions, a pre-emptive increase in Bank rate would help to keep inflation expectations anchored to the target and lessen the need for more restrictive policy in the future.”
15 Aug 2008
Breaking News
Halifax cuts rates by up to 0.45%
Halifax is cutting rates on some of its introduced mortgage products by up to 0.45%, and is set to introduce four new fee-free products from Saturday 16 August.
The new rates include a two-year tracker at 5.59%, down from 5.69%, up to 75% LTV with a £1,999 fee and a three-year fixed rate at 6.04%, down from 6.49%, up to 75% LTV and with a £499 fee.
The new fee-free products include a three-year tracker rate at 6.19%, up to 60% LTV, and a two-year fixed rate at 6.39%, up to 60% LTV, both available for homebuyer and remortgage customers.
Thursday 14th August 2008
Millions of Britons are doing without life insurance, despite a sustained fall in the price of the cover.
Research conducted by the Post Office found that around 75 per cent of adults in the UK do not have a life insurance policy.
Among the principal reasons given for not taking out cover was that the premiums are too expensive - a factor cited by 28 per cent of those quizzed.
This is in spite of the fact that the cost of life insurance has fallen by 70 per cent over the last 30 years.
Post Office head of protection, Duncan Caesar-Gordon said: "Thinking about the future and how the family will cope should the unexpected happen is a worry that can be easily avoided by taking out life insurance.
"With a typical cost of £10 per month people would have peace of mind knowing that their loved ones are protected."
The survey also revealed that 18 per cent of people had not taken out cover on the grounds that they deemed their lives not worthy of insuring.
Monday 11th August 2008
The Association of Home Information Pack Providers (AHIPP) has moved to defend Home Information Packs (Hips) from widespread criticism, claiming that they deliver "real benefits to home buyers and sellers".
Since the introduction of Hips their worth has been repeatedly questioned, with estate agents this week reiterating claims that the extra expense of securing one is dissuading people from marketing their homes and contributing to the market slowdown.
However, Paul Broadhead, deputy director general of AHIPP, has refuted the criticism and said that there were a number of discernable positive effects that the packs have had.
He commented: "Even in their present incomplete form Hips are already having a positive impact on the market. Consumers are benefiting from faster transactions, reduced stress, cheaper searches and better protection.
"With more consumer friendly information in packs from the beginning of next year along with the ending of estate agents marketing homes without packs, the benefits will be increasingly obvious for all to see. I believe the government should now go even further."
AHIPP claims that since Hips were introduced the time taken to exchange contracts has fallen to 12 days.
7 Aug 2008
Breaking News
MPC votes to hold rates
The Bank of England’s (BoE)Monetary Policy Committee (MPC) has voted to hold the Bank base rate at 5%.
The BoE was widely expected to hold the rate by the majority of industry commentators.
The last change was a reduction of 0.25% to 5% on 10 April.
Thursday 31st July 2008
The cost of fixed-rate deals is falling, offering a "glimmer of hope" to borrowers amid the downturn in the housing marker, according to Moneyfacts.
Research conducted by the personal finance site showed that the average cost of a two-year fixed rate as of July 11th was 7.08 per cent.
However, since this time the fall in swap rates, which are used by lenders to set rates for fixes, the average rate has fallen to 6.95 per cent.
The cost of the deals has been brought down after a number of mainstream lenders have announced cuts to rates recently.
Darren Cook, mortgage expert at the site, commented: "There is a faint glimmer of hope the fixed-rate mortgage market is returning to some sort of normality."
Stamp of approval as discussions held to relieve housing crisis
Wednesday 23rd July 2008
It was announced this week that the government are considering suspensions to the existing Stamp Duty levels in order to help First Time Buyers and those at the lower end of the property scale through the credit crisis. The current financial landscape has seen a phenomenal reduction in the amount of approved mortgages and loans, with lenders stalling over passing on the reductions in interest rates as quickly as they passed on the increases; it is an extremely worrying time for borrowers.
Indeed, as reported by Moneyfacts.co.uk, the loans sector is faring no better, with two, three and five year fixed rate best buys are now occupied by deals over 6%. Whilst there are still sub 6% deals available, the fees attached do not qualify them as a best buy; however, the average rate for a three year fixed deal currently stands at a record 7.25%.
An official government spokesperson stated that talks were being held to find a way to relieve the burden felt by the current financial state as a whole, and to boost the property market. Currently all homes above £125,000 are required to pay Stamp Duty, but in a move similar to that which the Conservatives took in 1992 when they raised the threshold to £250,000 The official told the Daily Mail that the government is being “exercised about the housing market and they are looking at a lot of different measures.”
The housing minister, Caroline Flint and the Royal Institution of Chartered Surveyors were in discussion over how best to move forward.
Banks have to stop ripping off customers if pressures of credit crunch are to ease
Thursday 3rd July 2008
Darling has warned banks that they need to stop ripping off their customers during the hardships of the Credit Crunch.
The Chancellor stated that he was aware that some banks were upping mortgage arrangement fees. The average fee for a fixed rate mortgage deal is now £860 having gone up 66 per cent in the last 18 months. Times are difficult enough for consumers and mortgage intermediaries without lenders increasing fees.
Mortgage approvals are falling and banks will have to be more lenient with fees if the housing market is to turn around soon. Many mortgage lenders are also hitting consumers by administering set up fees which are often 2 per cent of the amount being borrowed.
Friday 27th June 2008
Darling has warned banks that they need to stop ripping off their customers during the hardships of the credit crunch.
The Chancellor stated that he was aware that some banks were upping mortgage arrangement fees. The average fee for a fixed rate mortgage deal is now £860 having gone up 66 per cent in the last 18 months. Times are difficult enough for consumers and mortgage intermediaries without lenders increasing fees.
Mortgage approvals are falling and banks will have to be more lenient with fees if the housing market is to turn around soon. Many mortgage lenders are also hitting consumers by administering set up fees which are often 2 per cent of the amount being borrowed.
Tuesday 24th June 2008
The number of property transactions fell during May, as tighter lending conditions and a wait and see approach from potential buyers caused activity to stagnate.
According to data from HM Revenue & Customs (HMRC), there were 110,000 completed property transactions during the month.
This represents a fall of five per cent from April when the figure had stood at 115,000.
During May last year, some 158,000 property transactions had been enacted, meaning that activity has fallen by 37 per cent year on year.
Levels of transactions are now at the lowest level recorded since the HMRC began compiling its property sector information in 2005 and according to the Independent, activity is now thought to be at its slowest since the mid-1990s.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics) said: "These numbers clearly highlight the very real pressure on the residential property market.
"Indeed, Rics suspects that the level of activity will fall further over the coming months."
Monday 23rd June 2008
UK house prices have continued to slide in June, according to new figures from online property portal Rightmove.co.uk.
Data from the site shows that the average price of a home fell by 1.2 per cent during the month.
This followed a rise of 1.2 per cent and brought the average rate of house price inflation down to 0.1 per cent.
As a result the average asking price for a property now stands at £239,564.
Rightmove.co.uk also recorded a monthly rise in the number of properties on estate agent books from 73 to 75, in a sign of weakening demand in the sector.
This led the site to predict that housing transactions will fall to 700,000 this year – down from 1.2 million last years.
Miles Shipside, commercial director of Rightmove.co.uk, said: "In terms of volumes we are predicting they will fall to levels below those seen in the Second World War.
"With the lack of mortgages, if people can't get money, they can't buy houses."
