April 15th, 2010
Interesting development at Northern Rock. Those with a mortgage older than about 2 years or so may well be able to re-mortgage away to another lender and avoid any redemption penalties! So if you have a high fixed rate mortgage, or have seen a better deal elsewhere, you can re-mortgage and get any redemption penalties refunded by Northern Rock. You can, interestingly enough, also do this by re-mortgaging to Northern Rock plc! If this applies to you, Contact us for further details.
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November 3rd, 2009
These banks will be forced to sell of branches and entire brands – all RBS not in Scotland and Cheltenham & Gloucester, for example.
Will this effect mortgage customers? Eventually, it may well do so, but these plans are 4-5 years in the future. At that point they may well be a fairly easy and cheap entry point to the market for new entrants – perhaps Tesco, Virgin or foreign banks.
Extra competition should in theory lead to better deals for everybody, but only time will tell.
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October 28th, 2009
Nationwide have increased their maximum loan-to-value to 85% for trackers, indicating that they believe house prices have stopped dropping – a good sign for first time buyers to start looking!
It’s also worth noting that the 1% stamp duty “holiday” on houses up t £175k will end on 31st December 2009. It will revert to £125k from then on, unless Alistair Darling changes his mind. So if you were considering buying a house for below £175k, act before the year end – the completion date is what counts, so time is of the essence!
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October 20th, 2009
You may have seen the FSA are planning on tightening up on mortgage lending, specifically self-certified lending.
This does not require any proof of income and was originally designed for start-up self employed people, who had not traded long enough to produce accounts. However, it became a mainstream product and was widely abused, with employed people taking self-certified mortgages because they could exaggerate their income – so shop assistants suddenly earned £50k+ a year!
If you cannot now prove your income with P60′s or SA302′s you will struggle to get a mortgage. Indeed, it may become impossible.
The FSA are also encouraging lenders to check affordability far more stringently. This will result in income and expenditure being analysed to ensure you are not over-stretched with your mortgage, which may see a move away from income multiples and towards affordability as the main test of how much can be borrowed.
For prime borrowers – those with at least a 25% equity, good earnings relative to the mortgage and a clean credit history – these changes will make very little difference. Those who are stretched financially, have a poor credit history or a small amount of equity may find getting a mortgage becoming far more difficult.
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October 10th, 2009
Northern Rock are chasing the market and are aiming to provide 1 in 10 new mortgages. The only way to do this is to lower rates and this is exactly what they have done.
The result is that they have initiated a mini pricing war. Abbey and Woolwich have responded by lowering rates, so sub 3% trackers are now widely available.
There has also been a move upwards in loan to value banding’s, so the best rates are now available at 75% LTV – an improvement over the 60% that has typically been on offer.
The key question is whether to fix or track. Tracker rates are sub 3%, but how long will they last? A sub 5% fix over 4 years or more will offer excellent value.
So if you cannot afford a mortgage if the rate exceeds 5%, fix now on a longer term fix – Northern Rock have a 4 year fix at 4.89% at 70% LTV. If you can afford it, a tracker will be cheaper now and in the immediate future, but be prepared for far higher costs when rates inevitably increase again.
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June 12th, 2009
Base rates remian firmly at 0.50%, but 5 year fixed rates are on the increase, as the markets believe infaltionary pressures will force interest rates upwards. If you were considering it, now is the time to get a fixed rate – they will work out cheaper in the long run than clinging on to a very low rate now, only to end up paying more when rates increase.
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May 4th, 2009
The mortgage market is looking like it may be making a small recovery, with the latest postive sign being Abbey’s decision to extend it’s loan to value. Their best deals were limited to 60% loan to value, but this has now been extended to 70%. This means they believe that the worst of the house price drops have subsided, as they feel comfortable that 30% equity will cushion them against negative equity.
Those on tracker rates should consider switching to a good 5-10 year fixed rate mortgage. The amount of Government borrowing, allied to inflationary pressures as the economy recovers, indicate that rates will have to rise sharply to fund borrowing and combat rising inflation. There are some lovely 2 year rates, but when they expire in 2 years time, rates will be far higher and those remortgaging at that time will be exposed to much higher repayments.
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