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Two member of the Bank of England’s Monetary Policy Committee voted for an interest rate rise in January’s MPC meeting.

Minutes from the meeting reveal that Andrew Sentance and Martin Weale both voted to increase Base Rate by 0.25%.  Adam Posen preferred to maintain the cost of borrowing at 0.5% and increase the size of the asset purchases programme by £50 billion, to a total of £250 billion.

Vicky Redwood, senior UK economist at Capital Economics, is quoted at saying: “January’s MPC minutes suggest that the Committee was edging closed towards a near-term rate hike. However, the GDP figures could well dissuade the waverers from rushing in to premature policy tightening.

“What’s more, some members are still convinced that policy should not be tightened. For now, then, we still expect rates to stay on hold this year – and even if we do see a rate hike, it might have to be quickly reversed if the economy is as weak as we expect.”

The latest figures from the Office of Nationals Statistics show that the UK’s economy suffered a 0.5% quarterly drop in Q4. This follows growth of 0.7% in Q3 and 1.1% in Q2 of 2010.

Janurary 31, 2011

Lloyds Banking Group have launched a new deal for existing customers in negative equity. The Second Steppers scheme will allow borrowers who are in negative equity of up to 120% loan to value to move to a property of the same value, buy a bigger home or downsize.

Customer’s can move without increasing their existing levels of borrowing and channel any additional funds into their new home. The scheme is being launched on February 2.

Lloyd’s says that a typical second stepper is someone who bought their first home at the beginning of 2008 and now finds that they are unable to move home because of negative equity, but might want to move up the housing ladder or move to similar property in a different location. 

Aaron Strutt, a broker at Trinity Financial, said: “It is a welcome addition to the market and it is good that Lloyds are giving those in negative equity the option to move, but this is something that should be considered very carefully. If borrowers have money available it may make sense to pay off a chunk off of the loan.

“Not all Lloyd’s customers will qualify and the bank will re-credit score borrowers wanting to use this option. Other lenders offer new rates to borrowers in negative equity but they don’t generally let them move home.”

January 31, 2011

Rightmove set a new record for its website traffic with more than 30m views on January 24, it has reported.

The previous record of 29 million page views was set in on January 17 and 28.3m pages on January 10. Rightmove is now the 8th busiest website for UK users for the week ending January 22, behind Microsoft’s MSN site in seventh place and ahead of BBC news in ninth place, according to the data analytics website Experian Hitwise.

The property finding website says that the volumes of traffic were a good signal for the property market in general. Miles Shipside, director of Rightmove, says: “High levels or activity are encouraging for all areas in the market. Around this time of year many people turn their attention to their living plans for the year ahead and to be doing so in such numbers hints at very strong pent-up demand.”

Januray 28, 2011

More mortgage lenders have increased their fixed and tracker rates this week as banks say that the cost of borrowing has risen on the back of inflationary pressures. First Direct were the most high profile lender to raise their fixed rate mortgages by 0.4% for borrowers with a 35% deposit. Some lenders withdrew rates totally, but the typical rise was around 0.3%.

Rate increases by many of the best buy lenders have meant that some of the more traditional banks have re-entered the best buy tables. Abbey are one of the few lenders to reduce some of their mortgages and they now offer a two year fixed rate at 2.89% for borrowers with 30% deposit. The arrangement fee is £995 and there is a maximum loan of £550,000. For those with a smaller deposit of 20%, Abbey also have a two year fix at 4.38% with a £995 fee. It has a free property valuation and £250 cash back paid on completion.

There are still some great tracker mortgages available and they will give you the lowest monthly payments. The Bank of China is currently offering one of the lowest base rate trackers at 2.30% and it is available to borrowers with a 20% deposit. The arrangement fee starts at £1295 and the maximum size loan does range. Borrowers wanting 80% loan to value can have a maximum loan of £150,000 and mortgages up to 75% loan to value have maximum loan size of around £1 million. Bank of China also have a Private Bank where mortgages are available to a maximum of £10 million.  The mortgage would need to be secured on a property in a prime area of London.

Aaron Strutt, a broker at Trinity Financial, said: “Many of the lenders have said that the cost of funds has risen and that this is why we are seeing more lenders raise their rates. The number of fixed rate mortgage applications has really started rise this month and one big lender has received around 90% of its applications for fixes.”

Friday 21, 2011

The European Commission (EC) have scrapped plans for the proposed 10-day cooling period for all mortgage contracts. The original idea was to give borrowers 10 days to decide if the mortgage they had chosen was suitable, after the bank had lent them the money. This would have resulted in real confusion in the mortgage market.

The EC have come up with new proposals for the banks and the new plans are to make lenders legally obliged to tell someone why they have been refused a mortgage. The commission would also like to see lenders refuse mortgages to borrowers that fail credit scores and a product worthiness assessment.

January 22, 2011

Gross mortgage lending in December was estimated at £11.0 billion, according to figures released by the Council of Mortgage Lenders (CML).

This represents a 6% drop from £11.7 billion in November. December was the fourth month in a row where outturn has been the weakest since 2000 (£10 billion). The figure is 18% lower than £13.3 billion in December 2009, although the stamp duty concession is likely to have distorted the figures as some house purchase activity was bought forward to avoid paying the tax. Lending totalled £34.4 billion in the fourth quarter, down from £37.9 billion in the previous quarter and 11% lower than the last three months of 2009 as a whole (£38.7 billion).

For 2010 as a whole, lending totalled £136.3 billion, slightly above the CML’s prediction of £135 billion. However, this is down 5% from the £143.3 billion in 2009 and the lowest annual total since 2000 (£119.8 billion).

In the CML’s market commentary released today, they acknowledge that recent inflationary pressures have increased the possibility of a rate rise sooner than previously expected. Although, if base rate does rise, they do not expect it to exceed 1% this year.

CML economist Peter Charles, says: “Money market rates have recently moved higher in anticipation of a rise in base rate and some lender have recently reflected these increases in their product pricing.  Against this backdrop, consumer demand may be weaker than we would have expected. Higher interest rates will also hit budgets of existing borrowers, although the expected modest rises in base rate will result in a relatively small proportionate rise in monthly payment for most mortgage holders. Consequently we believe there will be little change in the level of arrears this year, and we do not anticipate revising our current arrears forecast.”

Friday 21, 2011

A host of lenders have changed their mortgages this week and there have been a number of rate hikes. The Co-operative Bank, Halifax, Northern Rock and the Skipton Building Society are just some of the lenders to make changes.

Northern Rock have increased rates by up to 0.2%. Halifax offer cheaper rates to borrowers that a capital repayment mortgage, rather than an interest only, but both mortgages have been raised by up to 0.2%. The Skipton Building Society have withdrawn their market leading interest only deal at 3.98% – as well as all five year fixes. They now offer only two year fixes and a selection of trackers.

Aaron Strutt, a broker at Trinity Financial, said: “The cost of fixed rates has risen slightly over the last few weeks and lenders are making changes on the back of these rises. Some banks are also removing rates to manage business and service levels.

“There are still some excellent fixed and tracker rates available. Skipton offers a two year fix at 2.89% (4.8% APR) for borrowers with a 40% deposit or a two year fix at 3.08%  (4.9% APR) for those with a 30% deposit. The arrangement fee is £995 and the lender will pay for the property valuation and legal fees if you are remortgaging to them. For borrowers worried about interest rates rising, Abbey for Intermediaries have a four year fixed rate at 3.99% (4.5% APR) and the maximum loan size is £1million. A 30% deposit is required and there is an arrangement fee of £1495. We also have access to five year fixes starting at 3.99%.”

January 21, 2011

Barratt Developments have teamed up with Hitachi Capital (UK) to offer parents’ of first time buyers unsecured loans of up to £50,000 to use as a deposit of an 80% loan to value mortgage.

Under the Hitachi Capital loan scheme, the typical buyer will need a deposit of 5% and the remainder of the purchase price can be met through an unsecured loan from

Hitachi Capital (UK) to the buyer’s parents or legal guardian.  The unsecured loan of up to £50,000 is available at a fixed rate of 5.4% for a period of 12 years. There are no early repayment charges and overpayments are allowed at any time with out penalty.

Parents’ or guardians wanting to take out the unsecured loan can use, Barratt Homes, David Wilson Homes or Ward Homes. Applicants must be UK residents and have a good credit history.

January 14, 2011

The Bank’s Monetary Policy Committee have once again kept interest rates on hold at 0.5% and decided to not add any further quantitative easing (QE) measures. The last base rate change was in March 2009.

At the MPC’s December, November and October meetings, there was a three-way split among the nine members. In those meetings one member voted for a rise and another for more quantitative easing. Andrew Sentance has consistently called for rates to rise and Adam Posen for an extra £50bn to be added to the QE program.

January 14, 2011

Mortgages: How to get the best deal

Money Talk by Aaron Strutt

Trinity Financial Group

Buying a home is the biggest purchase most people make during their lives

Qualifying for a mortgage can be a complicated affair and some first-time buyers may find it daunting. It is important to choose the correct lender and not to pay a higher rate than necessary.

That means that for some buyers, waiting to save more for a deposit can ultimately save many thousands of pounds on the annual mortgage bill.

By getting to know the process of how a mortgage works and what is required by the

lenders, it is possible both to secure a lower interest rate and to increase the chances of  being accepted for an appropriately sized loan.

A major difficulty with banks today is that they constantly change their lending criteria.

To get a mortgage, applicants will need a good deposit, a clean credit history and a decent income.

For many first-time buyers the support of their parents may make the difference between getting a mortgage or not.

Deposits

The size of your deposit determines your monthly mortgage payments and the interest rate that you pay. Virtually all lenders use a loan-to-value banding system which means you pay much more if you have a smaller deposit.

We are consistently advising our clients in a position to save a bigger deposit to put down another 5% of the property value. This may be a lot to ask at a time when money is tight, but there are usually big savings to be made with another 5% added to the deposit. Looking at the Post Office’s mortgage rates, for example, the lowest two-year fixed rate they offer if you have a 10% deposit is 5.75%. Yet, with another 5% deposit, the mortgage rate drops to 4.29%.

So, over two years on a £200,000 interest-only mortgage, you would pay £5,840 less if you are able to save the extra 5% deposit.

Interest rate savings are more substantial with a longer term mortgage.

Northern Rock’s lowest two-year fixed rate for those with a 30% deposit is 3.39%, but if you have a 10% deposit the rate increases to 5.88%.

Borrowers able to access the lowest Northern Rock rates will save £8,965 (including arrangement fees) over two years on a £200,000 mortgage compared with those able to take a fixed-rate with the smallest deposit available.

‘Clamping down‘

Before a bank will offer a mortgage, they will want you to know what your monthly expenses are and how much you have left in your bank account at the end of the month.

Keeping on top of personal finances can make getting a mortgage easier. Virtually all unsecured debt is taken into consideration and any credit card or loan payments will reduce the amount that you can borrow.

Banks have clamped down on borrowers if they are attempting to take out an interestonly mortgage and it is likely that you will now require a 25% deposit to qualify for interest-only. Customers of HSBC and First Direct must earn a minimum of £30,000 a year to qualify for an interest-only mortgage.

Interest-only mortgages offer a more affordable way of getting on the property ladder and the difference in the cost of the monthly payments is as much as £360 a month.

This is on a £200,000 mortgage with a 25-year term on a typical interest rate. Key tips for getting a mortgage include:

• Ensuring you are on the electoral roll

• Making sure you do not miss any financial commitments. Missing a credit card or loan

payment will count against you

• Reducing your personal debt will enable you to borrow more

• Ensuring you do not apply for credit while a mortgage application is going through

• Keeping pay-slips and P60s

• Checking your credit rating to make sure that you know what your credit score is

• Doing your homework to find out what the lender requires from you.

There are some good options for borrowers looking to remortgage, but rates are more expensive than they were three months ago.

Whether you should remortgage really does depend on the lender that you are with and the type of rate you are on.

If you are on your lender’s standard variable rate then there is a danger your bank will raise your rate by more than any Bank of England base rate change.

I would advise you to call your lender to see what they will offer you to stay with them and then research the best rate available to you in the market.

It is still possible to remortgage on to a competitive rate which is lower than the average standard variable rate. Two-year base rate trackers are available from 2.28% and two year fixed-rate deals start at 3%. Five-year fixed-rate deals are more expensive as they start at 4.39%.

A number of lenders have made changes to the price of their mortgages this week and the market leading two and five year fixes offered by NatWest were increased by 0.3%.

The Royal Bank of Scotland, NatWest, Cheltenham and Gloucester and Halifax have all changed their mortgage range and most have made increases. The Skipton Building Society have some very competitive rates and are now offering a two year fix at 2.89% for borrowers with 40% deposit, or a five year fix at 3.98% for those with 30% deposit. Both mortgages have £995 arrangement fees and offer a free property valuation and legal service if you remortgage to them. Trinity Financial have access to tracker rates starting at 2.48%.

The Woolwich have also made changes to their mortgages. They offer home buyers a term tracker rate at 2.68% if they have a deposit of 30% - the arrangement fee is £999 and the maximum loan is £1 million. For those with a 20% deposit, the rate is higher at 3.48%.  Woolwich allow their customers on tracker rates to switch in to a fixed rate at any time and this is a key feature of their mortgages. This protects customers from future base rate increases and is popular with many of our clients.

Aaron Strutt, a broker at Trinity Financial Group, said: “Many lenders increased the cost of their lowest fixes this week but there are still some excellent mortgages available. NatWest have a five year fix at 3.95% and they will pay the legal and valuation fees when you switch to them. We are starting to see some increases and it will be interesting to see if they go much higher.”

January 8, 2011

More than 295,000 people have used credit cards to pay mortgage or rent in the North West, according to figures released by the housing charity Shelter.

The survey, conducted in August 2010, of 2202 people in Great Britain asked if respondents had borrowed money on their credit card to pay their rent or mortgage in the last 12 months. Five percent of respondents in the North-West said yes – an increase compared to just two percent in November.  The survey also reveals that over two million people are using credit cards in this way across the country, an increase of almost 50 percent in a year.

Mortgage lenders generally do not accept credit cards as a way of paying for a mortgage, but many credit card companies will advance cash. Vanessa Dixon, Shelter North West Regional Manager said: “Using a credit card to pay the rent or mortgage us simply robbing Peter to pay Paul. With the average credit card interest rate now standing at over 16 percent it is the worst possible course of action.”

January 8, 2011

Prime Minister David Cameron has hit out at banks and building societies for holding back the property market with new tighter lending criteria.

The Daily Mail reported on a visit Mr Cameron made to Leicester where he spoke to voters. He said that it is vital for the economy that Britain’s housing market becomes more competitive and he is quoted as saying: “In a way the pendulum has now swung too far the other way. If you are a single person, you are earning a decent salary. You go to the bank or building society, you are actually quite a good risk – they won’t give you 80% of the value, they won’t give you four times your salary. The housing market has become stuck and we’ve got to get it moving again.”

Housing minister Grant Shapps was expected to meet Hector Sants, the chief executive of the Financial Services Authority (FSA) this week to discuss the Mortgage Market Review. There have been fears that the FSA were going to clamp down harder with even tougher new rules, but it is likely that they now appreciate how far the banks have gone. Mr Shapps has previously said that he intents to ensure the FSA do not go too far.

Friday 7, 2011

The Coventry Building Society have launched two fixed rate buy to let mortgages with £250 arrangement fees.  For investors able to raise a substantial deposit of 50%, they can now access a five year fixed rate as low as 4.99%. For those with 35% to put down the rate rises to 5.39% and this is also fixed for five years.  The lender offers a free property valuation on house purchases and a free legals service when you remortgage to them.

January 7, 2011

A number of lenders have made changes to their mortgage rates over the last few days, including: NatWest, Royal Bank of Scotland, Halifax and the Skipton Building Society. 

The majority of these banks have increased the cost of their mortgages but there have been some rate reductions. One lender launched a very competitive two year fixed rate at 2.89%. The arrangement fee is £995 and borrowers require a 40% deposit.  The same lender also offers a five year fixed at 3.98% and you will need a 30% deposit to access the rate. The reversion rate on both mortgages is 4.95% and the APR is 4.7%.   One added incentive is that the lender will also pay the cost of the property valuation and legal fees when you switch to them.    

The cost of two and five year fixes has increased over the last few weeks and a number of the best buy mortgages have been removed.   To discuss the best mortgage we can secure for you, call us on 020 7520 9427.

January 6, 2010