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The government has announced a new housing strategy to make it easier for first-time buyers to get on the property ladder.

The initiative will allow up to 100,000 first-time buyers to purchase a new-build property with a 5% deposit, with the government and house builders providing security for the loan.

This means if the property is sold for less that than the outstanding mortgage balance, the lender will be able to recover the loss.

Through the scheme, which will be launched in spring 2012, the hope is that lenders will be encouraged to offer more low deposit mortgages.

The Council of Mortgage Lenders says that the details haven’t been finalised, but the idea is:

• The builder will pay a sum equivalent of 3.5% of the selling price of the home to the lender, which will be held for seven years.
• The government will agree to guarantee a further 5.5% of the property value.
• The money collected and the governments guarantee is a form of indemnity. The fund pays out to the lender if a property financed under the scheme is repossessed or there is a shortfall.

The government says that some of the biggest mortgage lenders have signed up in principle to the new indemnity scheme and they include:  Barclays, HSBC, Lloyds Banking Group, Santander and Yorkshire and Clydesdale Banks.

They also confirmed that over 25 developers have agreed in principle to the scheme, including: Barratt, Persimmon and Taylor Wimpey.

24 November 2011

Mortgage lenders have increased the price of their fixed rate mortgages over the last few days. NatWest has raised their 60% loan-to-value two-year fixed rate from 2.65% to 2.85% and Accord Mortgages hiked many of their two and three-year fixes by up to 0.4%.

Aaron Strutt, a broker at Trinity Financial, says: “The cost of short term fixes has been getting more expensive and two-year fixes are generally higher than they were. The Skipton Building Society offers one of the lowest fixes at 2.58% for two-years. The lender asks for a 40% deposit and there is a £1,995 arrangement fee. Nationwide Building Society also has a three-year fixed rate at 3.04% and it is available to borrowers with a 30% deposit. There is a £999 arrangement fee”.

Leeds Building Society has lowered its ten-year fix from 5.99% to 4.99% and it is available to borrowers with a 20% deposit. The arrangement fee is £999.

24 November 2011

Nationwide Building Society increased its gross mortgage lending by 48% in the six months to September.

In its interim results for the six months to September 30, 2011 the society lent £8.9bn, up 48% on the £6bn it lend over the same period in 2010.

The lender says that they approved over 10,000 first-time buyer mortgages and that their market share has increased from 8.5% in 2010 to 12.4%.

Chief executive Graham Beale told Mortgage Strategy magazine that the funding had come from a 250% increase in the level of savings receipts to £1.4bn, making Nationwide the second largest savings provider in the UK.

He also said that there has been a 24% increase in the combined sales of Nationwide’s current accounts, personal loans and credit cards.

24 November 2011

Financial planning will be crucial for households if they are to avoid falling into difficulty in 2012 and beyond, debt charity Consumer Credit Counselling Service (CCCS) has warned.

Their findings are the result of a survey by the Institute of Financial Planning, which says that one in four Britons (26 per cent) are not setting a clear enough budget to stick to each month.

CCCS is particularly concerned about the 6.2 million households identified as “financially vulnerable” and highlights the importance of financial planning.

23 November 2011

The Bank of England’s Monetary Policy Committee voted 9-0 in favour of maintaining base rate and the programme of asset purchases during November’s meeting.

The minutes from the Committee’s latest discussion show that the existing programme of asset purchases would take a further three months to complete. They also said that due to the current level of market capacity it was difficult to increase the monthly rate of asset purchases substantially above what was already underway.

There was a strong signal that there will be more Quantitative Easing in the near future. The minutes went on to say: “Some members also thought that the balance of risks to inflation in the November Inflation Report projections meant that a further expansion of the asset purchase programme might well be warranted in due course; anticipation of that might itself have an effect on asset prices and demand.  Although some other members judged that the risks to inflation around the target were more balanced.”

Vicky Redwood of Capital Economics commented on the report: “Overall, more QE still looks very likely, although it does not look like the Committee will be panicked into announcing more purchases before it has even completed those already underway. We are therefore sticking with our forecast that we will see another £75bn in February – and probably more after that.”

24 November 2011

Aldermore have launched a 100% maximum loan to value fixed rate mortgage. The Family Guarantee Mortgage is designed for first or second-time buyers who don’t have a big enough deposit, but do have a parent, step-parent, or grandparent who is able and willing to provide a guarantee secured against their residential property, equal to the amount of the new mortgage that exceeds 75% loan to value.

Aaron Strutt, a broker at Trinity Financial, says: “The new mortgage is not cheap. The rate is fixed for three-years at 6.48% and there is a £1,298 arrangement fee. The maximum loan size is £250,000 and the mortgage must be taken on full capital repayment. The guarantor will be liable for the debt for ten-years.”

18 November 2011

The Council of Mortgage Lenders (CML) is calling on the government to announce a reprieve for the stamp-duty concession, currently due to end in March 2012.

If the current window closes, the CML think that there is likely to be a slump in mortgage lending next year and more first-time buyers will struggle to buy a home.

The CML believe that there is a good case for fundamental reform of the way revenue is raised by stamp duty. Approximately 87% of the money generated by the tax comes from property sales of more than £250,000 in value.

Revenue from stamp duty has fallen considerably from a peak of £6.7 billion in 2007 – 2008 to just over £4 billion in 2010 – 2011. Reinstating the 1% tax on property valued between £125,000 and £250,000 would raise modest funds and be unhelpful given the fragile state of the economy, according to the CML.

CML director general Paul Smee commented: “The housing market can act as a force for growth in the economy.”

18 November 2011

Northern Rock has been sold to Richard Branson’s Virgin Money in a deal worth £747 million, which could rise to more than £1 billion. The deal is subject to regulatory and EU merger approval and completion is expected on 1 January 2012.

The acquisition is going to include: 75 Northern Rock branches and 2,100 employees, one million customers, a £14 billion mortgage book and a £16 billion retail deposit book.

The acquisition is funded by an investment consortium led by Virgin Group and WL Ross & Co. The company will be rebranded to Virgin Money and there will be no compulsory redundancies for at least three-years.

Sir Richard Branson, Founder of Virgin Group, said: “Banking in the UK needs some fresh ideas and an injection of new competition. I’m delighted we will get the chance to work with the loyal staff of Northern Rock to create a new force in the market. Virgin has a history of entering new sectors to improve service and provide value for customers. We plan to do the same for banking.”

18 November 2011

House prices in market towns across England have more than doubled over the past decade, according to research by Lloyds TSB.

The average price has risen by 103% from £114,718 to £233,416 in 2011. Some of the largest price increases have been in northern England, with the biggest rise seen in Stanthorpe in County Durham. The average price rose 158% from £57,502 to £148,264.

House prices in market towns are on average, more than £25,592 or 12% higher than the county average, according to Lloyds. They say that since the start of the housing downturn in 2007, prices in market towns have risen by approximately 5%.

18 November 2011

Rising demand from those unable to buy their own home and those reluctant to commit in the current market – means that rents will rise significantly more than house prices in the UK over the next five-years – according to Savills.

The company forecasts that private renting will account for one in five households by 2016 and that it is unlikely that supply will keep pace with demand for at least in the next five-years.

In prime London, rental growth of 20.5% is forecast for the next five years, and the average rental growth forecast over the same period will rise from 5.1% to 6.1%.

18 November 2011

More than £25bn-worth of mortgages currently on either, fixed, tracker or discounted rates are due to switch on to their lenders’ standard variable rates in 2012, according to Lloyds Banking  Group.

18 November 2011

Speaking at the mortgage industry’s annual business exhibition this week, representatives from Northern Rock, Barclays, Nationwide and GE Money all predicted that base rate would not increase until 2013.

18 November 2011

There is concern that an EU draft directive to assess new buy-to-let mortgages in the same way as residential mortgage applications may be implemented in 2013.

The EU would like to see new buy-to-let mortgages to be based on affordability, creditworthiness, income and outgoings, rather than the current minimum income (typically £25,000), a good credit score and the rental income generated by the property. A vote of MEP’s is set to take place next spring.

18 November 2011

First-time buyers are running out of time to take advantage of the stamp-duty holiday and potential savings of up to £2,500.

The tax concession for buyers purchasing a home valued below £250,000 will run out on March 25, 2012.

The stamp-duty holiday for first-timers was introduced during last year’s budget and gave borrowers a reprieve from the 1% tax on property purchases between £125,000 and £250,000.

The Council of Mortgage Lenders has urged anyone thinking of selling their property to put it on the market now. They say that if the pattern set by previous government stamp-duty tax concessions coming to an end is repeated, there could be a peak in sales before the end of March.

Aaron Strutt, a broker at Trinity Financial, says: “We can arrange mortgage finance very quickly, but if you are looking to get on the property ladder for the first-time, it does make sense to take advantage of the tax break.

“First-time buyer mortgages are now more readily available and during the last few weeks both Woolwich and Nationwide Building Society have increased the availability of their rates. The lenders require at least a 10% deposit.”

11 November 2011

The number of buy-to-let mortgage loans has hit the highest level for three years in the third quarter of 2011, according to the Council of Mortgage Lenders. They say around 34,500 buy-to-let loans were advanced in the three-months to September, 16% more than in the previous quarter.

Godiva Mortgages is the latest lender to improve their buy-to-let rates to attract more investment customers. Their lowest two-year fix is 3.65% and it has a £2,249 arrangement fee. There is a free property valuation and the mortgage has no early repayment charges.

Northern Rock is currently offering £500 cash back as an incentive to take one of their buy-to-let mortgages. The cash back was reduced from £750 this week due to the increase in demand.

11 November 2011

Paragon Mortgages have conducted a survey of the intermediary mortgage market and the results are positive for the growth of the buy-to-let sector.

The survey shows that during the third quarter of this year, some 42% of mortgage brokers reported that their buy-to-let clients were looking to add to their property portfolio.

When brokers were asked how they would describe the current level of landlord demand, 26% said it was strong or very strong and 45% described it as stable.

John Heron, managing director of Paragon Mortgages, said: “There is incredible pressure now on rental stock. Lettings agents in many regions are reporting that they simply do not have properties available for an increasing number of potential renters.

“In order to meet this increasing level of demand, landlords need to continue to grow their portfolios.”

11 November 2011

Around 14,000 mortgage customers with Bank of Ireland are set to see their mortgage repayments increase from 2.99% to 4.79% – after their home loans were sold to Nationwide Building Society.

Last month, The Mortgage Works (TMW), which is part of the Nationwide Building Society, acquired a book of £1.1 billion mortgages from the Bank of Ireland.

TMW have said that they will give borrowers plenty of notice about the increased repayments, although borrowers unable to remortgage to another lender could struggle.

For those in a position to swap banks – Trinity Financial can access NatWest’s two-year remortgage rates – their lowest two-year tracker is 2.29% and their fixed rate is 2.55%. Both mortgages have a £1,499 arrangement fee and require a 40% deposit.

11 November 2011

The three-month inter-bank lending rate, or Libor, has passed the 1% mark, taking it to the highest level in more than two-years.

Libor is used as the benchmark rate for UK lending. A banks cost of borrowing is based on this, plus a premium added, often depending on the bank’s credit rating.

The rate peaked at 6.3% on September 2008, according to thisismoney.co.uk.

Mortgage lenders have been increasing the cost of their tracker rate mortgages over the last few weeks and the typical increase has been between 0.1% and 0.2%.

11 November 2011

The Bank of England’s Monetary Policy Committee (MPC) has kept base rate on hold at its historic low of 0.5%. The MPC also kept the quantitative easing programme at £275 billion.

This is the 32^nd consecutive month base rate has stayed the same.

11 November 2011

Many self-employed borrowers have found it difficult to get a mortgage since the start of the credit crunch, but lenders are loosening their lending criteria.

Northern Rock will now accept self-employed borrowers with two years accounts. It previously required the self employed to have been trading for at least three years. Leeds Building Society has also made changes and borrowers will need one years accounts and a projection for the second years trading to qualify for a mortgage.

Aaron Strutt, a broker at Trinity Financial, says: “Most lenders require two years accounts if you are self employed, but others will work with one year’s accounts.

“Kensington Mortgages are one of the only lenders happy to lend with just one year’s accounts. Their lowest two-year rate is fixed at 3.99% and they ask for a 25% deposit.

“Halifax may also look at the self employed if they have one years accounts although they will need a really good credit score. They offer a three-year fixed rate at 3.64% for those with a 40% deposit.”

Both mortgages mentioned have a £999 arrangement fee.

04 November 2011

Woolwich has increased its maximum loan to value on buy-to-let mortgages to 75%, up from 60%.

The lender has also launched a number of best-buy rates, including a two-year fix at 4.39% and a lifetime tracker at base rate plus 3.49% – there is also a five-year fixed rate at 4.99%. All of these deals have a £1,999 arrangement fee.

Woolwich has been planning to increase its buy-to-let lending figures and they needed to make their mortgages more competitive. They expect the new deals to be popular and the maximum loan on an individual property is £1 million.

04 November 2011

Leeds Building Society has withdrawn one of the lowest ever two-year fixed rates at 1.99%.  The mortgage was removed due to the high level of applications.

04 November 2011

The European Central Bank cut interest rates by a quarter of a point to 1.25% on Thursday, acting boldly to support the ailing euro zone economy at President Mario Draghi’s first policy meeting in charge.

European leaders said that they were prepared for Greece to leave to euro zone if they did not decide quickly to implement the bail out program.

04 November 2011

Coutts is dropping the Royal Bank of Scotland name from its international business in an attempt to revitalise the private bank, according to a report in the Financial Times.

The group has operated as RBS Coutts outside the UK since 2008.

According to the report in the FT: “The move is part of broader efforts to rejuvenate the business and banish its reputation of a somewhat outdate and conservative private bank. Coutts aims to double the size of its business in the coming years.”

Coutts now requires clients to have at least £1million in investible assets, up from £500,000 previously. The bank also charges £600 a year if customers just want to a current account.

04 November 2011

Yorkshire Building Society and Norwich and Peterborough Building Society (N&P) have completed their proposed merger.

The N&P brand will be retained and kept separate, within the Yorkshire group, in the same ways as the Chelsea and Barnsley Building Societies.

Ian Cornish, chief executive of the Yorkshire, told eveningnews24.co.uk: “We will be working to integrate the societies and make sure there is a seamless transition. Members using N&P’s branches will still see the same name on the door and the same staff they know and value.”

Norwich and Peterborough’s standard variable rate has been lowered to match the Yorkshire Building Societies and is now 4.99%. Existing N&P customers will see their monthly repayments reduce by £100 if they have a £100,000 mortgage.

04 November 2011