Mortgage rescue claim is rejected
May 13, 2009 by admin
Filed under Mortgage News
A woman was rejected by the government’s mortgage rescue scheme despite being the “perfect candidate”, according to financial advisers.
Donna Parsons was told that under the Mortgage Rescue Scheme the government would buy her home, pay off her debt and rent her home back to her.
But despite showing four bank letters threatening repossession she had not been sent one from her mortgage lender.
“There is just no flexibility, it must be notice from the lender,” she said.
Mortgage lending ‘will be negative next year’
December 19, 2008 by admin
Filed under Mortgage News
Mortgage lending will be negative next year for the first time on record and 75,000 people will have their homes repossessed, the Council of Mortgage Lenders predicted today.
The group expects the number of people who lose their homes to soar by 67% from 45,000 this year, and it predicts 500,000 people will fall at least three months behind with mortgage repayments as the economic downturn intensifies. The mortgage drought will also contribute to a further drop in the number of homes changing hands, with only 700,000 transactions taking place during the year, down from 900,000 this year and 1.63 million in 2007.
Is The Uk Housing Market Going To Crash?
December 10, 2008 by admin
Filed under Mortgage Articles
The big question is will history repeat itself? A short answer to this question is very likely, unless the market changes its habits. In 2003 the UK bank base rates reached a low point of 3.5%; at the start of 2007 the base rate was 5.25%, this represents a 50% increase in less than 4 years. Combined with increasing bank base rates people have also been borrowing on ever high multiples of their incomes, in some cases up to 7 times annual income. These higher borrowings make people even more vulnerable to further increases in bank base rates, so it doesn’t take much thinking to realise that the UK property market is at the very least stretched, more likely it is stretched to a point where it could break.
Looking back on history 20 years ago then the UK will reach a comparable situation when bank base rates reach 6.5% to 7%. Already there are projections that base rates will increase to over 6% in 2008, if this happens there will be a huge increase in mortgage arrears, for many it will be too late to stop repossession of their homes. This is a very dire outlook, the best advice anyone can offer is do not over extend yourself when buying a property, ask the question “can I afford my mortgage if bank base rates increase to over 6%”, if the answer is no, then don’t buy.
Government Action in Mortgage Market
November 28, 2008 by admin
Filed under Mortgage News
The collapse in mortgage lending is becoming a real concern. Next year, the Association of British Bankers predict net mortgage lending could be negative. Despite lower interest rates, it is still as difficult as ever to get a mortgage. As a result, housing sales are at their lowest level on record.
When the government suggested banks should return to 2007, lending levels there was many raised eyebrows. Surely there is no sense in returning to lending levels that caused the housing boom in the first place?
However, the mortgage market has become so constrained that it now appears there is a case for government intervention to overcome the almost paralysis which afflicts the market. We are not suggesting we want a return to interest only, 100% mortgages - far from it. But, the banks have gone from one extreme to another. From freely offering mortgages, they are now being very conservative.
You could argue there is good reason to be conservative. Banks will correctly point out we are facing:
* Rising repossessions,
* Economic recession and rising unemployment
* falling house prices creating negative equity.
* Banks need to improve their balance sheets after years of over lending.
With these factors in mind, it is hardly surprising that banks are being more cautious in their lending. But, if the mortgage industry faces continued constraints we could see a market devoid of buyers; this will cause more problems. It also must be remembered that with low interest rates and falling house prices, the cost of mortgage repayments has fallen significantly. Although repossessions are rising they are still less than 1% of total mortgage loans. It is not that the government should try to stop house prices falling or return to 2007 lending. But, the market is showing signs of market failure, with banks wanting to retreat into a shell. Therefore, there is a case for governments offering some temporary incentives for mortgage lending, and more than just a stamp duty cut.