Mortgages Uncovered

Nationwide yesterday defended the launch of their 125 per cent mortgages.

The building society said the “very niche” product was only available to existing borrowers who needed to move, but owed more on a mortgage than their property was worth. A Nationwide spokesman said:

“We are doing something socially responsible.

In my opinion this is just another way for the banks to get round the problem of lending money to make it look as if they are morally correct. And anybody with a bank account knows that the banks and building societies are only in it for the money at the end of the day”

“Access to mortgages at higher loan-to-value and loan-to-income ratios is to expand over the course of the next few months”

as a result it’s predicted that householders will be offered more credit secured on their homes in coming months. However not everyone will be so lucky. This will only apply to certain people. Sadly I think that the economy is in such a bad state that while there are encouraging signs, with proposals such as this a quick return to “pre-credit crunch” lending conditions seem highly unlikely posing the question will still people be struggling just as much even after the “credit crunch” is declared over?

According to the most recent reports there are only 2,282 mortgage products are on the market today. This means there have been falls in the number of home loans available.

This figure shows there is around ten times fewer loans around today compared to two summers ago. Although this must mean that there is lack of choice for the mortgage buyers it does mean that its now easier for brokers to recommend which Mortgages are suitable for individual consumers simply due to lack of variety which is frustrating as yet again the only people look set to loose out are the consumers-with a lack of choice it means there is higher potential that they will take up a mortgage which isn’t right for them.

Mortgage related fraud has become increasingly prominent in the UK in recent months. As a result measures have had to be put in place to crack down on this type of fraud. The first few months of this year saw the FSA impose fines of more than £300,000 on those found to be committing mortgage fraud, according to the figures.

Can mortgage fraud these days be seen as a plea for help or is it simply people becoming greedy. I believe it’s a bit of both but Many people are beg borrowing and stealing to survive and mortgage fraud can be seen as a way out on the other hand although times are hard and it seems like a good idea surely struggling along and having a clear conscience is better than a potential criminal record.

Buying a home for the first time can be expensive at any time in ones life but now more so than ever. Many people are resorting to renting or even setting up home with friends as a way of being able to finance it. Most mortgage lenders require a deposit of at least five to ten per cent of the value of the property you wish to buy.

As the price of property increases, the deposit can become expensive. A lot of first time buyers are ex students whom also carry the burden of student debt so is getting a mortgage really the best thing to do or is it only going to get them into more debt which they will struggle to repay. It will leave almost their entire income to cover the mortgage repayments.

People that have a fixed rate mortgage cannot get out of their contract resulting in them not being about to take advantage of the low bank rates at the moment. Many people are now paying way over the odds due to being in a fixed rate mortgage a person paying five hundred pounds a month could probably save themselves a hundred to hundred and fifty pounds a month. So which type of mortgage is the best, as they all seem to have their problems in the current economic climate?

According to reports the Abbey National have the best fixed rate loan around at the moment at one time people would have jumped through fire to get paper work all sorted but now everyone is edging on the side of caution and they have reason to.

A few years ago it was said that getting an endowment mortgage was the way forward as it allowed buyer to receive cash in hand at the end of the fixed period. Now as many people know or are finding out, there are people with large short falls in the repayments of their mortgages.

Its now said that One in Three Endowments Will ‘Definitely’ Fail to Pay Off the Mortgage not only that but more than 60% of policyholders are likely to face a bill to top up their mortgage due to an underperforming endowment policy. These are sad facts as many people went into their contracts with the idea that it was going to benefit them not financially cripple them.

Approvals by main high-street banks saw an increase of the annual rate to almost 16 per cent last month, touching a 13-month high.

The average value of the loans, although below the levels seen last year, has also risen steadily over the last six months according to BBA.

The BBA also published statistics on lending to companies, with the figures showing that loans to certain industries remained at a poor quality. Loaning to the construction industry, for example, was down £500m last month, compared with an average drop of £200m over the past six months. With figures such as these being broadcast is there any hope for anyone?

The administration of Obama is broadening it’s mortgage refinancing programme to allow more borrowers hit hard by falling home prices to take part. Loans are now worth up to 125% of the value of their homes and people are now eligible to refinance their homes under the Obama foreclosure prevention plan. Previously, the limit was 105%.

How many more people will be drawn to the program now, however, remains questionable, especially since mortgage rates are on the rise but the administrations have predicated that 4 million to 5 million mortgage borrowers would be helped with the broadening of the programme. So basically it would seem giving mortgages to the people who cannot afford to pay a mortgage has increased the problems of toxic debt that started the banking problems in the first place.

Politicians described the figures as “absolutely pitiful”, saying it didn’t begin to address the true extent of the problem facing Britain’s homeowners yet almost 1,000 homeowners are being evicted every week. Housing Minister John Healey said: “We have put in place help for home owners struggling with their mortgage at every step of the way.”

But the problem is now so great that the Government is supposedly establishing a new team to fast track the cases of those most at risk of repossession. The idea is that under the new scheme families that are eligible can either sell their home and become tenants of it or get an equity loan.