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?

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.

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.

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.

In March house prices rose again, say the Nationwide.

The Nationwide building society claimed that house prices further increased by 0.9% in comparison to the previous month.

The annual rate of property price falls fell from February’s 17.6% to 15.7% in March, which brought the average cost of a UK home to £150,946.

Nationwide described the change as a “surprise bounce” and warned against concluding the market had turned.

Chief economist at Nationwide, Fionnuala Earley said;”While the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached. Cuts in interest rates and the Bank of England’s move to expand the amount of money in the system would take time to work through into the housing market before there was a sustained recovery in house prices.”

The survey from Nationwide found that UK house prices had dropped by 4.2% during the first 3 months of this year in comparison to the final quarter of 2008.

Ms Earley commented that “… the significant slowdown in falling prices year-on-year was distorted by the sharp decline in the market last year.”

The figures from the building society further show that the prices of flats have been particularly volatile in comparison with other types of properties.

A new division of Crystal Mortgages known as Crystal Commercial Funding has claimed that it believed the commercial market particularly property was about to turn and they believe they can provide a safe foundation for those SME’s who have just been unfortunate in missed out on bank funding.

Roger Dewsbery, at Crystal Commercial Funding, said: “Crystal has always been in commercial mortgages, but we thought there was a window because these days a business will jump through hurdles to get its money from the bank and then fail for a small reason. We have introduced this little window called ‘near prime’.

That doesn’t turn them into a sub-prime borrower – we are just pitching it somewhere in the middle. There will be an increased level of risk, the level of risk will decide the cost of borrowing but sometimes it can only be a tiny amount.

“I’m not criticizing the banks, I’m just saying they have got no margin for movement. “

It seems that hope is up that the new product will really help a number of firms who are caught in a no win situation with their current lender who is too expensive to stay with and too expensive to leave!

If they are able to build confidence into the market then the feeling that commercial properties are about to tumble in value will have nearly reached the end

In a bid to take on the mortgage brokers, HSBC is now trialing a new “whole of market” full mortgage and finance advice service which is available to their customers throughout its branches in the UK.
The bank is set to charge their customers £150 to speak to an HSBC ‘Mortgage Matcher consultant’, who is a person that has to offer completely impartial advice on the markets best mortgage deals including those from the bank’s rival lenders.

HSBC bank, who is now the sixth largest lender throughout the UK has recently teamed together with John Charcol, mortgage broker, to develop this unique scheme.

Peter O’Donovan, head of mortgages at Bestinvest, a financial advisor, said: “This is a threat to brokers, who have already been hit by customers choosing to get mortgages straight from lenders.”

Andy Mielczarek, head of retail products at HSBC, said: “We remain totally committed to funding our own mortgage business, with £15 billion available for 2009 – double what we lent in 2007. However this service offers our customers who are less confident in deciphering the right mortgage deal for themselves, another reason to talk to us and gives us more options to help them.

Melanie Bien, of Savills Private Finance, a broker, said: “This appears to be a natural step for HSBC, but other lenders, such as Bradford & Bingley, have tried, and failed, to offer whole of market advice in branch in the past.”

The partly nationalized building society Bradford & Bingley has just published its’ annual report and it clearly details that they will experience a troubled year ahead, however, it did show a 7% rise in pre-tax profit. The report also stated that it had occurred £507 million of mortgages that had turned sour.

The report, published a few days ago, also said that the firms had incurred the huge mortgage charges that had turned sour, from £22.5 million in 2007.

B&B admitted that most of their accounts had come into arrears on houses that had been reposed in the last three months.

The report also concludes that arrears rates are likely to continue deteriorating throughout 2009 and 2010.

The executive chairman, Richard Pym has presented a business plan to reduce the mortgage book at B&B from the current £42 billion to £36.3 billion by the end of the year 2011. He admitted that the rate of redemptions is slowed by the state of the economy and falling house prices.

“Many of B&B’s borrowers have limited alternative refinancing opportunities due to a combination of increasingly conservative lending criteria and a significant reduction in mortgage lenders’ appetite for buy-to-let and self-certified lending,” the business plan warns.