Mortgages Uncovered

Most analysts are in agreement that the mortgage market needs to adapt to the changing needs of the public if it is to spur the necessary growth to help the housing market recover properly. There is a lot of uncertainty in the housing market at the moment and that is in part a side-effect of a mortgage market that needs a new approach.

Perhaps a more successful approach within the mortgage market would be to take a less objective point of view when it comes to lending. Subjectivity allows lenders to target consumers with tailor-made mortgages that better suit their circumstances.

This has been shown to work in various areas. For example, contractor mortgages are available for those who have been turned down when they have approached ordinary lenders on account of the fact they work as contractors charging daily rates as opposed to employees on the payroll at their place of work.

If smart lenders are able to offer mortgages for contractors that meet their needs specifically then there is much less of a risk attached to the venture and there is less need for caution. Lenders can take this as an example of how the market can adapt to the needs of the public in order to offer a more positive service.

In today’s average household, mortgage debt and the monthly demand for repayments is putting a lot of strain on family budgets. The cost of living is rising and there are so many other bills and debts to take care of, but the largest one – mortgage debt – must always be prioritised.

If you’re struggling to meet your monthly mortgage repayments and still make ends meet, it sounds like you need to find a way to increase your income. This is where online bingo can help, believe it or not.

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Interest rates in the UK are currently at the exceptionally low rate of 0.5%, and yet analysts are now warning that these interest rates are set to rise as high as 5%, or potentially, even higher.

These could see new home-buyers spending more than half of their take-home pay on mortgage repayments.

For existing mortgages and remortgage deals, the rise in interest rates would also see a significant increase in the amount to be repaid.

This doesn’t bode well for those who are already struggling, although the Bank Rate is not expected to change before 2013.

The last quarter of 2010 saw 7,900 reposessions, while this figure had risen to 9,100 for the first quarter of 2011.

According to UK lenders, March saw an increase in the numbers of new mortgage deals.

Remortgages in March were 16% higher than those in February, and 17% higher than the number approved in March 2010.

The rise in demand for fixed-rate mortgages is being linked to increased living costs and the fear of an increase to the base rate.

Well over a third of all lending in the first quarter of 2011 was for remortgage lending, which represents an increase of 30% on the last quarter of 2010.

The numbers of new mortgages increased by almost a quarter in March when compared with the previous month, although this was 17% lower than the same time last year.

‘Freedom to Fix’ is the new tracker mortgage on offer from Northern Rock that allows customers to change to a fixed rate mortgage at any time during the repayment period. They can do so without the risk of incurring charges or repayment penalties.

At the moment, interest rates are at an all-time low of 0.5% and so starting on a variable interest rate mortgage makes a lot of sense. This option, however, would allow buyers to take advantage of the current low rates without being put off by the potential interest rates in the future.

The Northern Rock commercial director Andy Tate said:

“Due to the low interest rate environment, many borrowers remain attracted to tracker mortgages. However, our research tells us that many customers are mindful of the possibility of base rate rises in the not too distant future and so would like to keep their options open.

“Our Freedom to Fix mortgages offer customers the best of both worlds – a competitive interest rate now with the added security of being able to fix their rate at any point during the tracker period.”

The number of mortgages approved by banks for home buyers fell in August for the third month in a row.

Banks approved 31,767 home loans, the lowest number so far this year, down from 34,219 in July, the British Bankers’ Association (BBA) said.

The figures are another indication that the UK property market has reached a plateau.

Most surveys have shown that prices are no longer rising, while the number of completed sales also fell last month.

“Demand for mortgages continues to be weak despite more properties reportedly coming on to the market,” said David Dooks of the BBA.

At the moment alot of young people are put off buying properties and this is due to the economic climate but also because they are not aware of the help that is out there for them.

Many young professionals tend to rent their own property and i know from experience that this is not cheap and some people could probably get a mortgage of the same in some cases.

The Government have done a few things to try and encourage first time buyers and i feel that not enough is done to make every one aware of these schemes.

Under new plans drawn up by the City watchdog, self employed persons will have to wait at least two years before they can get a loan. New business traders will thus not be able to buy their first home or even move house. This also means that those people who find that their one year introductory mortgage is coming to an end will be stuck on the standard variable rate until their two year trading anniversary.

The change has come about because from today lenders will have to confirm their applicant’s income which means that self-cert mortgages are effectively a no-no.

So how do you get a mortgage if you are self employed?

You now need to show two years tax returns or two years company accounts’ to get a mortgage if you are self employed.

It seems that the mortgage market is not recovering as well as expected, after reports that the number of mortgage products available in the UK dropped in the two weeks up to the beginning of July. At a time of year when many homeowners feel the need to move, this is not the news the new government expected.

The figures produced from Moneyfacts.co.uk stated that although the figures are much better than at the start of the year, when there were only 1600 products on the market, the numbers have stalled with little change to the 2600 products currently available.

The banks have also stated that they expect lending to fall over the next three months prompting fears that a new mortgage squeeze could be on the way. Mortgage rates are still dropping slightly, which is good news for borrowers, but it remains to be seen what happens in Q3 and Q4.

It can be really easy to get a mortgage from your bank or building society. You just have to walk in the door and because you are a current customer, they will blind you with technical jargon and what seems like great figures and you will leave with a mortgage in place. However this is really not the way to do it.

Banks and Building Societies will only have a limited range of mortgage deals and will fob you off with one of their own offers. What you need to do is spend a little time researching the market to find the best deal. If you use a website that offers a range of current best buy deals, you will be able to compare quotes and choose the most suitable deal available. Mortgage companies are falling over themselves to find suitable borrowers and by getting the best deal you could save a considerable amount of money.