Mortgages Uncovered

Two US bankers were forced to resign over the sub-prime mortgage crisis – you know, the one affecting most of the developed world at the moment – because their banks lost over $20 billion in the last six months of2007.

In the meantime, they made hundreds of millions Read the rest of this entry »

Ah, beancounters – my favourite kind of people (not!) Fair-value accounting means that accountants have to consider the current market value of any assets when they’re drawing up the balance sheets. For companies who have mortgage-backed assets, this means that they are fast running short of capital, which can then mean they need to sell.

No accounting mechanism or rules are flawless of course, but fair-value accounting, although timely and designed to be completely transparent, will cause a problem in the event of a market crash. How can something have a market value when there’s no market?

If companies start to offload Read the rest of this entry »

Next Wednesday, Alistair Darling will be running through the government Budget.  However, how will he handle the Northern Rock nationalisation?

The fiscal rule set by the government was that public debt should be held below 40% of GDP and they were doing very well – until Northern Rock.  With the expected slowdown of the economy, the government anticipated that public debt would increase and they had been holding it at around 30% so had room to manoeuvre.  However, Northern Rock cost them £90 billion, taking the public debt to 36%!

Darling may argue that Read the rest of this entry »

As of April 6th, the capital gains earned on the sale of a property other than your main residence is due to be cut from its current level of 40 percent to just 18 percent, in order to simplify the current matters where capital gains tax is tapered and can be anything from 10 to 40 percent.  Prime Minister Gordon Brown is being urged to scrap this potential tax break, and I think he probably will.

A report is also expected to recommend that the government puts measures in place to discourage people from buying or owning a second home.  The idea currently in discussion is Read the rest of this entry »

Mortgage company WAVE is introducing a range of new products and is increasing the minimum age on all its products to 21 years old. It is also going to stop allowing first-time buyers to use its Buy-To-Let mortgages. Is this a sign of things to come, could others follow suit and increase the minimum age on their mortgage products to 21 years old as well?

At Mortgages Uncovered, we doubt that, mainly because Read the rest of this entry »

We’ve had all the worry and publicity about sub-prime mortgages and now it’s moved on to near-prime mortgages.  According to The Times, shares in certain financial stocks who are exposed to near-prime mortgages are now also feeling the heat.  Shares in HBOS continued their trend and dropped even further yesterday.

Near-prime mortgages are also called ‘Alt-A’ or ‘Extra Light’ mortgages and whereas sub-prime applicants generally have a bad or poor credit rating, near-prime or extra light mortgage applicants generally have Read the rest of this entry »

Lloyds TSB, one of the UK’s largest mortgage lenders, has joined the retreat from 100 per cent mortgages.  Cheltenham & Gloucester, owned by Lloyds TSB, has now said it will only accept a minimum of 10 per cent deposit.

If Lloyds TSB has joined the retreat, you can bet your bottom dollar we’re about to be bombarded with similar news and reports from all the other major lenders.  Many lenders mortgage books include a high percentage of business Read the rest of this entry »

A fixed rate mortgage is when the lender tells you your interest rate and guarantees that no matter how interest rates change, you will still pay that fixed rate of interest for as long as you have agreed.  There are many two- and three-year fixed rate deals available but you can even get them fixed for ten years or more.

In recent months, the government has even talked about encouraging fixed rate term mortgages where the interest rate will be fixed for the entire length of the mortgage – imagine having no interest rate change worries for twenty five years!

Of course, although a fixed rate does give you peace of mind Read the rest of this entry »

Nationwide, one of the UK’s remaining building societies, has said this week that it’s first time buyers mortgages are still one of the best deals around. This is despite having reduced their maximum Loan-To-Value on fixed and tracker mortgages from their original 90 to a whopping 75 per cent!

Of course, you can still have a higher Loan-To-Value if you like, you’ll just have to Read the rest of this entry »