Mortgages Uncovered

The Scotsman newspaper reported that office space is in short supply in Glasgow, which will greatly interest those who have commercial mortgages.

According to commercial property consultant firm, DTZ, there is only 75k sq ft of office space (Grade A) available in the city.

There are currently developments underway which will provide an additional 98,000 sq ft of office space, and serviced offices, but that will not be completed until later this year.

In comparison, Aberdeen’s office space market is busy.

Yesterday we reported that the Bank of Englands Monetary Policy Committee (MPC) had decided to maintain the current base rate of 5 per cent.  Experts could barely believe it.

A spokesman for insurance company Legal & General said:

“It”s just a matter of time before the next quarter point cut.”

A spokesman for Barclays said:

“We expect the Bank of England to reduce interest rates gradually over the coming quarters”

They believe the interest base rate will be cut to as low as 4.25 per cent by the end of this year.

Now if that happens, then I’ll look at one of these new 25 year fixed rate mortgage deals!

The Bank of England held the base rate this month, despite speculation that another cut was on its way.

News was stated that the Bank of Englands Monetary Policy Committee had decided to hold the interest rate at its current rate of 5 per cent.

Murmurs from the experts predict it won’t be able to sustain this.  We shall wait and see…

According to figures released this week, 44.79 percent of first-time buyer mortgages now come from dual income applications, showing that more people than ever are clubbing together to get their first step on the property ladder.

It also seems to be a buyers market at the moment and first time buyers have been haggling prices.  The average house value for a first time buyer is down 5.75 percent compared to March – down to £170,559.

Senior Editor at Moneyextra.com, Robin Amlot, said:

“While it may be getting tougher to get a mortgage now, it would appear that those first-time buyers who are in a position to buy are driving much harder bargains with sellers.  Housing is very definitely a buyers’ market now rather than the sellers’ market that existing homeowners had become used to.”

The average loan-to-value ration on first time buyers mortgage has also dropped to 82.89 percent as well.  I don’t think that’s purely as a result of first time buyers having more money, although obviously there will be a little more if they’re clubbing together, but probably because banks have stopped offering 100 percent mortgages, there are fewer 95 percent mortgages and they’re haggling the price down.

Landlords are seeing an increase in rental demand now that mortgages are more difficult to get as a result of the credit crunch.

Indeed, there may even be a shortage of properties available as criteria for buy-to-let mortgages has also tightened.

Director of Robert Watts estate agent, James Watts, said he had seen rental prices increase by about five percent in his local area of Bradford.

A spokesperson for the Royal Institution of Chartered Surveyors said the recent forecasts that buy-to-let landlords would leave the market to benefit from lower capital gains tax were unlikely to happen because of the increase in rental demand.

Jonathan Charters-Reid, RICS regional spokesman, said: “With first-time buyers struggling, the current state of the property market lends itself to first-time renters.”

Housebuilder George Wimpey is offering to help its customers combat the increasing costs of getting a mortgage and is trialling this in the South Midlands. For those who want to reserve a home in the region, they should have a free consultation with the Wimpey mortgage broker

The idea is that the home buyer will be protected against interest rate increases for up to three years. This move could save them thousands of pounds.

Jason Colmer, Sales and Marketing Director for George Wimpey South Midlands, said: “We are offering our customers confidence and security at a time when many homebuyers are worried about the cost of mortgages. We understand how important it is for homeowners to have a manageable monthly budget and we make sure, with the help of our independent financial advisors, that this is the case. We also offer to pay the set up costs of mortgages, because those with lower interest rates generally are more expensive to buy. This stops customers having to add this cost to their mortgage and therefore paying interest on it.”

You must get the consultation before you reserve your home, so contact the Sales Executive at the development you’re interested in. If you have a home to sell, then there is also the option to use the Wimpey easymover scheme, which means the housebuilder will help you sell your property.

My advice would be to check the price of the new home first. If you have your heart set on it, then this is a great offer, but be sure you aren’t paying over the odds for that property type in that area first.

After years of encouraging consumers to shop around for a mortgage deal and to switch providers to ensure they’re getting the best deal, the government now says that we need more stability in the housing market and the best way to get that is through 25 year mortgages.

Most of us expect to spend around 25 years paying our mortgage, however, we don’t expect our deals to last that long.  However, when many people get to the end of their fixed rates deals this year, the 25 year mortgage will be available.

A reasonable compromise could be to take out a 25 year mortgage but one with an option to switch after ten years or do.  Nationwide are offering such a mortgage – they currently have a 25 year mortgage fixed at 5.98% with an option to switch after ten years.

I’m not sure I’d like to be tied in for so long though.  If I got my 25 year mortgage now at 5.98% and my friend got one next year and was lucky enough to find the interest rates had dropped, how bad would I feel knowing I was locked in for TEN years?  The jury is out on this one I feel

Experts have predicted that they believe the Bank of England could be about to cut interest rates again this month.  The mortgage lenders have tightened lending criteria in the last few months and Investec economist, Philip Shaw thinks the Bank of England will have to respond by taking action.  He said:

“If this trend continues it would tend to point to rate cuts despite the fact that the Monetary Policy Committee is known to be walking the tightrope at the moment.”

The Bank of England’s Monetary Policy Committee will meet next week on Wednesday and Thursday the 7th and 8th May.

Shareholders in Abbey will be delighted at this week’s news that their shares have trebled in price at a time when Abbey’s rivals are suffering from the effects of the credit crunch.

Abbey has grabbed almost 1 in 6 of the new mortgages that have gone through in the first quarter of 2008.  The majority of these were remortgages according to a spokeman for the bank, with new customers unable to satisfy their credit criterion in most cases.

During the housing boom, Abbey did not borrow as much on the wholesale markets as its rivals and is now reaping the rewards. Although Abbey did scrap its 100 percent loans and its buy to let mortgages, it has still been able to do some prime mortgages whilst its rivals had to stop altogether in many cases.

The Bank of England has released its figures showing the number of new mortgage loans approved in March.

The number has tumbled to just 64,000 home loans, which is almost a record low.

With the Bank of England’s governor, Mervyn King, saying that the £50 billion lifeline won’t help the mortgage market, we shall watch to see what happens.  The lifeline should mean that the number of home loans will increase from now, but we’ll see what the April figures show.  Watch this space…