Finance Matters

• 07Sep

  Bank of Mum & Dad should insure deposits

  Mortgages No Comments

  From This is Money:

  But there could be a sea-change on the cards as more and more parents help the children out financially and look to cover themselves against their offspring defaulting on payments.

  This could cost £27 per month for a £50,000 debt and if something happens the loan repayments or lump sum should then be covered.

  According to Lloyds Banking Group, a fifth of parents give their children money to help them on to the housing ladder.

  Figures from Hartwood Wealth Management in Spring 2008, when average first-time buyer deposits stood at £15,500, said 5.5m parents had already given more than £116bn to their children to help get them onto the property ladder.

  Peter Chadborn, of CBK Colchester, an independent financial adviser, says: ‘When parents assist their children financially, often this entails a loan of some form or another. But this loan is more and more often being taken out at a time when parents are making serious plans for retirement or are even at retir…

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• 07Sep

  HSBC launches 1.99% mortgage

  Mortgages No Comments

  From This is Money:

  The mortgage is only available to those with a big deposit of 40% though and comes with a sizeable £1,199 fee.
  A pair of attractive discounted rates for those with smaller deposits are also available at 2.49% for those with a 25% deposit and 3.89% for homebuyers with a 10% deposit.
  But, despite pledging £15bn worth of mortgage lending in 2009, HSBC has been criticised for its slow processing of homeloans and potential borrowers have been warned not to get their hopes up.

  Andrew Montlake, of independent mortgage brokers Coreco, said: ‘Another headline-grabbing mortgage range and rate from the HSBC machine but borrowers shouldn’t get over-excited.
  ‘HSBC’s tactic is to create a buzz, take in as many applications as possible and then embark on a ruthless cherry-picking exercise whereby it only lends to those it considers worthy.
  ‘So, great for HSBC but not so great for all the borrowers whose hopes are momentarily lifted.
  ‘Reports are that the percentage of applicants…

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• 07Sep

  Buying a smallholding: The lure of the country

  Mortgages No Comments

  From This is Money:

  Farming is far from an idyllic lifestyle. Keeping livestock is fraught with difficulties and if you’re in the big league, the price of wheat and barley constantly fluctuates.
  Yet the lure of the farmyard is as strong as ever – just ask Hugh Fearnley-Whittingstall, Elizabeth Hurley or Alex James, all of whom have opted for the proverbial Good Life.
  Tom and Sarah Main have done the same thing. And it’s better than they expected.
  Until last year, Tom was an accountant and Sarah a teacher, but now they toil full-time on their smallholding in Hampshire.
  They are an example of so-called greenshifters, those who want to leave urban life behind and head for pastures new.
  Over the past four years, the couple have built up a collection of sheep, hens, pigs, ducks and turkeys on a four-acre smallholding next to their semi-detached house in Holybourne, near Alton, Hants.
  ‘In our old house we had a small patio, so we weren’t in a position to have animals or grow much,’ says Tom.
  ‘…

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• 02Sep

  Homeowners refusing to drop sale prices

  Mortgages No Comments

  From This is Money:

  But research by The Co-operative Bank suggests that homeowners looking to sell are reluctant to admit that the price of their house has declined to such depths.

  And the recent spate of house price studies reporting a slowdown in house price falls, or even a rise in monthly prices, are likely to lead to more sellers refusing to lower expectations.

  This has left a gulf in expectation between buyers and sellers, with only 12% of those asked saying they would offer full asking price on the property they are looking to buy.

  The Nationwide’s house price index has been one of the most optimistic since the start of the year, and revealed a fourth consecutive monthly rise in August.

  But the property market remains very much subdued, with transactions still only at just over half long-term levels, banks and building societies reluctant to lend and mortgages difficult to get.

  John Hughes, of the Co-op said: ‘With much speculation about green shoots of recovery in the housing market,…

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• 02Sep

  Homeowners repay more than they borrow

  Mortgages No Comments

  From This is Money:

  A combination of borrowers paying off their debts while interest rates are low and the ongoing squeeze in the mortgage market led to homeowners paying back £418m more than they borrowed in July.
  The newfound trend for thrift has also extended to Britons’ love affair with credit cards, overdrafts and personal loans, with £200m more paid back than borrowed in consumer credit.
  The Bank of England said this was the first time net mortgage lending has been negative since it started compiling figures in their current format in 1993.
  The number of mortgages being taken out for home purchases continued to rise, to reach 50,123 in July, 20% above the six month average, with the amount borrowed rising to £6.7bn, 34% above the six-month average
  Clearing their debts is a sensible course of action for many heavily indebted British homeowners, but does not spell good news for a swift recovery from recession with less cash going into the economy.

  The Bank of England figures sho…

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• 01Sep

  Mortgages rise points to house price gains

  Mortgages No Comments

  From This is Money:

  But with mortgage criteria still tough and a lack of supply cited as the driving factor behind recent house price rises, economists warn the market could see a double dip and fall again next year.
  The number of homeloans approved for buyers rose by 7.5% to 38,181 in July: 28.5% higher than the six-month average and 77% higher than the same month last year.
  Mortgage approvals for homebuyers have staged a slow but steady comeback from their lows recorded last winter, to reach the highest level since February 2008, but are still just under half the longer-term average.
  A combination of a pool of cash rich buyers and a lack of supply of homes for sale has been credited as the driving force behind recent monthly house price gains posted by major studies.
  The continued rise in mortgage approvals is likely to support this momentum in the coming months, but economists warn that house prices could fall back again next year.

  Seema Shah, property economist at Capital Economics, said: ‘The…

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• 01Sep

  Nationwide: House prices up £10k in 2009

  Mortgages No Comments

  From This is Money:

  The report from Britain’s biggest building society recorded its fourth month in a row of rises, with prices now down just 2.7% on a year ago.
  Nationwide said the average home is now worth £160,224 ? 14.4% below the October 2007 peak and the same level as early 2006.
  Property prices are now almost £10,000 higher than the £150,501 average recorded in January’s report
  But Nationwide warned the exceptionally low interest rate environment providing a floor for prices was not permanent and when this ended ‘it could make the recovery in the housing market bumpier that some might expect.’
  Nationwide’s report did not mention the possibility of a double-dip for the property market, with prices falling again once the current momentum dies out, but the current rapid rise in prices could increase the chance of this scenario.
  David Smith, senior property partner at Carter Jonas, said the figures showed now could be the ‘perfect time to sell’.

  He added: ‘Property is still in…

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• 25Aug

  Mortgage borrowers better off on SVRs

  Mortgages No Comments

  From This is Money:

  Most will list alternative fixes, trackers or discount deals for loyal customers.

  But an examination of the market reveals that many borrowers will be better off tearing up the letters and switching to their lender’s standard variable rate instead.

  – Has your SVR been cut?
  This decision is likely to make even more sense as borrowers are unlikely to be charged a fee to move on to their lender’s standard rate. By contrast, signing up for a new fix or special rate deal such as a tracker or discount can trigger fees of several hundred pounds.
  Ironically, it is the most generous lenders with the lowest standard rates who most need to distract borrowers from them at remortgage time.
  C&G, for example, is keen to promote its latest range of fixed-rate deals, priced at between 4.19 and 6.69%, rather than its super-low standard variable rate of 2.5%.
  Halifax hope its remortgage customers look at its fixes of between 4.39 and 6.19% rather than its standard rate of 3.5%.
  Royal Bank o…

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• 25Aug

  Homebuyer rise points to house price gains

  Mortgages No Comments

  From This is Money:

  But with mortgage criteria still tough and a lack of supply cited as the driving factor behind recent house price rises, economists warn the market could fall again next year.
  The number of homeloans approved for buyers rose by 7.5% to 38,181 in July: 28.5% higher than the six-month average and 77% higher than the same month last year.
  Mortgage approvals for homebuyers have staged a slow but steady comeback from their lows recorded last winter, to reach the highest level since February 2008, but are still just under half the longer-term average.
  A combination of a pool of cash rich buyers and a lack of supply of homes for sale has been credited as the driving force behind recent monthly house price gains posted by major studies.
  The continued rise in mortgage approvals is likely to support this momentum in the coming months, but economists warn that house prices could fall back again next year.

  Seema Shah, property economist at Capital Economics, said: ‘The one strange thing th…

  Click to read the full article »
• 24Aug

  Millions caught by mortgage gamble

  Mortgages No Comments

  From This is Money:

  Four out of ten households have taken out the mortgages, according to figures from the Financial Services Authority.
  Many expected that the increase in property prices would help them to pay off their loans.
  But with houses having lost almost a quarter of their value in the last two years, an estimated 4.2m homeowners have to confront the prospect that they may not be able to move for many years.
  Among the hardest hit will be those needing to move to take up a new job, or trade up to a larger house because their family has outgrown the current one.
  Banks and building societies will be unwilling to give them a new loan because they have had any deposit eaten away by falling prices and have never attempted to repay any of the capital on their previous loan.
  To compound the problems caused by falling property prices, the credit crunch has left thousands of white-collar workers unemployed and millions facing a pay freeze, so they have little chance of increasing their mortgage p…

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