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+ Bank of England Maintains Bank Rate at 0.5% and Ma (04/02/2010 - 13:11:52)

+ Rate Rise Rush for Societies (23/01/2010 - 09:25:07)

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Bank of England Maintains Bank Rate at 0.5% and Maintains the Size of the Asset Purchase Programme at £200 Billion

mortgage rates

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion

Rate Rise Rush for Societies

ARTICLE IN SUNDAY TIMES by Simon Read

The days of rock bottom mortgages may be over as one of the biggest lenders hoists its variable rate

Mortgage rates are set to soar for hundress of thousands of borrowers after the Skipton announced plans to raise its standard variable rate by almost 0.5% despite there being no increa in the bank base rate for a year. Other building societies are likely to follow Skipson's lead as it makes it easier for others to follow as the will get less flack. Building societies that has so far have increased their variable rate include Skipton, Scottish, Ipswich, Cambridge, Marsden and Mansfield.

The Skipton which has just over 100,000 borrowers, will incresae it's rate from 3.5% to 4.95% from 1st March leaving borrowers on a typical £150,000 mortgage needing to find around an extra £1,500 a year. The increase will also apply to the Societies specialist lending subsidiary Amber Homeloans.

Anyone facing an increased SVR should consider switching lenders and deals!

Bank of England Maintains Bank Rate at 0.5% and continues with £200 Billion Asset Purchase Programme

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its programme of asset purchases totalling £200 billion financed by the issuance of central bank reserves

Bank of England Maintains Bank Rate at 0.5% and continues with £200 Billion Asset Purchase Programme

Lenders raise mortgage costs amid property fears

Sunday Times article by Elizabeth Colman

Government backed banks raised mortgage rates and introduced stricter lending criteria last week amid concerns that this year's house price recovery is not sustainable.

Northern Rock increased it's market leading 5 year fixed rate for remortgages from 4.99% to 5.39% while the equivalent deal for homebuyers went up from 4.99% to 5.29%. Both require a 30% deposit.

Royal Bank of Scotland, 84% owned by the taxpayer, surprised brokers by increasing the deposit required for its popular two year tracker from 20% to 25%.

Industry sources confirmed most of the big mortgage lenders were anticipating a double dip in house prices next year. Average house prices fell 20% from the peak of £186,044 in November 2007 to a trough of £147,746 in February this year according to the Nationwide house price index.

Bank of England Maintains Bank Rate At 0.5%

Bank of England Maintains Bank Rate At 0.5% and Increases Size of Asset Purchase Programme by £25 Billion to £200 Billion

BANK OF ENGLAND MAINTAINS BANK BASE RATE AT 0.5%

Bank of England Maintains Bank Rate at 0.5% and continues with £175 Billion Asset Purchase Programme

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves.

Lenders Ignore Bank rate freeze

SUNDAY TIMES ARTICLE BY ELIZABETH COLMAN

Two of Britains biggest lenders raised the cost of new mortgages last week, one day after the bank rate was kept on hold for the sixth consecutive month.

Lenders have cosnsistently put up the cost of new mortgages in the past six months, despite bank rate being on hold at 0.5% since March. Experts warned that fixed rate mortgages could soar to 10% when the Bank of England starts to raise rates again, if lenders continue to profiteer.

Darren Cook of Moneyfacts, the financial data firm said: ''It's astonishing to see margins continuing to grow at the expense of borrowers. If mortgage rates go on like this, and they will, the closer we get to the bank increasing rates, we could soon see mortgage rates of close to 10%.''

Bank of England Maintains Bank Rate at 0.5% and continues with £175 Billion Asset Purchase Programme

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves.

The Committee expects the announced programme to take another two months to complete. The scale of the programme will be kept under review.

SCOTTISH MORTGAGE MARKET BEGINS TO STABILISE

Scottish mortgage market begins to stabilise in second quarter
26 August 2009

New data from the Council of Mortgage lenders shows lending activity in Scotland began to stabilise in the second quarter, mirroring the trend seen in the UK more widely

In the second quarter of 2009 there were 11,400 house purchase loans taken out in Scotland, a 50% rise from 7,600 in the previous quarter, but 39% below the same quarter a year earlier.

The rise in mortgage lending in Scotland was spread evenly across first-time buyers and home movers. There were 4,300 loans to first-time buyers, up 54% from the previous quarter, and 7,200 loans to home movers, up 53% from the first quarter.

There is some evidence that the tightening in lending criteria is slowing. First-time buyers typically put down a 25% deposit in the second quarter, unchanged from the previous quarter but up from 13% a year earlier. Home movers typically borrowed 70% of the property's value, down from 71% in the previous quarter and 73% in the same quarter a year earlier.

Income multiples rose modestly in the second quarter. First-time buyers typically borrowed 2.85 times their income (3.06 across the UK), up from 2.74 in the first quarter of 2009. Home movers typically borrowed 2.55 times their income (2.73 across the UK), compared with 2.51 in the previous quarter.

Scottish first-time buyers typically spent 14.1% of their income on mortgage interest payments (compared with 15% across the UK), the lowest share since the first quarter of 2006.  And interest payments typically consumed 11.1% of Scottish home movers' income (compared with 11.3% across the UK), the lowest share since the second quarter of 2004.

Mortgages are slightly more affordable in Scotland.  This is principally because house prices remain lower than the UK average, leading to modestly lower average income multiples and debt servicing costs.

Remortgage activity remains subdued, with demand suppressed by attractive reversion rates and access to the best deals restricted to those with large amounts of equity. There were 9,000 remortgage loans in Scotland in the second quarter, worth £900 million, compared with 11,000 loans worth £1.6 billion in the first quarter of 2009. As with house purchase lending, this pattern echoes what is happening across the UK.

RBS Chief Economist's update

Chief Economist's Weekly Brief

03 August 2009

Much of the globe is still mired in recession, but unprecedented policy support, together with recent signs of stabilisation, leave policymakers in a quandary. The difficult decision is whether to fight on with further stimulus, wait and see, or start to pull back. In the developed economies, patience is a virtue, but in China, where the recovery is well advanced, the search for the exit may be about to begin

House prices in the UK rose for the third consecutive month in July. According to Nationwide, the average price of a house rose by 1.3% m/m to £159K last month. This led to speculation that prices could end the year above where they started it. But it is a shortage of available properties that is supporting prices, rather than a rebound in demand. Although there has been some improvement - mortgage approvals saw a 7th monthly rise in June - it has been modest. Approvals remain 60% below their 2006 peak as first time buyers struggle to enter the market and many homeowners face negative equity.

Net lending to individuals in the UK was weaker last month than at any time in the last 20 years, as households borrowed “only” £414m more than they repaid. This is a big swing from the average of £10bn in monthly net borrowing over the last few years and is largely a consequence of a weaker housing market. With £1,458bn in outstanding borrowing, most of which is property related, UK households are amongst the most highly leveraged in the world.

Ahead of its August meeting this week, the Bank of England completed its announced plans to undertake £125bn of asset purchases. Governor Mervyn King had previously indicated the Monetary Policy Committee would review the effectiveness of its quantitative easing programme, and is expected to reveal on Thursday whether the scheme will be expanded by another £25bn, to the £150bn ceiling authorised by the Treasury.

In the United States, the economy contracted by just 1% q/q (annualised) in Q2. This was better than expected, but revisions to earlier data revealed the recession has been deeper than previously thought. The US economy has shrunk by 3.9%, and both consumer spending and investment fell sharply in the three months to June. Without a strong positive contribution from net trade and government spending, the contraction would have been much sharper.

Signs of stabilisation also emanated from the US housing market. This is good news since housing was the source of much of the current economic malaise. Home sales rose for a third month running in June to the highest level since October and the Case-Shiller index of house prices showed the first monthly increase in three years in May.

Unemployment in the euro area ticked up further in June as the number of people out of work inched closer to 15m. The unemployment rate reached 9.4%, above the peak during the last recession and the highest in ten years. More than 3m people have now lost their jobs in the region in the last 12 months, but layoffs have not been evenly distributed. Spain, suffering a huge fall off in its construction industry, faces unemployment of close to 20%, while the Netherlands is faring much better with just 3.3% of the labour force out of work.

The European Central Bank’s (ECB) efforts to revive lending, and thus the economy (through asset purchases and bank lending), are yet to bear fruit. Private sector loan growth in June slipped to just 1.5% y/y, the lowest outturn since comparable records began in 1991. This caused the rate of growth of money in the region to slide further. The ECB uses broad money growth as a measure of future inflation, which looks likely to remain subdued based on present trends. Consumer prices fell in July compared to a year earlier largely as a result of lower commodity prices. With inflation temporarily out of the picture, policy makers should be free to focus on reviving growth.

Analysts are debating when policy tightening might begin in China. The central bank recently reported seasonally-adjusted annualized growth at 14.9% in Q2 and cautioned against rising inflation expectations, suggesting that central bank officials are worried that the pace of growth is too strong. Asset price inflation also remains a concern. Up to 50% of this year's increase in credit was used to purchase equities, property or commodities.

It is the State Council that ultimately decides on monetary policy, and, so far, it has offered no indication it is ready to tighten it. The State Council's focus is broader than that of the central bank, and worries about joblessness may make it less inclined to tighten policy until there are clearer signs of economic overheating. But the central bank and the banking regulator will nevertheless attempt to restrain loan growth through regulatory measures to try and ensure that credit is not used for speculation.

Royal Bank's Chief Economists Brief

Chief Economist's Weekly Brief

20 July 2009

Last week’s releases continued to pour cold water on the idea that a robust recovery is close at hand. China was the exception, reporting rapid growth in Q2, although questions remain about the sustainability of its upturn too.

One of the defining features of the current downturn has been the collapse in world trade, which intensified in Q1. The total value of trade of the 30 most industrialised nations fell by an unprecedented 27% y/y -the fastest pace since OECD statistics began in 1970. Exports of goods in the seven largest developed nations (the G7) took a battering, with volumes slumping 23% y/y, much worse than the 8% y/y decline recorded in the previous quarter. Japan was hardest hit, with exports tumbling 42% y/y, followed by France and Germany, which posted 26% and 23% declines, respectively. The UK and US fared better, although the 17% declines recorded by both still mark a wrenching adjustment for their exporters. Sterling is probably playing a stabilising role in the UK’s case, with the pound down 20% since 2007 on a trade-weighted basis.

UK unemployment surged by a record 281k to 2.38m in the three months to May, taking the unemployment rate up to 7.6%, the highest since 1997. In the early stages of the downturn, the rise was being driven by increases in the number of people searching for work, rather than layoffs. The pattern has shifted. Employment slumped by a record 269k in the three months to May, with a 110k drop in May alone. Declines were broad-based, both by age and occupation. Falling employment, together with the slowdown in underlying earnings growth, will take spending power out of the economy when it needs it most. It will also make the process of balance sheet repair, where households save more to accumulate assets and/or pay down debt, more difficult and drawn out.

Falling inflation is helping to provide some support to purchasing power. Retail prices declined 1.6% y/y in June – the largest fall since 1948. Most of the benefit is accruing to homeowners, with the move driven by steep declines in mortgage interest repayments on the back of lower interest rates. Nevertheless, the core consumer prices measure, which is less skewed by developments in housing or movements in volatile items like food and energy, has also been ticking down and currently stands at 1.6%, down from a peak of 2.1% last September.

Lower mortgage rates are attracting buyers back into the housing market. New buyer enquiries and newly agreed sales increased at their fastest pace since 1999 in June, according to the Royal Institution of Chartered Surveyors. This helped convince surveyors that prices will rise over the next three months - the first positive outlook for two years. But lift the lid of the survey and it becomes apparent that the market is not free of underlying concerns.

Sellers are not yet feeling confident. New instructions to sell remain weak, meaning that the number of houses in estate agents’ windows is at its lowest level since 1979. It is the lack of new supply as much as rising demand that is helping restore prices. Transactions remain thin by historic standards. The next key stage in the market's convalescence will commence if new buyer enquiries go on lifting actual transactions, and if sellers respond by increasing the supply of housing. Fingers crossed.

In the US, positive headlines masked underlying weakness. The pace of contraction in the industrial sector slowed in June but, truth be told, that isn’t all that encouraging. Output is down 15% from its peak and utilisation rates of plant and machinery are at all-time lows. It’s a similar story with retail sales. The headlines noted an apparently healthy gain in June (+0.6% m/m). But, for the second month in a row, this mainly reflected soaring gasoline prices. After stripping away the jump in energy prices, retail sales have been gently falling. In real terms consumer spending, and overall economic growth, will probably have remained in negative territory in Q2.

In Europe, new car registration increased by 2.4% m/m in June according to the European Automobile Manufacturers' Association. Demand all but collapsed in the first part of the year, but is now showing signs of stabilisation with the help of government-sponsored scrappage schemes. But not all is well. The schemes bring purchases forward - the risk is that demand will fall sharply once they expire. They also tend to boost sales of smaller, cheaper vehicles - luxury carmakers continue to struggle.

The Chinese may be asking “What global slump?” as the economy accelerated towards the government’s target growth rate of 8% in Q2. But the data are patchy and growth is probably being driven by government spending and investment in residential property. Lending regulations that were relaxed in response to the global slowdown have resulted in rapid credit growth. But much of the rise seems to have been used to fund speculation in equities and property. Consumer spending is flat, while trade and investment are down sharply. This sounds like a recipe for an asset price bubble rather than long-term growth.

Bank of England Maintains Bank Rate at 0.5% and continues with £125 Billion Asset Purchase Programme

House Price Index from Halifax

Commenting, Martin Ellis, housing economist, said:

"There was a 0.5% decline in average UK house prices in June. On a quarterly basis, the 1.9% fall in house prices in the second quarter was the smallest since 2008 quarter one. These figures provide evidence that the underlying pace of house price decline is easing.

There are further indications of a modest improvement in sales activity, albeit at a very low level. Industry-wide figures show that the number of mortgages approved to finance house purchase increased for the fourth successive month in May. Approvals were at their highest level since April 2008 and 10% higher than a year earlier.

Improvements in affordability and low interest rates have stimulated housing demand. This, together with a low level of properties available for sale, has helped to stabilise activity and reduce the underlying rate of house price decline in recent months.

Whilst there have been encouraging recent signs of improvement, the outlook for the UK economy remains uncertain with unemployment set to continue rising for sometime. Overall, we expect to see a continuing mixed pattern of monthly house price rises and falls over the remainder of 2009."

Buyers are back...but beware biggers mortgages

Article in Glasgow Herald by Naomi Caine

There are signs that buyers are returning to the hosuing markets, but anyone thinking of moving home should expect to pay more for their mortgage.

Anyone thinking of buying a house , or switching their mortgage, could pay a high price as almost all lenders have raised the cost of their fixed rates over the past few days. Nationwide, for example, has raised rates twice in as many weeks. A 3 year fixeed rate with a 25% deposit now costs 4.98% up from 4.54% which was an increase from the previous rate of 4.28%.

After a period of relative calm in the mortgage market, lenders are stumbling over each other to increase fixed rate mortagges. The last time we saw such frantic activity was at the end of June 2008 when the average 2 year fixed rate reached a staggering 7.08%.

The rise in swap rates might have triggered the recnt bout of increases, but lenders have also wasted no oppertunity in boosting their profits margins. In June 2008 when the average rate hit its peak, the margin over swaps was 0.76% points. Today the margin is 2.81 points

bascically if your thinking of fixing your mortgage act quickly

First Time buyers begin to return to the market

Article from Glasgow Herald by Naomi Caine

There are signs that first time buyers(FTB) are coming back into the housing market. There were 13,5000 loans to FTB's in April which is an11% jump on the previous month. FTB's are the life blood of the market, so any increase is welcome. As mortgage rates have come down over the last year the Council of Mortgage Lenders figures show that FTB's typically commit 15% of their income to their mortgage interest, the lowest proportion since May 2004. But if purchases are more afforadable, what's holding young buyers back? Basically there is still a lack of readily available finance for first time buyers, especially those with small deposits. Abbey & Nationwide are amoungs a small group of lenders who will do deals on up to 90% of the property's value. Most banks and building societies still insist on a deposit of at least 15% and the best are only open to people with a deposit in excess of 25%.

Lenders who will entertain first time borrowers with only a 5% deposit are a rarity indeed. Nationwide has just relaxed it's deposit rules but it's 95% deals are only available to existing customers. Or there's Lloyds TSB's "Lend a Hand deal". This offers a 95% mortgage -as long as their partents, relatives or friends are willing to stump up a further 20% of the property value in savings. This is then held in a Lloyds TSB fixed rate bond currently at 3.5% and the bank has legal rights over the money. Another option is that most mainstream lenders will allow a parent to act as a guarantor on a mortgage.

An alternative for people on low incomes is to seek government help through a shared equity scheme, one of a range of measures under thr LIFT banner-low cost inititaive for first time buyers. With shared equity you buy a portion of their house, usually between 60 &-80%. The purchase is financed in the normal way, through a bank or building society, which would apply the usual lending criteria. The remaining equity stake is the effectively bought by the governmant, through a registered social landlord, often a housing association. Until recently shared equity schemes were available mainly to new housing developments, but government opened the scheme to a wider market in March 2009. However, there are strick eligibility criteria, so you need to check the details at the Communities Scotland website www.communities-scotland.gov.uk

Move fast to get the best deals on fixed rate mortgages

From article in Telegrah by Kara Gammell

The cost of fixed rate mortgages is already beginning to rise and is predicted that it will go higher still in the coming months. This is bad news for consumers because, according to the CML, 69% of mortgages taken out in April 2009 were fixed- the higherst share since June 2008.

Nationwide, C&G and Northern Rock have raised rates on their fixed price mortgages following steep increases in the swap rates upon which fixed rate mortgages are based. Other lenders are expected to follow suit!

If you wish to obtain the cheapest deal move quickly and phone the Independent Mortgage Store on 0141-337-3393

End of the cheap fixed mortgage

Sunday Times article by Elizabeth Colman

Britain's banks stand to reap a £900m windfall from the recovery as mortgages look set to rise for the first time in a year. Anaylists have warned that the average 5 year fix could hit 6% within weeks. Deals as low as 4.5% are still available but they are expected to disappear fast. While the Bank of England's rate is not expected to go up until next year, the cost of funding mortgages has already moved in anticipation. The message for borrowers wanting to take a fixed rate is clear- GET IN NOW OR MISS OUT ON THE CURRENT RELATIVELY LOW RATES.

Bank of England rate holds

Bank of England Maintains Bank Rate at 0.5% and continues with £125 Billion Asset Purchase Programme

Interest rate cut as expected

As I'm sure you know, The Bank of England did cut base interest rates on Thursday to 1%. Many lenders are still to set their new rates so contact us if you need advice on remortgaging.

Bank rates predicted to fall again! Positive and negative news in the media...

The Bank of England's rate setting committee meets today and is widely expected to recommend cutting interest rates to 1%. This is great news for homeowners on variable rate mortgages but don't be too complacent - this article appeared in Monday's Daily Mail suggesting that some borrowers will be paying virtually no mortgage interest but others' homes may heading for negative equity.

Monday's mortgage report from the Daily Mail

By Daily Mail Reporter
Last updated at 11:21 AM on 02nd February 2009

Thousands of people are set to pay as little as 8 pence a month for their mortgages.

Some homeowners could see their monthly mortgage payments drop as low as zero this week.

The Bank of England is expected to cut interest rates to just 1 per cent on Thursday, bringing a windfall to those with interest-only tracker loans.

If it does, Cheltenham & Gloucester customers who took out a deal at 1.01 percentage points below the Bank's base rate will be paying no interest at all.

For technical reasons, they will still have to make payments - 8p a month for a £100,000 loan - but the money will be refunded.

Those with repayment mortgages will need to pay around £333 a month on the same-sized loan.

Most other tracker customers will gain but rates on new products are generally one or two percentage points above the base rate.

Some have 'collars' restricting the level they can fall to.

Homeowners on good mortgage deals are being warned against complacency however because property prices are plunging.

Since the market peaked in October 2007, the average value of a home has dropped by nearly 20 per cent, according to the Nationwide Building Society. About 1.2million homeowners are in negative equity - with their loan exceeding the value of their property.

Welcome to our blog!

Blogging is not necessarily my strong point but in the interests of keeping you up to date with the latest in mortgages here goes...!

Did you know?

* Bank of Ireland and Bristol and West have pulled from the intermediary market and no longer accept new mortgage business

* Mortgage Express are waiving ERC's (early repayment charges) for people who pay off their mortgage between February and June 2009

* Bank of Scotland and BM Solutions have withdrawn form the self -cert market but continue to offer product transfers for existing self -cert customers

* Bank of Scotland applies 80% LTV(loan to value) limit on mainstream further advance applications

* The Mortgage Works have amended their rental calculators on Buy to Let mortgages

Keep checking back for updates!