Rate rises to hit interest-only mortgages
Posted on April 10th, 2011
The Bank of England may have left interest rates on hold this month, but how long can the cost of borrowing be kept so low?
With inflation well above target, the smart money is on a small interest rate rise over the the next couple of months with further rises likely later this year and early next. A rise in rates will bring blessed relief to hard-pressed savers, while most mortgage holders should be able to cope – provided the rises aren’t too large or sudden. But there undoubtedly will be borrowers who find even a relatively small rise in rates too much for their finances to bear. <
Tags: Rate, Rate Rises
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Record pay-off of mortgages by UK households
Posted on April 4th, 2011
In an ominous development for house prices and spending on the high street, the Bank of England says that record amounts of money are being used by families to repay mortgages and to pay off other debts secured on their homes – with little new lending to first-time buyers to balance the depressing impact on the economy.
The Bank’s latest statistics on housing equity withdrawal show that British families paid off £7bn, net, of mortgage and other secured debt in the last three months of 2010 – the highest net repayment since records began in 1970. It marks an acceleration on the £6.6bn paid off between July and September.
As a percentage of incomes, the net pay-off of debt in the three months of 2010 was also at a near record 2.7 per cent, a shade behind the 2.8 per cent of income paid off in the last months of 2008, in the depths of recessionary gloom.
Tags: Mortgages, Mortgages Uk
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Prequalification calculator tips and tricks
Posted on April 2nd, 2011
Are you paid weekly or every other week? Is semi-monthly the same as bi-weekly? One of the most important duties performed by a mortgage professional is to properly prequalify mortgage applicants for new home loans. If you are using a prequalification calculator to determine your ability to purchase a new home here are some basic income calculation tips to ensure your results are accurate.
Note that your income for mortgage qualifications is always your gross monthly income.
That’s gross!
When it comes to financial calculations “gross” does not mean disgusting but total, without any deductions. Your gross pay is your base pay before deductions for taxes, health insurance, retirement contributions or other deductions. For mortgage calculators always use your gross income.
First-time buyers: Shared equity scheme to help 10,000 buy homes
Posted on March 22nd, 2011
First-time buyers received a small boost with a new shared equity scheme, but industry experts question whether it will have a significant impact. The FirstBuy scheme will be available for a year to 10,000 first-time buyers looking for a new-build property, which could inject £250m into the sector.
Critics pointed out that George Osborne was in fact revising a measure similar to one which he scrapped after last year’s general election, which had been introduced by Labour.
First-time buyers have struggled to get on the property ladder since banks started to demand bigger deposits. Most in the industry gave a cautious thumbs-up, but its impact is likely to be limited. Even if the maximum number of 10,000 applied in the first month, this only equates to one-third of the 29,923 mortgages approved in February.
Buyers will have to stump up a deposit worth 5 per cent.
Tags: Buy, Equity Scheme, Shared Equity, Shared Equity Scheme
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Mortgage lending stalls
Posted on March 19th, 2011
Mortgage lending stalled during February as potential buyers continued to sit on their hands in the face of economic uncertainty.
A total of 9.5 billion was advanced during the month, broadly in line with January’s one-year low of 9.48 billion, the Council of Mortgage Lenders said.
The group said that although it had seen a seasonal pick-up in interest from property-buyers during the past few weeks, demand was weaker than a year ago, despite the fact that the market was distorted early last year following the end of the stamp duty holiday.
The CML said looming fiscal changes looked set to put further pressure on households’ finances, while the prospect that the Bank of England could start raising interest rates, possibly as early as May, also suggested that property transactions would remain depressed this year.
Tags: Lending, Mortgage Lending
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