April 2009

Nationwide withdraws SVR guarantee
28 April 2009

Previously, Nationwide Building Society has pegged its Standard Variable Rate (SVR) to the Bank of England base rate, guaranteed to be no more than 2% above it. This meant that when any fixed deal ended, assuming the customer did not arrange a new deal, they would automatically transfer to the SVR which was for all essential purposes a tracker rate.

However new customers will no longer benefit from this guarantee as Nationwide have withdrawn it for all new deals which will now default to the lenders new “standard mortgage rate”, currently 3.99%, with no guarantee as to what the rate will be in the future

Source: BBC News

Homeowners Mortgage Support Scheme commences
21 April 2009

The Homeowners Mortgage Support Scheme (HMSS), announced in December 2008, has finally begun. The scheme is aimed at supporting those who are struggling with their mortgages and will allow borrowers to defer up to 70% of mortgage interest payments if they lose a portion of their income. Lenders who support the scheme will have the option of government support in the way of a guarantee in some circumstances against part of the risk.

To qualify, applicants need to have savings of less than £16,000, a mortgage of less than £400,000 and still have some income and the ability to pay at least 30% of their interest payments.

Housing Minister Margaret Beckett explains the scheme is an offer of temporary help for hard-pressed homeowners, stating:

“the idea of this is to try and help people who haven’t lost everything… but who nevertheless are having difficulties”

“Maybe one of them has lost their job but not both, maybe it’s just that they’ve lost their overtime, but one way or another… they are struggling with the mortgage level payments that they could meet before,”

The scheme is being supported by several of the main mortgage lenders, while others have set up similar comparable schemes.

The Council of Mortgage Lenders (CML) says it welcomes the scheme, but that it is simply one means to an end, and stresses the importance of lenders working with their borrowers during these tough times.

Sources:
BBC News
www.cml.org.uk

Stamp duty holiday extended
21 April 2009

As part of Wednesday’s budget, Chancellor Alistair Darling is set to extend the stamp duty holiday on properties under £175,000 by a further 3 months, to the end of the year.

This is expected to be part of a £1bn package aimed at housing, details of which will follow once announced.

Source: BBC News

Negative equity growing
21 April 2009

Recent research conducted by James Tatch, senior statistician at the Council of Mortgage Lenders (CML), suggests that as many as 900,000 UK homeowners could already be facing negative equity.

Tatch goes on to explain that the majority of these homeowners may well have low levels of negative equity at less than 10%, and also points out that there is very little difference between low levels of negative equity and low levels of positive equity, as either way borrowers will find it very difficult to obtain credit.

On a slightly brighter note, it seems far less homeowners are experiencing negative equity this time round compared to the recession of the 1990′s.

Source: www.cml.org.uk

New buyer enthusiasm continues
16 April 2009

The Royal Institute of Chartered Surveyors (RICS) published its housing market survey on the 15th of April and it showed that enquiries increased for the fifth consecutive month. It seems the continual fall in house prices and gradually increasing availability of funds is generating more and more interest from buyers. With the recent release of new 90% LTV mortgage loan products on the market, the opportunities are increasing for more and more people.

Source: www.rics.org

Conflicting house price reports
16 April 2009

The house price reports from Nationwide and the Halifax are showing very different price movements for the month of March.

Halifax’s house price index showed a continuation of the current trend with the average price falling a further 1.9%. Nationwide’s index shows that the average price actually increased in March by 0.9%. Nationwide’s chief economist Foinnuala Earley was quick to point out that one month’s figures can not be seen as real evidence that prices have reached bottom.

Source: cashquestions.com

Base Rate held at 0.5%
16 April 2009

Last week the monetary policy committee voted to maintain the base rate at its lowest historic level of 0.5%. This was generally expected and came as no surprise to most.

The bank also pledged to continue with quantitative easing as it attempts to aid the economic recovery, having so far injected £26.4bn into the system.

Source: BBC News

Homeowners focusing on reducing their mortgages
3 April 2009

The governments decision to temporarily reduce VAT and cut interest rates had been done in the hope of increasing consumer spending in an effort to boost the economy. However, as predicted by Worldwide’s managing director Peter McGahan in his article The credit crunch – What on earth is that then?, with interest rates on mortgages lower than ever for many homeowners, the extra disposable income is being used to reduce their mortgages rather than for funding spending.

The final 3 months of 2008 saw homeowners reduce their mortgages by a staggering £8bn, the biggest injection of cash since 1970 according to the Bank of England.

The rising fear of unemployment, low savings rates and falling house prices eroding peoples equity, has led many to concentrate on debt reduction rather than spending. This is major change in attitudes from the days of homes being used as cash machines to fund excessive spending and holidays, with the peak of equity withdrawals being in the last quarter of 2003 when a massive £17bn was added to people’s mortgages.

Source: www.telegraph.co.uk

‘Your home may be repossessed if you do not keep up repayments on your mortgage’