27 March 2009

Mortgage lending restricted to 3 times income?

This weeks announcement from the Council of Mortgage Lenders advises that mortgage lending figures for February were down some 60% against the same time last year. Hardly surprising when available products had dropped some 85% in the same period and most lenders criteria has changed dramatically! Due to the continued pressures that lenders are placed under, they are finding many ways to refuse applications, even for those with large deposits and good credit ratings. In addition, some high street lenders have recently reduced their maximum loan amounts to £250k, and others lending above £500k are charging an additional 1% per annum for the increased “risk”!
The US government recently announced plans to buy over $1trillion of toxic mortgages from struggling US banks. Mortgages that should not have been granted in the first place and were always unlikely to be paid consistently by the consumer. No surprise there then! However, this is a positive move forward and is intended to stimulate US lenders in to funding again albeit supported by the public sector!
In contrast, the UK Financial Services Authority (FSA) are expected to announce plans to look at restricting the amount of mortgage loans advanced to consumers by capping income multiples. Only 2 years ago you could obtain a mortgage loan at 6 to 8 times your income, depending on your status. This has already reduced to the 4 to 5 level but is heavily reliant on the computer not saying “no”! The new plans are to restrict lending to just 3 times income….
This is partly justified by recent reports from the FSA that mortgage arrears are up 31% for the last quarter of 2008 compared to the same period in 2007. It’s interesting to note that arrears statistics are only reported when the mortgage account reaches 1.5% of the balance. So, on a £100,000 mortgage, the account needs to be in arrears of £1,500. Therefore, the true picture of mortgage arrears is probably substantially higher.
With an average house price in the south east of £248k (BBC statistics) and borrowing at 75% loan to value on 3 times income, you will need to prove annual income of £62k! The days of mortgage rationing are looking more like reality!
Following the success of our Mortgage Clinic we are holding another on Saturday 4th April, from 9am to 2pm, at our North Street office, Horsham. Please do come along!

23 March 2009

Mortgage rates on the way up?

During the past week some mortgage lenders have reduced their Standard Variable Rates following the recent Bank of England base rate reduction to 0.5% yet others have increased their fixed rates by up to 0.25%! Is this the start of things to come? What is available on a Friday night may not be there on a Monday morning.
Two more mortgage giants, Chase De Vere and Cobalt Capital, shut their doors this week. Both, further casualties of the current mortgage climate and a real loss to the sector.
Recent trade news also suggests that when regulation renewal fees are due in April, 32% of mortgage brokers will choose not to renew. That is a huge number of professional advisors likely to exit the market. Now, more than ever, it is important that you seek out the services of an independent advisor who is not tied in any way to a linked business.
Last Saturday saw AToM exhibiting at the excellent MicroBiz, a great medium for small businesses to work together and understand each others needs and benefits. We had chance to meet many different people there and all with various situations.
Some had been made redundant and were evaluating all options available to them in starting up a business, whilst others, still in employment, were forward thinking should redundancies occur. Being self employed did not seem to scare anyone! All were opportunity seekers, prepared to go over and above the standard call of duty to ensure they survive and are in the ‘last man standing’ pack!
With this in mind, the weekend could be a valuable time for you to complete a full review of your personal finances, or even go out looking to buy new property! More and more people are turning towards alternative methods for securing their families future. With saving returns so low and house prices bottoming out, many experts would agree that property is a great long term investment.
But be wary. As I have commented before, Lenders really don’t want to lend in volume currently, despite the numerous requests from no. 10! So seek independent advice to ensure you get the best available products for your requirements.
See all mortgage products available, for free, at www.atomltd.co.uk and now you can follow the latest AToM product updates on Twitter, Facebook, Linkedin, Ecademy and more, if you’re that way technology inspired!

16 March 2009

Products on the decrease, but new launches are great!

Overall, market conditions continue to deteriorate and mortgage products are subject to regular review and withdrawal. Between February and March, more than 20% of mortgage products were withdrawn from the market. To put this in context, the number of available mortgage products today are approximately 2,800 compared with 3,500 in February and more than 20,000 this time last year!
Mortgage Brain, one of the mortgage industries largest product sourcing systems recently commented that, for the first time in three months, fixed rate mortgage schemes had suffered the biggest fall (20%) followed closely by variable rate mortgages (18%) and base rate trackers at 15%.
That said, even though product offerings are on the decline, the actual rates available are extremely attractive. There is no surer bet that, despite the Bank of England Base rate being at its lowest ever, rates will increase. As a result, fixed rate mortgages should and will be in great demand.
One lender recently launched a 10 year fixed rate mortgage with an interest rate of just 4.75%. This really is a superb rate and is available to anyone looking to borrow up to 60% of the property value for either a purchase or remortgage.
For those with a smaller deposit, competitive rate examples include:
- Up to 75% LTV, 3.49% fixed for 2 years, subject to terms and conditions
- Up to 90% LTV, 5.50 fixed for 3 years, subject to terms and conditions
There are also many lenders offering attractive remortgage fixed rates to existing clients. These are known as retention rates and a specialist company like AToM can advise you on these as most are not publicly advertised by the lenders!
Please visit www.atomltd.co.uk where you can now view all major rates in the market and apply or enquire online.
Whether you are looking to remortgage or purchase, with rates so low and potentially tenuous, please don’t delay and possibly regret it later….

11 March 2009

The statistics...

I thought this week I would review some ‘interesting’ statistics which have just been released!
Credit Action suggests that today in the UK:
- 323 people will be declared insolvent or bankrupt. One person every 4.5 minutes.
- 2,430 County Court Judgements will be issued
- 144 properties will be repossessed
- 33,600 applications for credit will be declined
- Unemployment will increase by 1,600
- There are more debit/credit/charge cards in circulation than people, with an estimated 73m in use…
Let’s stop there and see if we can put a positive spin on this:
- Average house prices for first time buyers now stand at £140,857
- According to smile.co.uk, the credit crisis has made 64% of Britain’s change their attitudes towards spending. The average Brit saved £1,882 in 2008, but plans to increase this to £2,605 in 2009!
And the reality…
Openness about finances is important to a relationship. A new survey from CreditExpert.co.uk suggests a very different story:
- 1 in 5 adults admit they haven’t told their partners what they owe!
- 10% (3.2m) have set up a secret bank account!
- Women are more suspicious than men (not new news!), with 31% secretly looking at their partner’s paperwork, against 24% of men!
- While 17% of men aren’t telling their partners what they really earn, against 13% of women, 28% of females do not own up to the full amount of their spending on clothes and shoes, against 11% of men….
So where am I leading with this? Undoubtedly, it is time to batten down the hatches, extract heads from the sand and review your finances. A visit to AToM, for impartial, independent advice, could help you see through the next few months more comfortably, especially if you find yourselves in, or approaching any of the above categories.
We are delighted to be exhibiting at Microbiz at the Drill Hall, Denne Road on the 14th March. Do visit us there or pop in to our offices in North Street, Horsham at any time. We will be pleased to assist you.