22 May 2009

Could it be a sign??

The latest Bank of England quarterly inflation report suggests that the economy will not now recover until the middle of 2010 (somewhat contradictory to Alistair Darlings recent budgetary prediction!). Analyst’s inflation review indicates that the Bank's base rate is likely to remain at 0.5% well into 2010. Therefore, a short term tracker rate with options to change to a fixed rate with no early redemption charges looks good. Generally known as an ‘all-weather’ product, a few lenders have previously offered this option, although Nationwide is currently the only lender with such an offering….at least for now!
This week, Rightmove.co.uk reported that sellers have increased asking prices by up to 2.4% during May in a bid to maintain their own position when buying. The average asking price is now £227,441 (against £222,077 in April). The Rightmove House Price Index for May shows that the jump in asking prices is the largest the property website has measured, for a single month, since 2003!
More positive news indicates that UK residential property sales have hit an 18-month high. Figures from the National Association of Estate Agents (NAEA) show that the average agency branch sold ten properties in April – compared with eight in March.
RBS (Royal Bank of Scotland) has changed its definition of New Build properties. Any property refurbished, modernised or altered since 1st January 2006 will now be classed as New Build. As a result, the maximum advance on these properties is now limited to 80% for residential and 65% for investment mortgages! This, from a lender who is seeking to lend a further £25bn over the next two years!
On the favourable side, the Abbey have increased their lending values from 60% to 70% on their competitively priced re-mortgages on 2, 3 and 5 year fixed rate products!
Congratulations to Lifestyle Ford of Horsham, who succeeded AToM in winning this years coveted West Sussex County Times Business of the Year Award. Well done!
Finally, you buy a car from a car specialist, flowers from a florist, so for all your mortgage requirements, why buy anywhere other than from your local mortgage specialist?

15 May 2009

Easing the Financial Strain...

I did have a small chuckle last week as reports emerged from the government that the ‘mortgage rescue scheme’ initiative (which was due to ‘save the world’), has assisted just one family. This is despite suggestions that it would be available to circa 6,000 in the country. In an hour of need, it surprises me that with so many analysts, experts and others in the industry, they cannot come up with a more practical scheme that would actually help rather than just be an apparent PR stunt. Perhaps less concentration on expenses might be a start!
Following the unexpected drop last week, the cost of fixed rate monies increased this week, as have the number of mortgage products in the market. The latter is great news as competition and attractive product options begin to return. Despite being some 70% down on this time last year, the number of available products has increased by 22% over the last two months to circa 3,300.
Much is made these days of the fact that, pre-credit crunch, customers took on secondary borrowings simply because they were available! These are often very expensive and can ultimately lead to financial difficulties which might easily blight their credit file if it is left to fester. In many cases, re-mortgaging may be the right option for customers and the following is a live example of one case where we were able to make a real difference:
The clients owned a property worth £395000 with a standard mortgage of only £47000. However, they had accumulated more than £90000 in secondary borrowings, including car and credit card loans and other similar commitments. These had led to monthly outgoings in excess of £2700! Whilst it is not always wise to convert short term loans to long term borrowings, these clients were gradually heading towards a point where defaults on payments were going to happen soon. A view needed to be taken, and quickly.
Income was fine and a re-mortgage to £140000 was undertaken culminating in a new monthly payment of approximately £785 representing a monthly saving of £1915. This massively eased the financial strain the clients were starting to feel. This would not be the right response for everyone of course and every applicant has different needs demanding individual consideration. Even for those of similar age and financial circumstances! As always, for more information, please visit our website or contact us on the number above.

08 May 2009

The right time to invest?

House prices are low, mortgage interest rates are competitive, traditional investment returns are poor. Therefore, purchasing a property as an investment might be viewed as an opportunity to make decent returns on savings. Let’s look at this in more detail.
A ‘Buy to Let’ mortgage is specifically targeted at borrowers who wish to invest in property to let out. The rental income landlords receive should generally exceed monthly mortgage payments and will help to offset maintenance/management costs as well as making some profit!
As a result, more and more people are looking at Buy to Let as a viable option for:
Planning for retirement.
It is a sad fact that many people in UK do not plan sufficiently for retirement. Additionally, large numbers of pensions and endowments may fail to perform to target or pay out as expected. As a result, purchasing an investment property might be considered as a flexible, controllable means of planning for retirement and also a medium to long-term investment.
A second income from property.
Investing in property can deliver a modest monthly return over and above the mortgage payments and be drawn as additional income or (with a flexible loan) used to “overpay” the mortgage. This might lead to early redemption and a nice profit once the mortgage debt has been re-paid. There are, of course, no absolute guarantees!
Letting as a long term investment.
Repayment terms range from 5 to 30 years so some might consider Buy to Let as a viable medium to long term alternative to more traditional investments vehicles.
These options do give rise to potential taxable implications (no surprise there then!) and these should be investigated with your financial adviser/accountant.
Finally, other news - The cost of fixed rate money nose-dived last week, prompting lenders to, against some expert predictions, lower fixed rates! Some have already launched reduced rate deals giving new customers some great fixed options. If you want to fix your monthly mortgage costs for the next 2 to 15 years, there’s no better time to be speaking to your local and independent mortgage brokerage!

01 May 2009

The Highs and Lender Lows...

Let’s start this week with some really good news! Halifax have announced that they are going to refund stamp duty for first time buyers who purchase properties up to £250,000. They will rebate the 1% stamp duty figure which takes effect above £175,000 after completion. This is available to first time buyers only and is seen as a positive move towards kick-starting this sector of the mortgage marketplace. Let’s hope other lenders now follow the HBoS giant and find other ways to stimulate new growth.
Contrastingly, the UK's biggest building society, Nationwide, has changed its reversion rates for new clients at the end of their fixed rate period. Whilst existing customers are guaranteed to pay no more than 2% over the Bank of England base rate when their current product term ends, new customers, who take a mortgage after April 30, will instead revert to the society’s new 3.99% variable rate (which will not track BBR).
Other news this week, the Leeds Building Society announced the launch of two new fixed rate mortgages for 5 and 10 years. With a loan to value available up to 85 per cent on the 5 year fixed rate deal (5.69%, 5.9%APR) and up to 75 per cent on the 10 year fixed rate loan(5.49%, 5.9% APR), borrowers who want to lock into the certainty of a long term fixed rate mortgage could be interested in these products.
The Budget was something of a mixed bag and certainly not a welcome one for those in receipt of high incomes. It does seem that we are entering into a phase where the tax payer is going to carry the can for many years to come as a result of the current government’s volume borrowing.
That said, another long weekend ahead provides ample time to review financial paperwork and here comes a plug! AToM has diversified into a number of new areas to ensure that we provide a one stop financial ‘shop’ for you. Historically, we are one of the longest established mortgage brokers in West Sussex and more recently have expanded our offerings which now include All Types of Mortgages, secured loans, wills, life/car/house/travel/pet insurances, equity release, bridging/commercial loans, debt management plans, IVAs, Utility Switching and other products such as Sky TV, Vodafone and 3 mobiles! AToM has them all. As always, no appointment is required, so please visit our offices in North Street, Horsham, or visit our website for more information.