Mortgages & me
Bringing both explanation and humour (yes, it is possible) to an often perceived realm of boredom
Mortgages. Let’s not kid ourselves here. If you had the choice of having one or not then there would be no choice. However, the vast majority of us, Russian billionaires excluded, need them to fuel that much loved British tradition – homeownership. So, if we all accept that we need them, you may as well do something positive and get the best one for you. It is staggering how many people make sure they get value for money from every day items but do not manage their home loan properly - the savings far outweigh the difference between the best baked beans and the value ones.
So, this blog will attempt to look at the world of mortgages and the housing market and try to bring both explanation and humour (yes, it is possible), and spark some comment, to an oft perceived realm of boredom. Here goes…
The Building Societies Association (BSA) has revealed that mutual lenders increased their mortgage lending by 19% year-on-year, in the first three months of 2013, from £6.5billion to £7.7billion. ...
The latest Financial Conduct Authority (FCA) report on Interest Only mortgages has just been published amidst predictable levels of hype and scare-mongering. Headlines of borrowers facing “financial armageddon” when they have to...
So the British Bankers Association’s (BBA) February figures show a drop in mortgage approvals for purchases of 6% compared to the same month in 2012. Many industry analysts claim the drop is a timely reminder that despite last year’s introduction of the Funding for Lending scheme, the mortgage and housing markets were still a long way off functioning properly. The BBA report then makes the blindingly obvious statement that more First Time buyers would help. How though do you find more of the supposedly elusive creatures? With rental prices being driven ever higher, there are many people who’d rather pay their own mortgage than someone else’s.
However there would appear to be two main factors stopping a new First Time Buyer making the move into property ownership, Lending Criteria and Consumer confidence.
Lending criteria particularly for First Time Buyers is still far too prohibitive and many good cases are being declined for reasons that most sane people would describe as petty. After the mortgage price war we’ve seen over the past few months, a relaxation in criteria would seem the only logical step left to try and increase lending levels, however lenders are worried about going too far and being described as reckless.
Consumer confidence is still running low, as the stubbornly high inflation level and low wage growth continues to squeeze household incomes, leaving many would be borrowers without the appetite to take on debt. The economic outlook remains uncertain at best, and it would seem that it’s not likely to change anytime soon. The plus point though is that many properties are more realistically priced, and therefore offering better value for money. It could be said to be a great time to buy.
More schemes that essentially prop up the big house builders (First Buy, NewBuy, Help To Buy) are not the answer, decent product innovation is. For those who don’t have access to the ‘Bank of Mum & Dad’, a good example of this is the Saffron Building Society’s ‘Rent To Buy’ scheme. The product is open to those want-to-be First Time Buyers who have been renting for a minimum of 12 months, and it’s available at 95% LTV upto a maximum loan size of £500,000. The core principle of the scheme is that by only opening it to applicants who’ve been renting for 12 months, they are looking at people who are already experienced at running a household and therefore more likely to handle a mortgage payment that’s likely to be at least the equivalent of the rent. The rate is fixed until 31/08/2016, but there are no penalties for overpayments or early redemption, and crucially, the lender ‘credit checks’ rather than ‘credit scores’ which makes it more likely for a sensible lending decision to be reached. More of this type of product is what we need to get the market (and people) moving again..
The launch of Barclay’s new “Family Springboard” mortgage has once again brought that stalwart financial institution the “Bank of Mum & Dad” into the spotlight. Typically when aiding their offspring in buying their own home,...
Last week the Governor Designate of the Bank of England, Mark Carney, made the radical suggestion suggested that the bank should be targeted on economic output (GDP) rather than its current focus; inflation. Currently the Bank's...
In what’s sure to start an interesting debate, a building society has claimed that if lenders (the high street) don’t get rid of their “computer says no!” approach to mortgages, the average age of a First Time Buyer will increase...
Okay, maybe not like Tutankhamun...
A broker has just claimed that last month they saw the largest take up of two year fixed rates so far this year, mainly on the back of lenders raising their Standard Variable Rates (SVR) over the past few months! Not an earth...
Nationwide’s decision to cease all new interest only lending, and only allow existing borrowers to take additional funds on a repayment basis, is the latest example of lenders (predominantly the larger high street ones) trying to...
In what is fast becoming a mortgage war, NatWest has entered the arena with s rate of 2.95% for its 5 year fixed rate. See what Ray Boulger had to say to the media about it here.
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and neither John Charcol nor Drew Wotherspoon will accept liability for them.