Mortgage News Articles

Mortgage arrangement fees have risen by more than two-thirds according to a new survey.

Moneyfacts reports that the average arrangement fees paid by a customer to set up a mortgage (money that doesn't go towards repayments or interest) is now £1,498, up from £889 this time last year. One theory is that lenders are using fees as a way to increase revenue while they are unable to increase interest rates with the Bank of England base rate remaining unchanged throughout 2011.

The survey did find that shopping around still makes a big difference: the most expensive arrangement fees were around £4,000.

Financial analysts are warning customers to take the fees into account when deciding on the best deal, particularly if they are short of cash and Read Full Story

The Financial Services Authority is proposing significant changes to the way banks must verify mortgage applications.

Under the new rules, banks must take much more account of individual circumstances rather than simply working on multiples of income. For example, they'll need to consider regular outgoings such as loan and card repayments. They'll also have to take into account how many children an applicant has.

Another major change is that lenders must take into account predictions of interest rate changes over the next five years. They'll then need to assess whether applicants will still be able to afford repayments if rates rise as high as expected.

Interest-only mortgages will still be allowed under the new rules, but borrowers will need to Read Full Story

Campaigners are protesting against planned European legislation that could restrict the ability of buy-to-let purchases to get mortgages.

The proposed rules come from a European Union consultation titled "Responsible Lending and Borrowing." If adopted as a directive, governments including the UK would be required to adopt the principles into domestic law, though there could be some scope for interpretation over the details.

One of the proposals is that the buy-to-let mortgage market be regulated in the same way as that for those who buy a home. That could mean lenders were no longer allowed to take potential Read Full Story

British mortgage-holders are paying back their loans at a record rate. It could mean more cash is available to banks for new loans.

Newly-published Bank of England figures show borrowers repaid a total of £9.1 billion between April and June. That's equivalent to 3.5% of total post-tax income.

The figure continues a pattern of high repayments since the recession of 2008. In the past three years homeowners have consistently paid back more as a whole than they've taken out in new mortgages, with the total outstanding borrowing declining by £92.2 billion.

While it may seem odd that mortgage repayments are rising during a tough economic time, it appears many homeowners are putting all spare cash towards overpayments in an attempt to reduce Read Full Story

The government has announced a new scheme designed to make it easier for first-time buyers to buy property without a large deposit. Experts are split about the overall effects on the market.

The scheme will involve the first government guarantee of its type. It applies only to  newly built property in England, and covers 95% mortgages (ie those where the buyer pays 5% of the purchase price up front.) Such mortgages have virtually disappeared in recent years as lenders have become more cautious in the wake of the credit crunch.

The new scheme, which takes effect from March, does not change the borrower's liability for the repayments. However, the government will deposit cash to the value of 5.5% of the purchase price with the bank, while the house builder will Read Full Story

Financial analysts have been debating the effects on the lending markets of Virgin taking over Northern Rock.

Virgin Money will pay £747 million up front, with a possible £280 million in extra payments. It's considerably less than the money paid by the taxpayer to bail out the building society several years ago.

Supporters of the deal argue that adding a new commercial operation will help stimulate competition for mortgages and savings, particularly given Virgin's reputation for challenging traditional players in an industry. However, critics note that Virgin will only be around a tenth of the size of the major banks, meaning it may have little market power.

Given Virgin's tactics of promoting simple plans and packages in its other Read Full Story

The increasing amounts of deposit needed to buy a home appears to have led to drastic measures. A new survey finds 10 percent of prospective first-time buyers plan to use a bank loan or credit card towards the downpayment.

The vast majority are still planning to save up the cash themselves. Just under one in five expect to borrow money from parents, while five percent plan to sell personal possessions.

The figures come at a time the average deposit on a home (for all buyers, not just first-timers) reaches £65,924 -- more than ten times the level required in 1990. The level of deposit is rising at roughly twice the rate of overall house prices, caused mainly by an end to 90% or 95% mortgages being typical, a result of increased bank caution after the 2007-8 credit Read Full Story

Putting savings towards mortgage overpayments could be a far more effective way of using spare cash according to one calculation. Harvey Jones of Lovemoney says he reckons it could be the equivalent of getting more than a 7% return: welcome news in times when low base rates mean most savers are lucky to get 1%.

The "return" comes in the form of reduced monthly payments. Jones gives the example of a £100,000 mortgage at 4%, and somebody using £10,000 of savings to make an early repayment. The immediate effect is a drop in future monthly payments equivalent to £744 a year, or 7.4% of the initial "investment".

In reality, it's difficult to make such direct comparisons and if anything the benefits of early repayment are more Read Full Story

Financial writers are split over the wisdom of taking out credit to fund home improvements rather than move house.

The topic has come to the fore with many homeowners wanting to move to a larger property but being unable to do so. That's led to the Nationwide finding that 10% of the remortgages it arranges are used to finance work such as loft conversions, a figure that is 20% among existing customers.

Rosie Murray-West of the Telegraph suggests some homeowners trying out this strategy could even find it cost-effective to borrow money on cards or loans to fund home improvements, then remortgaging the house when the work is complete. Her theory is that the improved home value will be reflected in a Read Full Story

Finance experts have forecast that interest rates will remain unchanged throughout next year. That could change the way consumers approach personal finance.

With the Bank of England keeping its base rate at 0.5% yet again, the same rate it's been at since March 2009, signs elsewhere suggest that it will remain the same. The US Federal Reserve is predicting no increases in its rate for at least 18 months, and European rates are forecast to fall.

It now appears that even the most extreme forecasts are for UK rates to rise no sooner that late next year, and most are expecting it to be mid 2013 before even slow rises begin.

For those looking for a new mortgage, the choice is between a tracker rate Read Full Story