The firm behind the deal, Principality, says it is aimed at buyers who are confused about contradictory forecasts over interest rate movements and are wary about taking risks given the financial climate. Marketing director James Wright said that while some financial experts predict low rates for the foreseeable future, other economists are pegging an 8% rate within two years.

The deal is for a three-year variable rate at Bank of England base rates plus 2.49% (meaning 2.99% at the moment). The deal automatically switches to Principality's variable rate (currently at 4.99%) after the three years. However, the borrower is able to switch to a fixed rate during that time without having to pay the standard early redemption charge of 3%.

There are some catches. The mortgage carries a £999 product fee and is only available for loans up to 75% of the property's]]> Tue, 7 Sep 2010 19:06:00 GMT http://www.uk-loan-pages.co.uk/articles/mortgage-struggles-drive-up-rents.html The number of mortgages approved in the UK has fallen for a second straight month and is close to dropping below 1,000 a day. The figure for July is down nearly a fifth from the same time last year.

Although mortgage rates are still low, the best deals generally require high deposits, up to 25% in some cases. That cash requirement, plus consumer concern over job losses has meant more people are choosing to stick to renting rather than buying.

The BBA noted that there are more houses available for sale (which has been linked to the removal of Home Information Pack requirements), and there's been a slowdown in price rises, but this hasn't been enough to tempt new mortgage holders.

In turn that's putting pressure on rents: over the past quarter the number of sources reporting rent rises was 27% higher than the number reporting fees. The increased demand for renting has coincided with a shortage of supply, caused mainly by banks imposing much tighter controls on buy-to-let mortgages. The number of new properties added to the rental market has now dropped for four straight]]> Sun, 5 Sep 2010 19:28:00 GMT http://www.uk-loan-pages.co.uk/articles/mortgage-lenders-better-off-despite-rate-drops.html Mortgage lenders are making their highest ever profit margins on individual loans according to new statistics.

Figures quoted by Moneyfacts say the difference between the average mortgage rate and the rates banks pay to borrow money themselves is now 3.29%, a margin that has doubled in the space of two years. That's enough to outweigh the trend for a small decrease in the rates customers pay.

One reason for this appears to be a slowdown in lending. Because banks and building societies are more hesitant to take on new customers at a time when job cuts look likely, the rates on offer remain higher than if lenders were engaged in fierce competition.

It appears borrowers believe rates could rise from current levels. Since the start of this year, the proportion of people taking out fixed rather than variable rate deals has risen from 45% to 60%. That's further fuelled by speculation that the Bank of England may soon raise base rates in an attempt to slow down]]> Thu, 19 Aug 2010 15:16:00 GMT http://www.uk-loan-pages.co.uk/articles/regulator-plans-end-to-self-certification-mortgages.html Self-certification mortgages look set to be banned under a Financial Services Authority crackdown on the home lending market.

The FSA is planning to tighten the requirements that lenders check borrowers are able to afford repayments on mortgages. It comes as the regulator found there was such a disparity between loans and incomes that 46% of house holds are left with no money after mortgage repayments and living costs.

The new rules wouldn't mean that people without a fixed salary, such as the self-employed, would be barred from getting a mortgage. However, they would have to offer more conclusive evidence of their income rather than the lender simply taking them on their word.  FSA research shows that people on self-certified mortgages have been three times as likely to default on payments as those who've been through income checks.

In another significant change, the FSA is considering a policy that checks on the ability to repay are based on a capital and interest basis. That means that even where the lender wants to take out an interest-only mortgage, they must still prove they could afford to repay the loan itself in their monthly payments, rather than simply hope a combination of]]> Sun, 18 Jul 2010 15:48:00 GMT http://www.uk-loan-pages.co.uk/articles/fsa-cracks-down-on-mortgage-advice.html The Financial Services Authority has announced that all mortgage advisers will be more accountable in future.

The new rules, which take effect from next March, mean that both independent mortgage advisers and bank staff which give mortgage advise will have be registered with the FSA. As well as proving they are "fit and proper", the advisers will have to show they meet a minimum level of competency and agree to follow an FSA code of  ethics.

The authority has also brought in tighter controls on how lenders treat people who are in arrears. The changes mean firms can't apply an arrears charge once there's an agreement to pay off the arrears, and that the borrower's payments are put towards the arrears first, rather than any charges they've racked up.

There are also tougher rules on firms which offer to buy a home from a customer in difficulties and rent it back to them. These include a ban of emotive terms in advertising (such as "rescue" or "fast sale"), a 14-day cooling off period, a ban on cold calling, and a guarantee that any homeowner who takes up such a deal will be allowed to rent the property for at least five]]> Mon, 5 Jul 2010 19:59:00 GMT