, The situation as I see it!,
Money seems to be in short supply; interest rates offered by banks for saving money remains diabolical; unemployment is expected to increase by quarter of a million as students leave university and college and members of Parliament from all sides of the political spectrum have exploited their expenses for years. Meanwhile the Royal Bank of Scotland which we all co-own has warned that they are preparing for two "very tough" years after they announced yet more losses for the first three months of this year. Confidence is a fine grey line and the experts are still scrambling around trying to find solutions and answers. Do we really believe that the recession is nearing the end?
The Bank of England decided to keep interest rates at 0.5% which is at an all time low after their monthly monetary meeting yesterday. It is thought that they are more concerned with the results of quantitative easing which they implemented earlier this year to inject money into the economy. They are now studying the economy for signs of improvements as they continue to print loads of money in an effort to get the economy moving again.
Estate agents around the country are reporting that more people were showing an interest in buying properties. One institute announces house prices starting to climb while another says they are still falling, who should we believe? The Halifax reported that housing affordability for first-time-buyers had improved substantially and was the best for six years in other words the house price to earning ratio had improved. Unfortunately, the average first-time-buyer still needs to find around £20,000 as a deposit and to cover legal expenses. The amount of money spent on a mortgage each month had dropped from 48% in 2007 to 31% in 2009 mainly due to the cut in interest rates for borrowers on tracker rate and standard rate mortgages. This has not been the case for homeowners on a fixed rate mortgages.
, Number of Mortgage schemes available rises,
Mortgage Brain, is one of two live mortgage systems used by mortgage brokers' to search the market for the best mortgage and remortgage product for clients. They have reported an 8% increase in last month's mortgage product available. The number of products available in March 2009 was 3,091 and on the 5th May 2009 it rose to 3,322 products available. Whilst this looks like a glimmer of hope it should be remembered that at the height of mortgage lending there was some 23,000 plus products available to homeowners to choose from.
During the past twelve months the number of mortgage products available has remained bleak with a 73% drop from this time last year. It seems that over the past two months the number of new mortgage schemes available has risen by 22%, which is good news. Although this information can be seen as encouraging I don't believe that there is yet any indication that the market will bounce back today or tomorrow. There are bigger issues that need resolving first.
, The stark Facts,
This information is great news for borrowers and homeowners looking to borrow money for a mortgage up to 85% of the value of their home. Mortgage Lenders are still not showing any signs of offering mortgages to new clients with any adverse credit. If you have missed a mortgage, credit card or loan payments and you have less than 15% equity in your home then there is limited number of mortgage schemes available to you. Your only option is to remain with your current lender and take what they offer. Not an ideal situation I know! But hopefully you still have a roof over your head.
Tuesday, June 23, 2009
The Sub-Prime Mortgage Market is broken - Mortgage Advice
Mortgage resuscitation required urgently!
The UK housing market will not recover until the mortgage market is fixed and expert advice at the Bank of England says, print more money in the hope of saving our economy from a long and drawn out recession is the answer. The Council of Mortgage Lenders says the number of UK households with mortgages is 11.7 million and has a value of over £1.2 trillion of these approximately 51% are fixed rate mortgages; 40% are on tracker, discounted or variable rate mortgages and less than 8% are on their lenders standard variable interest rate scheme. The mortgage market needs urgent resuscitation and repair to restore the banks lending confidence. We may have green shoots appearing across our economy but they don't seem to have any roots yet.
A recent poll of 539 professional mortgage brokers by Exact Mortgage Expert suggested that house prices were likely to continue falling for the next six to twelve months and the housing market had not bottomed out yet. Many housing commentators feel that the market still has a further 6% to 7% to fall before we reach this illusive bottom is found. Lloyds Banking Group say that the decline in property prices this year is around17.7% with the average home now valued at £154,716. In the last year the average property value has plummeted by £33,264.
Sub-Prime borrower in Limbo
According to the latest Mintel, one third of the UK mortgage borrowers are facing financial difficulties and 1.5 million have fallen behind with their monthly mortgage payments. Those borrowers that have fallen behind with their repayments are considered by future lenders as sub-prime borrowers and they are offered less than favourable interest rates when they come to remortgage. There are now only two lenders remaining that will consider sub-prime or non-standard mortgages compared with the non-standard or sub-prime industry prior to August 2007 when the 'Credit Crunch' started. Whilst the lenders have disappeared the sub-prime borrowers have remained in limbo not knowing where to go or what to do and the number new recruits has swelled.
Since the rescue of the banking system by the Government last year and the sharp drop in the base rate by the Bank of England it seems that all the lenders have lost their appetite to lend money to homeowners and potential new borrowers. Lenders are nervous about incurring further losses and have drastically tightened their lending criteria. This means that borrowers are unable to refinance their homes easily and first-time borrowers now require a deposit of around 25% just to get on the property ladder. As a result of this large deposit being required many have turned to the bank of mum and dad for help in raising a deposit. The lenders have now become very choosy who they lend money to.
Finding a Mortgage
Borrowers looking for a new mortgage will find it impossible if they have suffered any adverse credit history within the last six years like: A default issued by a lender, an Individual Voluntary Arrangement or a bankruptcy order. 1. Any missed credit card and any loan payments. 2. Any missed mortgage and secured loan payments. 3. Need to borrow more than 90% of the value of your home. 4. Falling house price 5. In sufficient deposit to buy new home Placing a mortgage is like riding in the Grand National Mortgage brokers report that they are at their wits end trying to place mortgages with lenders in the current market. They liken the placement of a mortgage to being a jockey in the Grand National with all the steeple jumps needing to be jumped over to complete a mortgage application. Most lenders are inundated with mortgage applications which have slowed down their processing time. When finally they do look at the application three weeks later the payslips and bank statements are out of date and need to be updated. Then the valuers down value the property and the loan-to-value percentages changes and finally interest rates are pulled without notice. It's a nightmare! To submit a mortgage and have it complete is a 'rare occurrence' and that's assuming that you have jumped through all the hoops and met the lenders criteria. Seek a Debt Solution if you are struggling!
For those borrowers that require a non-standard or sub-prime mortgage it may finally be worth looking at a debt solution as debt consolidation is no longer an option open for reducing your debt by using your home as a 'Cash Machine.' If you are struggling to pay your credit card debts and unsecured loans then it may be time to get out of debt and seek advice and help. You need to seriously consider a Debt Management, Individual Voluntary Arrangement or possible bankruptcy proceedings. Don't be rushed and think carefully about what you are doing. Always speak to your credit card and loan providers to see what they can do to help you first.
The UK housing market will not recover until the mortgage market is fixed and expert advice at the Bank of England says, print more money in the hope of saving our economy from a long and drawn out recession is the answer. The Council of Mortgage Lenders says the number of UK households with mortgages is 11.7 million and has a value of over £1.2 trillion of these approximately 51% are fixed rate mortgages; 40% are on tracker, discounted or variable rate mortgages and less than 8% are on their lenders standard variable interest rate scheme. The mortgage market needs urgent resuscitation and repair to restore the banks lending confidence. We may have green shoots appearing across our economy but they don't seem to have any roots yet.
A recent poll of 539 professional mortgage brokers by Exact Mortgage Expert suggested that house prices were likely to continue falling for the next six to twelve months and the housing market had not bottomed out yet. Many housing commentators feel that the market still has a further 6% to 7% to fall before we reach this illusive bottom is found. Lloyds Banking Group say that the decline in property prices this year is around17.7% with the average home now valued at £154,716. In the last year the average property value has plummeted by £33,264.
Sub-Prime borrower in Limbo
According to the latest Mintel, one third of the UK mortgage borrowers are facing financial difficulties and 1.5 million have fallen behind with their monthly mortgage payments. Those borrowers that have fallen behind with their repayments are considered by future lenders as sub-prime borrowers and they are offered less than favourable interest rates when they come to remortgage. There are now only two lenders remaining that will consider sub-prime or non-standard mortgages compared with the non-standard or sub-prime industry prior to August 2007 when the 'Credit Crunch' started. Whilst the lenders have disappeared the sub-prime borrowers have remained in limbo not knowing where to go or what to do and the number new recruits has swelled.
Since the rescue of the banking system by the Government last year and the sharp drop in the base rate by the Bank of England it seems that all the lenders have lost their appetite to lend money to homeowners and potential new borrowers. Lenders are nervous about incurring further losses and have drastically tightened their lending criteria. This means that borrowers are unable to refinance their homes easily and first-time borrowers now require a deposit of around 25% just to get on the property ladder. As a result of this large deposit being required many have turned to the bank of mum and dad for help in raising a deposit. The lenders have now become very choosy who they lend money to.
Finding a Mortgage
Borrowers looking for a new mortgage will find it impossible if they have suffered any adverse credit history within the last six years like: A default issued by a lender, an Individual Voluntary Arrangement or a bankruptcy order. 1. Any missed credit card and any loan payments. 2. Any missed mortgage and secured loan payments. 3. Need to borrow more than 90% of the value of your home. 4. Falling house price 5. In sufficient deposit to buy new home Placing a mortgage is like riding in the Grand National Mortgage brokers report that they are at their wits end trying to place mortgages with lenders in the current market. They liken the placement of a mortgage to being a jockey in the Grand National with all the steeple jumps needing to be jumped over to complete a mortgage application. Most lenders are inundated with mortgage applications which have slowed down their processing time. When finally they do look at the application three weeks later the payslips and bank statements are out of date and need to be updated. Then the valuers down value the property and the loan-to-value percentages changes and finally interest rates are pulled without notice. It's a nightmare! To submit a mortgage and have it complete is a 'rare occurrence' and that's assuming that you have jumped through all the hoops and met the lenders criteria. Seek a Debt Solution if you are struggling!
For those borrowers that require a non-standard or sub-prime mortgage it may finally be worth looking at a debt solution as debt consolidation is no longer an option open for reducing your debt by using your home as a 'Cash Machine.' If you are struggling to pay your credit card debts and unsecured loans then it may be time to get out of debt and seek advice and help. You need to seriously consider a Debt Management, Individual Voluntary Arrangement or possible bankruptcy proceedings. Don't be rushed and think carefully about what you are doing. Always speak to your credit card and loan providers to see what they can do to help you first.
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