Mortgage | Property Investment | Finance Guide

Mortgage lenders begin to ration the size of their loans to people remortgaging and property buyers

Moneyfacts , a financial information service  says ,This year, there is an increase in the number of deals by sixty six percent from 1,414 in January to 2,351 now. However fifty eight percent of the deals obtainable still need a downpayment of at least twenty five percent of the price of the home or property being bought. And the amount requiring only a ten percent deposit still stands at eight percent of all the mortgages at present on offer.

Michelle Slade of the Moneyfacts, says there has been no actual movement in the total number of new mortgages deals obtainable on the market (in the previous month), however those that are obtainable continue to be competitive. Most of the great deals are now available for a twenty five percent deposit, having previously only been obtainable for those with the forty percent deposit.

Lower rates

Even though there has been small change this year in the proportion of the mortgage deals needs less deposits, the average rate  of interest  is being charged on them has mentioned down.

The average two year fixed rate mortgage deal now comes with a rate of 4.5 percent interest compared to interest rate of 4.9 percent in January.

Three-year deals now cost on average 5.2 percent rather than 5.5 percent at the beginning of the year, and five-year fixed interest rates now cost 5.6 percent rather than the 6.1 percent charged in January.

But these figures disguise the very huge difference in the interest rate being charged based on the size of the deposit being made.

According to Moneyfacts, a two-year fixed rate mortgage deal with just a 10 percent deposit comes with an interest rate of 6.2 percent, but a 25 percent of deposit brings that down to 4.1 percent whereas the 40 deposit attracts an interest rate of just 4 percent.

A rise of £11.5 billion worth of Mortgage lending in March 2010 is some sort of relief for the economy though it will not sufficient to make up the awful start of the year
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Taking away of stamp duty relief for houses worth between £125,000 and £175,000, strike the housing market in the New Year. The new tax break of relief of stamp duty, for houses worth less than £250,000 will benefit first- time buyers.

Though there was a rise in the mortgage lending during the first three months and the value of the loans had improved, still the situation is the lowest in the recent history.
CPL economist warned that there is a possibility of tax hikes and the property market will have some sort of a blow. Though the Housing and Mortgaging is stagnant for present it is still better than the situation of last decade or so.
A slow improvement is expected with the progress of economic crisis despite the situation of early this year. Economists are awaiting an improvement in the interest rates in near future.

Prices edged up in the Midtown, City and Docklands housing markets in the second half of 2009, with an average rate of growth of 3%. Transaction levels remained relatively low, however, and the upward tick in prices had as much to do with the lack of stock for sale as any demand side factors. Given the absence of mortgage finance on reasonable terms, if there had been a bigger supply of property for sale it is possible that there would have been no increase in sales prices in 2009.

Taking a chronological view, July was the tail end of the unexpected boost to the market from equity-rich buyers that had started in March 2009. August is the summer holiday season and is traditionally quiet, but the normal September boost to sales transactions did not occur, although there was evidence of purchasers from the euro-zone buying apartments for family members at London universities. This led into a typically quieter 4th Quarter, with low levels of transactions and no further evidence of price increases. The impact of the interplay of supply and demand factors led to 6% increase in sales prices across Midtown, Bloomsbury property price and Docklands in 2009. The price of the illustrated average one-bedroom flat increased by £20,000 during
2009 from £318,000 to £338,000.

In a continuation of the trend in the first half of 2009, it remained the case in the second half that 70% of all transactions in our Midtown, City and Docklands offices were from 100% cash buyers. It was notable that there were fewer overseas buyers in the market in the second half of 2009, in spite of continued weakness of the pound against other currencies, especially the euro. The absence of mortgage finance from British banks available at reasonable terms is hugely influential to the sales markert.

Cowcross Street

Preparations have started in this area for the construction of the new Integrated Ticket Hall. The buildings at 54-60 Cowcross street have been boarded up and hoardings installed. A scaffolding protection-deck has been installed over the railway. Scaffolding has also been installed around the structure. Structural demolition commenced on the 21^st September and will last for approximately twelve weeks.

The demolition will be undertaken during normal working hours. All deliveries will be through the entrance to the site at Cardinal Tower.

On the 26^th and 27^th September 2009 we will also be excavating trenches outside the entrance to the station to find electricity cable connections.

Cardinal Tower

Preparations for the demolition of this building have started. Internal surveys have been undertaken and soft strip demolition has started. Demolition scaffolding is being installed will be covered with sheeting to ensure that dust and debris is controlled. A tower crane will be constructed within the central car park on the 26^th and 27^th September. The main demolition of Cardinal Tower will start from the 12^th October 2009. There will be an increase in lorry movements in and out of Cowcross Street between 10am and 4pm on Mondays to Fridays, during which time the gate to the fencing will be closed in Cowcross Street to create a clear, separate area for lorries. Outside of these hours the fencing gates will be open.

The majority of these works will be undertaken during normal working hours; however there will be periods when extended working hours are required when the work to be carried out over the railway lines. Find out more information about clerkenwell area.

Fashion designer Delia Seaman regretfully admits that sales at her West Hollywood boutique are still suffering amid the recession. She has put her 1920s Spanish-style bungalow up for sale, and after Realtor fees and closing costs, she believes to clear up little or nothing beyond $922,000, the price she paid for the property four years ago– something close to the now asking price, of $999,000.

Seaman even says, her yearly mortgage payments, insurance and property taxes has exceeded what she would have spent renting a similar home annually. According to her the whole housing dream is kind of a joke, and says “I paid in for four years and got nothing. I wish I’d never bought.”

Seaman’s property agent, John M. Barrentine, calculates that her house would yield close to $1 million in a sale but less than 3% of that (or $30,000 a year) in net annual rent if leased out. She would be better off selling and putting her money into California municipal bonds. Buy you rent?

There are currently 101 different mortgages available to people looking to borrow 90pc of their home’s value, down from 122 at the beginning of the year and 903 in July 2007, before the credit crunch struck.

But the number of home loans aimed at people with a 40pc deposit has soared during the same period, rising from just 17 in July 2007 to 251 in January this year and 320 now.

Financial information group moneyfacts.co.uk said the fall in availability of mortgages with a 90pc loan to value ratio (LTV) showed that first-time buyers were continuing to be ignored by lenders as they cherry-picked lower-risk customers.

Banks and building societies are also failing to pass on falls in their own funding costs to people borrowing a high proportion of their home’s value.

The cost of the average two-year fixed-rate mortgage for someone with a 10pc deposit has fallen by only 0.12 of a percentage point to 6.12pc since September 2007, despite the Bank of England base rate dropping from 5.75pc to a record low of just 0.5pc during the same period.

The margins that lenders charge on these products have also soared during the same period, from just 0.02 of a percentage point above two-year swap rates, on which the deals are partially based, in September 2007 to 1.34 percentage points a year ago, and a massive 4.25 percentage points now.

From -  http://www.telegraph.co.uk/financ

According to lenders’ group, activity in housing market remains at a very low level although there has been a slight increase in the number of mortgages sold in UK in the month of February. The Council of Mortgage Lenders (CML) said the number of house purchases rose to 24,300, (up by 4%) compared with January.

CML Director General Michael Coogan says, they are not convinced that underlying trends have shifted sufficiently to change their forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year. According to him, some large banks are making more and more loans available through enhanced lending commitments, which is helpful, but will not satisfy consumer borrowing demand on its own.

The number of completed home loans for house buyers has risen slightly on a monthly basis, running at about one-third of the average of February’s total, ie., 76,000 loans for house purchase between 2002 and 2007. Accordingly, the total value of the completed home loans has remained unchanged at £3.1bn, which remains in stark contrast with the recent years.