Homebuyers may soon be out of woods

After three years, 90% mortgages have returned. Rates are down, too - and, if you're lucky, there are no fees...

For two years, first-time buyers in the capital have struggled in the face of a dearth of affordable properties and lack of mortgage availability. After the credit crunch, banks - scared of defaulting borrowers and negative equity - tightened their lending criteria, forcing prospective home purchasers to build up a deposit of 20%, or in many cases significantly more.

Now, however, banks' miserly funding to first-time buyers looks to be easing. The past fortnight has seen lenders including Barclays return to the 90% mortgage market after a three-year absence, helping the availability of the products to grow by a fifth over the past year.

There are currently 253 mortgages at 90% loan-to-value on the market, up from 101 this time two years ago, according to financial comparison site Moneyfacts. As the same as availability has grown, interest rates have also fallen. The average rate on a two-year fixed-rate mortgage with a 10% deposit has dropped from 6.1% in January to 5.39% today. On a five-year home loan under the same terms, the average rate is now 5.87%, down from 6.55% at the start of the year.

On Thursday, through its mortgage arm Woolwich, Barclays bought more competition to the market by introducing new "zero fee" deals. Buyers with a 10% deposit can secure a three-year, fixed deal at 4.99% with no arrangement fees. Over five years, the fixed-rate rises to 5.49%, with a £499 fee - less competitive than HSBC's currently five-year fixed-rate offering of 4.89% with no fee on 90% LTV. Says Andrew Hagger at Moneynet: "A 0.6% difference in interest rate may not sound much in isolation, but on a £150,000 mortgage for 25 years, the HSBC deal is £3675 cheaper over five years."

Alternatively, the Chelsea Building Society has an offset mortgage fixed at 4.19% for two years. It has a hefty £1495 fee, but is a good option for those keen on an offset deal - where the balance of the mortgage on which interest is payable is reduced by the value of savings in a linked account.

These are unusual on large mortgages and mean that overpayments or bonuses can be offset against the outstanding balance. At the same time, borrowers withdraw their savings at any point.

"Lenders are trying harder to offer borrowers with a 10% deposit more help to get on the property ladder, and Barclays' return to the market will provide more competition," says Aaron Strutt, of broker Trinity Financial Group. "We have had more enquiries from first time buyers and we have been able to help them - although they must have an excellent credit score to be accepted."

FACT 

"At Heart Finance  we search the entire market in order to help you find the best deal you possibly can.

We are committed to offering our customers the highest possible 

standards of service

We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspects of our dealings with you

Only recommend a mortgage or financial services product that we consider suitable for you and that you can afford – Our lenders charge the lowest fees of all - and always the most suitable from the available options " 

The cheapest deal at 90% LTV is currently the Chelsea's two-year fix at 4.09%, with a £1495 fee. "It really does pay to shop around," adds Strutt. "To access the most competitive mortgages we advise our clients to try and raise a 15% if possible, as the rates are more competitive, but selected lenders are starting to make life easier for first-time buyers so a 10% deposit is now sufficient."

Those with an even smaller deposit will have to pay a higher premium for a mortgage. Skipton Building Society offers one of the only home loans for buyers who need a 95% mortgage, fixed for two years at 5.99%, although the arrangement fee is low at £199.

Still, more mortgage won't necessarily translate into more buyers in the capital. "It's encouraging to see one of the big players of the mortgage market once again competing seriously for first-time buyers' business," adds Hagger.

"But unfortunately the combination of unemployment concerns and ultra-cautious lending criteria may result in a limited take up of these low deposit deals."

From The Evening Standard

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Remortgaging could save you £1200

Nearly 60pc of home owners say they have never remortgaged outside of moving home, according to Barclays. 

Rising food, energy and petrol bills have left many households grasping at any chance to save money. In fact, nine in 10 of us are trying to reduce our spending by cutting back on purchases.

Yet, many of us fail to realise that it is possible to cut one of our biggest monthly outgoings – the mortgage – and save an average of £1,200 a year, according to a new survey from Barclays.

The bank said that nearly 60pc of home owners say they have never remortgaged outside of moving home, thinking it would save just £10 a month and was not worth the hassle.

With the majority of borrowers living in their homes for an average of more than 16 years, we are potentially missing out on years worth of decreased mortgage payments. In fact, over the next two years, Barclays' data shows UK home owners could save as much as £346m.

David Hollingworth, spokesman for London & Country Mortgages, said that improvements in mortgage products over the past year have meant that there is far greater opportunity for borrowers to make savings on their mortgage by reviewing their deal.

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We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspects of our dealings with you

Only recommend a mortgage or financial services product that we consider suitable for you and that you can afford – Our lenders charge the lowest fees of all - and always the most suitable from the available options " 

He said: "Some borrowers have stuck with their lender's standard variable rate [SVR] once their deal has come to an end and some of the very lowest are still very good value."

There is considerable variation in the SVRs available from mortgage providers, with some long-standing borrowers paying as little as 2.5pc, while others face an SVR of 6pc or more.

Mr Hollingworth pointed out that Kent Reliance charges 6.08pc on SVR, while Lloyds increased the standard variable rate for Bank of Scotland only this week, lifting it from 4.84pc to 4.95pc. So shaving a couple of per cent off your mortgage will mean a significant monthly saving.

Andy Gray, head of mortgages at Barclays, said: "There are an increasing number of good mortgage deals to be had, so we are urging home owners to act now and look at the rate they are paying to allow them to get more out of their hard-earned cash."

Many borrowers who are looking to remortgage are faced with the dilemma of whether to stick with their current provider or move to a fix, since interest rates were cut to unprecedented levels by the Bank of England.

However, given that no one knows when rates will start rising or how high they will go, how can borrowers decide whether they would be better off switching? And if they do decide to switch, is now the time to do so?

Although existing variable-rate loans may be very attractive at present, home owners who opt for monthly mortgage payments could see payments rise steeply when rates go up.

From The Telegraph

Personal insolvencies,debt experts warn 'many will go bust next year'

The number of individuals  who became insolvent fell in the last three months, official figures showed today. 

The Insolvency Service reported there were 30,219 personal insolvencies in the July, August, September, down from 30,513 in the three months to June. 

Within that figure, the number of bankruptcies continued to decline, and was 31 per cent lower than the year before.

Some experts warn that the figures show a change in the type of people becoming insolvent. 

Bev Budsworth, managing director debt management company, The Debt Advisor, said: ‘Levels of personal insolvencies are not as high as last year but we are still seeing over 330 people a day being declared insolvent or bankrupt.’

‘The real change that we are seeing is the demographics of the people that are finding themselves with levels of serious debt – we are seeing a strong increase in the ‘impoverished middle classes’ coming to us for help as the situation becomes more and more desperate!’

According to the figures Individual Voluntary Arrangements (IVA’s), were up nearly 1 per cent on that basis and there was a 7.6 per cent increase in Debt Relief Orders (DRO), taking them to a new record level.

Bankruptcies are seen as a 'last resort' - you can forced to sell your home (to release equity), you will lose any savings or valuable possessions and it will be advertised in newspapers. 

IVA's are a less severe method of dealing with insolvency. It will usually last longer than bankruptcy - often up to 5 years, but it is very unlikely that you will have to sell your home. It will not be advertised in newspapers but your name will appear in an publicly available insolvency register. 

DRO's are another form of insolvency - first introduced in 2009 - they are only available to people who meet a strict level of criteria. 

They are aimed at helping the very poorest members of society who are not home-owners, who have no realisable assets of more than £300, who are typically dependent on state benefits or very low incomes, who are in debt due to a crisis or a life accident, who still wish to pay their debt, but simply cannot afford to. 

In April this year a change in DRO rules meant that anyone who had built up value in a pension scheme could apply for debt relief provisions – increasing the overall number of those eligible. 

This means that If you have not retired, but have a private or occupational pension fund, in most cases the value of your pension fund won’t count towards the £300 limit.

The falling total number of bankruptcies since 2009 is mainly due to the introduction of debt relief orders. 

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However, debt charity Consumer Credit Counselling Service (CCCS) has warned against complacency, it estimates that there are 6.2 million financially vulnerable households. 

Delroy Corinaldi, director of external affairs at CCCS, said: 'There are millions of people teetering on the brink financially, whose household budgets are getting harder to manage every month. They are struggling against pressures such as high inflation, wage freezes and redundancy.

'I fear that many will go insolvent over the next year. The key message to anyone who is finding it hard deal with their finances is to seek help as soon as they realise they have a problem. The sooner they deal with their problem, the more can be done to help them.'

Chris Nutting, director of personal insolvency at KPMG, said: 'Today’s figures show that the latest bankruptcy numbers are falling to levels last seen in 2004. And whilst this may seem to be good news on the face of it, it fails to reflect the number of people with severe personal indebtedness.  

'There is a growing number of individuals with large amounts of unsecured debt looking for some resolution of their financial problems which have simply not gone away. 

'And while creditors are willing to set up repayment plans with debtors, the continual pressure on household budgets due to the price increases of fuel, energy and food means that even agreed repayment plans will be broken.  

'This is likely to result in more debtors eventually turning to a formal insolvency procedure to resolve their financial problems.'

From the site : This is Money 

Britons pile on the debt

Britons have taken on the highest levels of debt since the height of the recession in May 2009 as they struggle to fund the rising cost of living, official figures have found.

Britons have taken on the highest levels of debt since the height of the recession in 

Households have amassed £208.6 billion of outstanding debts in credit cards, bank overdrafts and other loans, equivalent to £9,070 for every household in the country.

In the past year household debts - excluding mortgages - have risen by over £5 billion, the biggest annual increase since the recession, the Bank said.

In the last month alone, Britons have increased their debts by £629 million.

Economists said that the figures show that people are having to borrow money simply to fund their day-to-day living in the face of rising inflation.Howard Archer, chief UK and European economist at Global Insight, said that instances of “stressed borrowing” by consumers are on the rise.

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Inflation is running at over 5 per cent and wages are largely stagnant, meaning that people’s money is not stretching as far. The average family’s spending power has fallen by £730 over the last year because of rising petrol, energy and food prices, according to recent research by supermarket Asda.

Mr Archer said: “The rise in unsecured consumer credit suggests increased ‘stressed borrowing’ is occurring, with more people having to borrow to help finance their spending.

“This is a consequence of the extended squeeze on their purchasing power coming from elevated inflation, low wage growth and tighter fiscal policy. In addition, job losses are rising.”

The Bank of England also said yesterday that mortgage approvals had fallen slightly in September, suggesting a cooling of the housing market since the summer. There were 50, 967 mortgage approvals in September, down from 52,347 in August.

Both figures are substantially below the average monthly level of 88,000 seen since 1993.

According to the Office for Budget Responsibility (OBR), total household debt in the UK – including mortgages - will rise from £1.6 trillion in 2011 to £2.1 trillion in 2015. This means that by 2015, the average Briton will have debt equivalent to 175 per cent of their annual disposable income, up from 160 per cent today.

The poorest households in the UK are being hit by VAT far more than the richest households, according to new figures from the ONS.

Figures show that while the poorest fifth of households in the UK spend 10 per cent of their disposable income on VAT, the fifth richest households spend just 5.3 per cent.

The Government increased VAT from 17.5 per cent to 20 per cent in January in an effort to plug the UK’s budget deficit.

The poorest fifth of households now spend a higher proportion of their money on goods that attract VAT than they did in 1986, the ONS said.

David Breger of chartered accountants HW Fisher & Company said: “This reinforces what is widely perceived to be the fundamental inequality at the heart of VAT.”

From The Telegraph

THE NEW £50 NOTE

His is a name few will recognise – but that is about to change. Chris Salmon, the chief cashier of the Bank of England, launches the new £50 note today – the first featuring his signature.

The importance of the moment is not lost on the 43-year-old, who succeeded Andrew Bailey in April.

‘People remember the chief cashier from when they were a child,’ he says. ‘For me, I can remember Page [John Page, chief cashier from  1970 to 1980].’

Although the £50 note is the least common in Britain – with 200m in circulation compared with 1.6bn £20s – it is instantly recognisable.

‘The existing £50 was launched in 1994 and is by some way the oldest of the current notes in circulation so it is time for it to be updated,’ says Salmon.

‘We have a rolling programme for updating the banknotes to make sure they stay up to date and remain secure. The new £50 is still very identifiable.

It is the same size and predominant colour, so you should be able to tell straight away that this is the son of the old £50.’

 

The current note features the portrait of Sir John Houblon, the first Governor of the Bank of England.

It replaced the Wren note, which was introduced in 1981. Prior to this, there was a white £50 note in issue between 1725 and 1943.

The new £50 note is the first to carry two portraits on the reverse – entrepreneur Matthew Boulton (1728-1809) and engineer James Watt (1736-1819), who developed and marketed steam engines in Britain and abroad. 

‘Together for over 25 years they were incredibly successful, helping to power the industrial revolution,’ explains Salmon.

Naming ceremony: Bank of England chief cashier Chris Salmon signed the note

For Bank Governor Sir Mervyn King, they are perfect role models. ‘The partnership of an innovator and an entrepreneur created exactly the kind of commercial success that we will need in this country as we rebalance our economy over the years ahead,’ he says.

Salmon, who is responsible for everything to do with banknotes, from production and design to distribution and circulation, says the new £50 also represents a big step forward in security.

It includes a so-called ‘motion thread’ woven into the paper rather than printed on it. 

The green thread has five windows, running from top to bottom, each containing images of the £ symbol and the number 50.

When the note is tilted from side to side, the images move up and down; when it is tilted up and down, the images move from side to side.

‘We want people to be aware there is a new £50 note, to be aware of the new security feature,’ says Salmon. 

‘People must have confidence in the authenticity of notes they receive.’ Not that this is a major problem at the moment. Last year, the Bank withdrew 300,000 counterfeit notes out of a stock of more than 2bn. Just 3,000 £50 notes were withdrawn.

‘We are very efficient at detecting counterfeits as well so our sense is that once they enter circulation they are removed very quickly,’ the chief cashier claims.

He adds that ‘one of my jobs next year will be to decide which is the next note to be replaced, what security features to put on it, and what characters to put on it’.

But he dismisses the idea of another denomination, such as a £100 note, on top of the fivers, tenners, 20s and 50s in circulation.

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‘There isn’t any work going on at the moment,’ he says. 

‘Our view is the current four denominations are fit for purpose.  I don’t think there will be any change there. 

‘But it’s something you would never say never to. It’s one of our jobs to keep an eye on it.’

The Bank has issued banknotes since it was founded in 1694, but it has not printed money on Threadneedle Street since 1920. Printing has taken place at the Bank’s site in Essex since 1956. It is currently done by British firm De La Rue.

The Bank has always signed its notes, first as a ‘promise to pay’ to someone depositing gold and now as a mark of trust.

Many famous figures have held the job of chief cashier – Leslie O’Brien became Governor – and the signature is seen by millions. So, did Salmon practice?

‘Absolutely,’ he says. ‘Some signatures you take care over, and I definitely took care over this. I think that is appropriate.’

From The site: This is Money