Mortgage Payment increases….
Did yours go up?….

An estimated 1.2m mortgage holders received a rise in their monthly payments through an increase in their standard variable rate this spring – Were you one of them? and how much more will this add to your household bills?

Based on a £100,000.00 mortgage over 20 years on capital and interest repayment…..

• 850,000 Halifax customers that saw their rate rise from 3.5% to 3.99% – which represented an approximate increase of £306pa.
• 200,000 Royal Bank of Scotland offset mortgage holders saw their rate rise from 3.75% to 4% – which represented approx £157pa increase.
• 100,000 Bank of Ireland customers will see their rate rise from 2.99% to 3.99% – which represented approx £616pa increase.
• The Co-operative bank will be raising it’s rate from 4.24% to 4.74% – which represents approx £323pa increase.

Just in case you are feeling like you have missed something ‘No’ the Bank of England Base Rate has not suddenly increased.

With fixed rate mortgages as low as 3.69% not only could you build in the security of knowing what you are paying each month, but you could also potentially save money.

If you would like to discuss your existing mortgage, fixed rates or reducing your outgoings then please feel free to contact us on 01482 658989.

* Please note, the above SVR figures are believed to be correct, however as this is to be used as a simple guide we would obviously double check your particular circumstances before making any recommendations.

Attention Halifax Mortgage Customers….
…the increase to their standard variable rate from 3.5% to 3.99%

Many of you will have seen in this weeks press that Halifax will shortly be increasing their standard variable rate from 3.5% to 3.99%. Why is this? I hear you ask, and what can I do?

I received an email from the Halifax saying that this change acknowledges that the cost of funding a mortgage in today’s market remains significantly higher than the longer term average, and that they will be writing out to customers in the next few weeks advising them of their intention to increase the Halifax Standard Variable Rate. They are currently in the process of calculating customers’ monthly payments and will start writing to all affected customers from 10th April to explain the changes and provide new monthly payment details.

This marks the first rise in its SVR for three years and will affect roughly 850,000 of its customers and thousands more in coming months as borrowers that are currently on other deals revert back to the default standard variable rate.

So, as I said at the beginning, what can you do? well perhaps this is a time to consider discussing your current situation, and to consider whether or not now is the time to look at other deals available to you either with other mortgage lenders, or indeed within the existing range of deals that the Halifax offer. For example, for less than 0.5% more than their new SVR, and without any fees, you could fix your rate for the next 2 years.

If you are a Halifax customer and want to talk to us about this, please do not hesitate to call and we will be able to advise you on your options.

I read in the press today that 55 economists believe that the Monetary Policy Committee will leave interest rates unchanged at 0.5% this week. ABN Amro has deferred its forecast, expecting the first rate hike to occur in 2012, and Barclays and J.P Morgan predict the BoE will raise rates in November, rather than August.

When interest rates do rise, a lot of households may have difficulties in repaying their mortgages, as they will have become accustomed to lower repayments, or may have taken newer, higher margin tracker loans.

So now may be a good time to review your mortgage, start to make overpayments, get yourselves used to paying higher amounts again, or even consider moving to fixed rates.

In November UK house prices increased by nearly 4.0% over the year to bring the average UK house price to £208,585.00. Six of the nine English regions saw increases, and the largest was in London at 8.7%, but unfortunately the North-East saw the largest fall at 2.5%.

Which leads me to my next point, after inflation rose by the fastest rate on record last month, experts have warned that the cost of borrowing could soon increase, and as a result, the demand for fixed rate mortgage deals is likely to increase significantly. Borrowers that are looking to protect themselves against future interest rate rises should possibly act quickly as it is likely that banks and building societies may increase their prices on new deals. Skipton Building Society and Northern Rock have already increased the rates on fixed rate deals and other lenders are expected to follow in the coming days.

We are advising clients that would struggle to pay their mortgage if rates were to rise should consider a fixed rate sooner rather than later.

If you would like to review your mortgage, please do not hesitate to contact us and we will be able to arrange an appointment.

Mortgages and Interest Rates
Could they start to rise soon?…..

I was reading an article from the Sunday papers a few weekends ago that said that almost 3 MILLION homeowners would struggle to pay their mortgage if interest rates rose by only 2 percentage points, which equates to one in three of all mortgage holders. Even if these rates rose by less than 2% then an approximate 1.6 MILLION homeowners would have mortgages deemed unaffordable according to the FSA.

Someone in this position could possibly consider moving to a fixed rate mortgage which may cost more in the short term but safeguard against future rate increases. Obviously there are a lot of variables to consider here such as falling house prices, strict lending criteria, or existing mortgage penalties. This is why it is important to look at your mortgage regularly, and not just leave it in study drawer, or worse still the kitchen drawer.

As Independent Financial Advisers we can consider all aspects of a clients position, but it also makes sense to be aware of your own position, and well in advance of any current deals ending. Mortgages are fairly complex, and the time taken to arrange a mortgage from start to finish means that if you are approaching the end of a current deal you need to be contacting us at least 6-8 weeks before the end date.

If you are not sure what mortgage deal (if any) that you are on, you should also make enquiries, or contact us so that we can do some investigating for you.

Many borrowers are on Standard Variable Rates, and those of you lucky enough to be on Nationwide or Cheltenham & Gloucesters SVR will only be paying 2.5%, but you may be on a rate far higher, for example some SVRs are 6.08% or higher, and the average is 4.75%.

If you would like to have a mortgage review then please give me a call at the office to arrange an appointment.

Shane Beardsley
Managing Director / Independent Financial Adviser

As highlighted in an earlier post; I mentioned whether or not mortgage borrowers were going to be affected by the “collars” in certain mortgage lenders terms and conditions. Earlier today Nationwide has confirmed it will not enforce their collar, previously set at 2.75%. This is good news as it will mean that borrowers on tracker mortgages will benefit from the full 1% rate drop. This news follows yesterdays decision by the Halifax not to enforce their controversial collar also.

Shane

The Bank of England has today voted to reduce the Bank Base Rate 1.0 percentage points to 2.0%.

The Council of Mortgage Lenders has welcomed today’s rate cut, and believe “it will help the wider economy, even if it cannot be reflected universally in lower mortgage rates.”

The impact this will have on borrowers, new and existing is yet to be seen, although many lenders have pledged to pass on the full extent of the saving. There is still the issue of collars…. more to follow.

Shane

Following last weeks 1.5% base rate cut by the Bank of England, the cost of inter-bank lending also decreased quite dramatically by falling over 1% to 4.49% on Friday of last week.

The LIBOR, the rate at which the banks lend to each other, is related to the cost of mortgages to customers, and we are hoping that this latest fall may result in cheaper borrowing for customers, especially since the recent reduction in the Bank of England base rate had a lesser impact on borrowing costs as some would have hoped.

Those customers on Base Rate Trackers will be very pleased with the rate reductions, and those customers coming out of 2 and 3 year fixed rate mortgages should also be more relieved that the payment shock they were all expecting “should” have been reduced by this action. Fixed rate mortgages currently in place will of course be unaffected, the main obvious reason for a fixed rate mortgage of course!

The Council of Mortgage Lenders have been quoted as saying that that the “Libor was more important in determining the cost of mortgages than the Bank of England’s rate”, so lets see how these rate changes effect the product ranges of mortgage lenders.

Only time will tell!

Shane Beardsley
Managing Director / Independent Financial Adviser

Mortgages? If we were to believe the media then we would probably think that it was impossible to get a mortgage!

But this is simply NOT the case; it is true that for many individuals it is harder to obtain a mortgage than it has been in recent years, but at the end of the day, assuming you have a clean credit history, a reasonable deposit or in the case of a remortgage, equity, and a steady job then getting a mortgage should not be too much of a problem.

Mortgage availability has certainly reduced, in fact we had access to around 25000 products this time last year, and at the last count our mortgage sourcing software had a little over 5000 available.

So the moral of this story is, don’t ASSUME you wont get a mortgage, whether to buy a new home, or to refinance your current property, just give us a call or drop us an email and arrange a meeting to discuss your mortgage needs.

Shane Beardsley
Managing Director / Independent Financial Adviser