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.

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