UK Mortgage Round-up - Week 14

Cheap two twelvemonth fixed charge per unit mortgage trades look to be coming to the end. These popular merchandises have got been at the top of consumers' listings for some years, but loaners are pulling these trades as they seek to protect their net income in the in progress recognition crunch.

Mortgage agents are gloomily forecasting a tax return to the years when place proprietors had only one pick - the criterion variable charge per unit of the lender, which be givens to be expensive.

Last hebdomad Cheltenham & Gloucester called an end to its lifespan tracker charge per unit of 6.23%, replacing it with a 6.53% deal. That would add £450 a twelvemonth to a mortgage of £150,000.

• NatWest became the first depository financial institution to increase refunds for existing customers. 15,000 countervail mortgage clients received letters from the depository financial institution saying that their involvement rates were going up from 6.2% to 6.45%. It is the first clip that existing borrowers have got got been hit by charge per unit increases; previously it have been new clients who have faced higher rates.

• Kent Reliance Bachelor of Science also set rates up for existing customers: from 7.34% to 7.59% on its criterion variable rate.

• RBS set its two-year tracker charge per unit up from 5.99% to 6.79% for new customers.

• First Direct is not taking on any more than new mortgage customers. Owned by HSBC, First Direct scrapped trades for new clients at a mere five hours notice. As a loaner expected to take around 5% of new mortgage concern this year, the move is unprecedented and shook the market. Now, others are expected to follow suit.

As bad news look to come up in every day, it looks that Banks are driving up their margins. Best offerings from Banks have got gone up by 0.25% on norm in this week. In March, nearly 3,000 mortgage trades disappeared from the market, leaving less than 5,000 now available. Blessing rates have got gone down but mortgage demand is still strong, and the Council for Mortgage Lenders anticipates around 2.8m families to come up up for remortgage in 2008. If people happen they cannot afford the new higher repayments, they will be left with small choice: sell up. Depository Financial Institution of England figs demo that the norm two twelvemonth fixed charge per unit have gone up from 4.96% to 6.09% inch just two years. If you can't acquire one of those deals, you could be left with an SVR of around 7.5%.

Banks claims that borrowers have got had it too good for too long. But borrowers don't do the rules; it's the banks. The Banks dug themselves a hole by offering cheap money and then chasing dodgy investings based on United States sub-prime borrowers. Was that the United Kingdom borrowers' fault?

Having dug the hole the Banks now look happy to bury their customers.

How To Consolidate Your Debts With A Remortgage

If you have begun to feel financial problems caused by debt, and you own a home, then you may have a good way to eliminate those debt problems. A remortgage could be just what you need to provide a way out and reduce your monthly bills at the same time. Here is how you can go about getting a remortgage for debt consolidation.

Before you think about remortgaging, though, you need to think about whether or not you plan on living there for at least seven more years. Remortgaging has fees and costs just like your first mortgage, and will take up to three years to pay off these costs.

Check Your Credit Rating

You should know that the best time to think about a remortgage is before your debts start being reflected on your credit score. You can get a free credit report from the three major credit bureaus each year. Once you get it, you can look it over and make sure that all statements it contains are accurate and up to date. Be sure to correct all incorrect information through the credit bureau before you apply for a remortgage. This is because your new interest rate will largely be based on your credit score.

Watch The Interest Rates

This will help you to know when the right time comes to remortgage. You want to wait until you can get at least 1% lower than your present interest rate. If it is close, but you feel the market may not go any lower, you may be able to buy points for an even lower rate.

Remortgage For A Shorter Term if Possible

Even if you are doing this for the purpose of debt consolidation, you will want to try and keep the length of the remortgage as short as possible. The shorter the time period, the less you will need to pay in the long run. This will reduce your overall indebtedness through the years and allow you to be mortgage free quicker. In fact, if you can, try to reduce it about 5 years less than the remaining time on your present mortgage. This will enable you to save possibly tens of thousands of dollars in interest.

Get Access To Your Equity

If you have lived in your house for a number of years, then you have built up some equity. This can be obtained when you remortgage. Although you could get much more, you should not remortgage for more than 80% of the value of your house, or you will be required to get Private Mortgage Insurance (PMI).

You can do what you want with your equity. This is the money that you take and consolidate your bills with. It has much lower interest than a personal loan, which is why it is a good alternative. It also has a much lower interest rate than a credit card, too, and gives you a long time to pay it back.

Put Some Equity Back Into Your House

It is also a good idea to take some of your equity and add it back into your home by remodeling or making an addition. This increases the equity in your home even more - and it is tax deductible, too.

Before you sign on any remortgage deal, be sure to get several quotes. Then look them over carefully, and choose the best one. Make sure you understand any terms, and avoid remortgages with early payoff penalties.

Mortgage Exit Fee Deadline Passes

Mortgage Lenders to reduce mortgage exit fees

In a victory for consumers, the Financial Services Authority's deadline set for mortgage lenders to reduce mortgage exit fees came and went last week, meaning lenders now have to slash fees, stick to the original fee or justify why they should be raised at all.

The FSA warned lenders in January that if they charge more than the exit fee originally agreed with the borrower, they will have to explain their position or face investigation. The new rules apply equally to people leaving their mortgage now or those who have been charged increased mortgage exit fees in the last four years and want to apply for a refund.

In recent years, mortgage lenders have been increasing exit fees originally designed to cover the cost of administration in an attempt to stop people from switching to cheaper mortgages and to supplement profits while maintaining low headline interest rates.

Mortgage exit fees more transparent

The FSA's attempt to make the mortgage exit fees more transparent has been welcomed by most experts, although some are warning that homeowners may face something of a struggle obtaining refunds.

Louise Cuming, head of mortgages at Moneysupermarket, said: "So far all of the decisions announced have been in favour of the consumer, representing a significant change from the earlier lacklustre response to the FSA's call to action. Although providers are now saying the right thing this is not the same as actually delivering on their promises."

Ray Boulger, technical manager at mortgage broker John Charcol, welcomed the deadline but was cynical that the consumer would have it all their own way. Although borrowers who have redeemed a mortgage in the last four years will have a "very strong" case for seeking compensation, he said that many homeowners will have discarded the mortgage documentation and are in a weaker position to make a claim for compensation.

"Around ten million mortgages have been redeemed in the last four years but the number of people who claim compensation will no doubt be largely influenced by the amount of media coverage this topic receives," he stated.

"However, I would estimate that the total compensation payable will be at least 50 million and probably in the region of 100 million."

Some experts believe that the decision will open the floodgates to homeowners wanting refunds worth 190 million and many borrowers are already preparing to make a claim. In fact, more than a million template letters have been downloaded from consumer websites to help people reclaim overdraft charges.

Melanie Bien, of Savills Private Finance, told the Times that lenders are concerned about the scale of claims they are likely to see regarding exit fees, "which may be why borrowers will have to make a claim themselves, rather than wait to be contacted by their former lender".

Mortgage payments rise

Interest rate rises and soaring house prices have added 120 to the monthly mortgage payments of first-time buyers, a new study has shown.

According to Nationwide, recent interest rate hikes added 45 to the monthly outgoings of a first-time buyer last year, while increased property prices added a further 75.

In order to reduce monthly payment, 34 per cent of new buyers now take out a home loan of 26 or more years, despite the prospect of being saddled with debt for many years.

Fionnuala Earley, chief economist at Nationwide, said: "As interest rates have increased to their highest level in over five years, the question of affordability again raises its head.

"House prices alone increased by just over ten per cent in 2006 adding almost 14,000 to the cost of a typical first-time property, but three interest rate rises in six months add considerably more to borrowing costs for this already struggling group."

Miles Shipside, spokesperson for property website Rightmove, has said that many new buyers are taking advantage of the rise in equity in their parents' homes in order to finance a deposit on a house.