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445 mortgage products withdrawn in a day!!

Monday saw the biggest withdrawal of Mortgage products ever seen in one day. Michelle Slade, analyst at Moneyfacts.co.uk said that Black Monday saw 445 products withdrawn from the Market.

This is just the tip of the iceberg. As the money markets gettin tighter and tighter lenders are reducing their Loan to Values but more importantly they are down valueing properties and only lending to people they feel are very low risk. Decreases in loans available and de valuation means you really have to do your homework to make sure you can actually get a Mortgage or re mortgage.

Michelle Slade of Monayefacts.com said.

“Halifax, Bank of Scotland Mortgages, Bristol & West Mortgages, Intelligent Finance and Newcastle BS have also restricted the range of products that they now have on offer”

She went on to say “This news will be another blow for mortgage borrowers, as not only do they now have a more restricted choice, but the insecurity in the money markets has caused many lenders to increase their mortgage rates.

“If more lenders decide to take the same stance and withdraw their range on a temporary basis, it is likely to cause a bottleneck for the remaining lenders.

“As the pressure on these lenders increases, service is likely to suffer. As a result we may see further lenders being forced temporarily to withdraw their range.

“Coupled with the liquidity problems in the markets, it may be that we see further increases with this phenomenon in other aspects of lending, such as loans and overdraft rates.

“It appears that lenders are slowly turning the tap off on the number of mortgage products available and their appetite to lend. If the problems continue we have to start asking the question, will the tap will be turned off completely until stable markets return?”

So what does this mean for the average house buyer or the home owner who is coming off a fixed rate deal and wants to re mortgage?

The lenders who are still actively in the market and really tightening up on their lending criteria and even if you see some fantastic rates advertised very few people can actually get a mortgage. I have a client who had their house valued in March 2008 at

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Mortgage rates Reducing despite the Credit Crunch 

5 September, 2008

This article was taken from a specialist broker magazine and is quite telling on waht is happening in the Mortgage Market even though the Bank of England maintained rates at 5% yesterday.

According to research carried out by Moneyfacts, the average two-year fixed rate has dropped to 6.39%. This is roughly around the same level that was seen just before the credit crunch.

Moneyfacts Michelle Slade says that "a good indication of what is going on in the market is the average rate. As the top ten lenders make up over 77% of the market it is interesting to see what they are up to.

All the main lenders have cut their two year fixed rates since the peak of early July 2008, with the exception of Northern Rock which has put up its rate by 0.01%, as well as increasing its arrangement fee by £500. The biggest cut comes from the Halifax where the rate has gone from 7.27% to 5.99%, as of the start of this week. Although Halifax now offers one of the best rates it has a high arrangement fee relative to its competitors.

Bradford & Bingley and Cheltenham and Gloucester have also passed on significant cuts, but this has been offset slightly by an increase in their average fees

Michelle goes on to say that "the cost to lenders in obtaining the funds for mortgages on the money markets has dropped significantly in the last few months and we are now seeing some relief for borrowers who are looking for a new deal. The increase in borrowers monthly repayments should not be as much as it would have been had they remortgaged two months ago, which will hopefully mean more borrowers can afford to remain in their homes.

“I doubt we will see rates being cut to levels similar to when base rate was last at 5%, but we should hopefully see further cuts from the big lenders in the coming months. Only time will tell if we have finally turned a corner, but this is the most prolonged period of cuts we have seen since the credit crunch began.”

You can check out all the lenders current offers at

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What is a Flexible Mortgage?
29 August, 2008

A recent survey has shown that more than one in ten mortgage holders (12%) plan to make overpayments on their mortgage over the next six months.

This survey shows that for most people their top financial priority still paying off their mortgage despite the tough economic conditions. There are still a samll amount of people who are planning on taking payment holidays (3%) and even fewer (1%) plan on underpaying on their Mortgage.

The survey also found that approximatley 1 in 10 people will looking to change their Mortgage within the next six months as they come off short term (2 years) fixed rates. This survey shows that a large percentage of people are interested in Flexible Mortgages.

So what is a flexible Mortgage?

Most lenders do not want the general public what a true flexible Mortgage is,as if used properly a flexible Mortgage can save years off your mortgage and save £1000’s in Interest payments.
You do not have to pay very much extra each month to make a huge difference in the overall amount you pay.

What you should be looking for from a Lender are the following criteria:

1) Does the lender allow overpayments? - usually there is no minimum but there is a maximum and the rule of thumb is you can overpay by 10% of the outstanding balance per year. Most people set up a standing order to overpay say £50 or £100 per month. You are in control as you can start and stop this overpayment whenever you want so you are not committed to this.

2) Does the lender allow underpayments? This can be very useful if you need to reduce your outgoings for what ever reason during your Mortgage term. Now you will have had to have made overpayments to use this facility and you will have had to have had a good payment track record for 6 months.

3) Does the Mortgage have a drawdown facilty? This is very important. When you overpay this is obvioulsy reducing the balance of your mortgage and therefore reducing the Interest element of the monthly payments. This builds up a pot of money that, if there is a draw down facility, you have access to at any time. This drawdown can be used for any purpose you wish and is a fantastic way of funding larger purchases such as new cars etc rather than getting expensive car or bank loans and as it has been paying off your Mortgage you will still be in front if you take it back out.

4) Does the Lender allow payment holidays? This is where you don’t pay anything off your mortgage on a monthly basis. The agreed missed payments are added to the mortgage and will increase the balance and mybe slightly stretch out the term. This facility can be extremely useful for times when your finances may be stretched to breaking point such as having a child or loosing your job. There is generally a maximum time you can take payment holidays and they have to be agreed by the Lender. They will look at your account and if you are upto date with all payments there wont be a problem. If you have overpaid even better as you will not be increasing your balance or increasing your term depending on how much you have overpaid.

There are only a limited number of Lenders who offer these types of Mortgages and they dont advertise them that much.

My favourite lender for this type of Mortgage is Nationwide. I have put many clients onto Nationwide as there flexible Mortgage is a great way of managing your money, reducing the term of your Mortgage and greatly reducing the amount of Interest you will pay.
Check out their deals here.

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House moves delayed by Government delay.
29 August, 2008

The Governments failure to to confirm the future of stamp duty is having a massive effect on people moving. A massive 83% of home movers are delaying or

postponing their moving date as a result of the recent Governments announcement that it may review Stamp duty.
Move.com said it asked its database on 11th August, just one week after it was leaked that the Chancellor was considering a move to suspend stamp duty in an effort to boost the flagging housing market, if the News had:

1)  Made no differnce to their plans
2)  Pushed back their moving date
3)  Postponed their move indefinitley

They asked over 1,500 movers and the response were:
1) 17% said that it made no difference to them
2) 20% said it had pushed back their moving date
3) 63% said they were postponing their move.

The stats from their site show that moving dates have gone from 37 days to 64 days, showing that the Governments refusal to confirm or deny the suspension is having a major impact on an already badly affected market.

The director of Moveme.com,Charles Wasdell said:

"It is plain to see the devastating effect the Government is having on the housing market, as it keeps tight lipped about the possibility of a stamp duty holiday. The Chancellor must either press ahead with the legislation immediately or confirm that there will be no stamp duty holiday, so the people who are buying property move ahead with their purchase.”

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House prices continue to fall in August - should I fix a rate?
29 August, 2008

Acccording to the latest figures by the Nationwide the price of a typical house fell by a massive 1.9% in August. This equates to a 10.5% drop year on year, the building society said. The average home is now £19,000 cheaper at £164,654 compared with the same time last year.

The Nationwides cheif economist Fionnuala Earley said “The price of a typical house fell by 1.9% in August, bringing the annual fall into double digits for the first time since the fourth quarter of 1990. The price of a typical house fell by 10.5% over the last twelve months to £164,654. While the pace of monthly falls picked up during the month, the less volatile three month on three month measure, eased very slightly in August to 4.5% from 4.6% in July".

Reports form Estate agents are a little more encouraging and optimistic. The data suggests that there may some interest returning to the market. Agents are reporting an upswing in new buyers enquiries, maybe stimulated by recent falls in prices and the opportunities to negeotaite further price reductions.

However the increase in enquiries has not yet translated into sales which is not encouraging.

The level of borrowing is still clearly much lower year on year with some reports saying that mortgage lending is down by a massive 60% year on year.

Borrowers who are active are tending to go for longer term fixed rate deals instead of trackers even though the rates are slightly higher.

The inflation report for August was more dovish than Mays, even though inflation is at its highest level since 1992 and more than twice the Bank of England target. The Bank of Englands growth and infaltion forecasts have indicated that there may be room for rate cuts in the near future but this is by no means a foregone conclusion.

The market has reacted to this and as a consequence fixed rates have started to come down from their recent peaks. The expectation of a reduction in Bank of England rates may have little effect whilst the overall confidence in market conditions and particularly the housing market is still very low.

So what does this mean to you if you are looking for a Mortgage.
As rates and in particular longer term fixed rates start to come down it is worth while looking at fixing a rate for at least 5 years. As stated earlier you may pay a little more in relation to a tracker rate but my personal view is that fixing a longer term rate gives you peace of mind that you will not have any nasty shocks in the future.

Look at your affordabilty and lock in a good fixed rate, don’t worry about the possibilty of loosing out on a small reduction in rates as you are covering yourself for any possible increases in rates over the medium term.

Nationwide in my mind are one of the best lenders on the market. Their rates have always been and remain to be competative. Their fees are generally alot lower than other lenders and they conduct the process very well. Their lending policy is quite conseravtive and they tend to have lower LTVs than otehr lenders.

They don’t get involved in the sub prime market and like to lend to the better end of the market.

Have a look at their rates, you can apply online and they will give you a Decsision in Principle in a matter of minutes.They will tell you based on your affordability what they are prepared to lend you subject to the valuation of your property. They also offer FREE VALUATION and FREE LEGALS with low administration costs for fixed rates.

Take a look at their offerings here.  

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