Welcome to the December 2007 Mortgage Broker Ltd Newsletter

The mortgage broker wishes all our clients a Happy Christmas and a Prosperous New Year.

House Buyers Market Brief

What’s happening in today’s housing market and how does it affect you? The Bank of England Base Rate has just dropped by 0.25%, but what will it do over the next 12 months? And how come American banking woes are affecting our housing market?

These are some of the questions that we hear almost every day. We don’t have a crystal ball and we certainly can’t read the minds of the guys who set the rates at The Bank Of England. Here’s our best shot as to what we believe will happen over the next 12 months.

House Prices

Many major high street lenders are predicting that house prices will remain at current levels overall during 2008. What this means for you will depend upon where you live, because even if prices overall stay about the same, some areas may rise or fall depending upon their popularity and the number of sellers and buyers.

A recent Halifax survey suggests that house prices may even have fallen over the past three months, although prices in London appear to be firm.

The Royal Institute of Chartered Surveyors said that 22.2% of its members reported a fall rather than rise in house prices in October. The sharpest falls were reported in East Anglia and the West Midlands, with only London failing to see a decline.

The RICS said that tight supply conditions were continuing to support the market, with the stock of unsold properties rising at its highest pace since May 2003. New instructions to sell dropped for the fifth month in a row.

The Rightmove website says house prices fell 0.7% in England and Wales during the four weeks to November 10th 2007. The drop has knocked £1,656 off the cost of the average home, cutting it to £239,986. They also forecast that house prices will remain flat during 2008.

What this means for you, in our opinion, is that if you are looking to sell a property, be prepared for some wheeler-dealing if you want to make a fast move, since buyers might expect keen pricing.

House Builders

Miller Group, the UK’s largest privately owned house-builder has put up a ‘for sale’ sign, which might attract interest from Persimmon and Barratt. A reflection of the market, perhaps? Meanwhile, Bovis Homes said that full year completions and profits would fall this year as it blamed the credit crunch.

With a continued shortage of good quality, affordable homes it’s interesting to see that Barratts, who have avoided heavy involvement with property investors, have been a lot more upbeat than many other builders.

Certainly we have seen a fall in the number of buy to let mortgage enquiries while demand for residential mortgages and remortgages remains strong.

How the US Credit Crunch Has Affected Us In The UK

Over the past 5 years or so, lenders in the US have been aggressively competing with each other to fight for business. This meant they made it easier to borrow money, even for those people with poor credit ratings and who were in debt. These people make up the so-called adverse or sub-prime market.

Loans made to people who could ill-afford them have not been repaid, with lots of properties being repossessed and as a result, huge falls in house prices as lenders have tried to turn lots of repossessed properties back into cash quickly. This became a vicious cycle and caused a serious slump in the American housing market.

These failed mortgages, for the lender, are a loss they have to bear. Especially when the repossessed property value does not cover the loan secured against it. This means that they have less funding available for new borrowers.

So, why does that affect the UK borrower? The fact is, many uk lenders borrow money from US lenders and then lend this on to home buyers here. With the trouble they have at home, many major US lenders no longer have an appetite for higher risk lending, or even the funds available for any new lending at all.

The Northern Rock problems, in simple terms, were caused by the situation described above. While they could easily sell mortgages to UK consumers, they found it impossible to raise money to cover these loans from their usual sources. Eventually they turned to the Bank of England to help them out, to the tune of around £25 Billion of the taxpayers’ money.

The emergency loan is now up to £23 billion and Northern Rock has been nationalised in all but name.

Even by 2010 the bank is anticipated to be “in hock” to the government to the tune of £10 Billion. The Government wants to be off the hook and thinks it can get its money back by holding a fire sale. The shareholders are at the back of the queue.

The bank has seen several heads roll as a result of their dramatic predicament, including CEO Adam Applegarth and deputy CEO, David Baker. Meanwhile commentators are saying that up to £10 Billion in deposits has been withdrawn by savers over the last two months, giving them even less money to fund mortgages.

Mortgage Market Hot Gossip

Rumours are flying around that smaller mortgage banks, such as Alliance & Leicester and Bradford & Bingley, have also had to go to the Bank of England recently for secret loans. It is more that they are short of funding lines than exposure to the melt down in the sub prime sector of the market.

Fact: The proportion of homeowners who pay out more than half their salary on mortgage payments has doubled in only two years.

Fact: About 4.8% of mortgage holders pay more than 50% of their pre-tax income on mortgages.

Mortgage Approvals

£30.6 billion was lent during September from £34.0 billion in August and higher than September last year (£29.2 billion), according to the CML.

Lending for house purchase borrowing at £12.7 billion (81,000 loans) was lower than in August, £16.2 billion (103,000 loans), and September last year - £13.9 billion. Re-mortgaging remained buoyant in September at £11.1 billion from £11 billion in August and £10 billion in September last year.

The Buy to Let market underpinned the figures with a figure of £6.8 billion, the same as in August and better than September 2006 at £5.3 billion.

Outlook - Interest Rates 2008

The Bank of England dropped rates by 0.25% to 5.50% this month, in response to growing concerns that the economy is stalling.

Rates are tipped to fall again next year, possibly twice, which might be too little too late.

The inflationary pressures building up in the economy due to the oil price surge and seasonal factors, partly engineered by tax rises and an economy rapidly slowing down has coined a new word 'stagflation'. The financial industry never misses a trick when inventing new jargon!

Special Offer – Free Insurance Deals

Company News

The Mortgage Broker Launch New Corporate Website

The mortgage broker are pleased to announce a new look and extended facilities for the companies corporate website at www.themortgagebroker.co.uk. The new site is focused on providing information and facilities for its many business partners with the introduction of a secure B2B mortgage portal allowing associates to track the progress of their mortgage introductions online in real time.

Managing Director Darren Pescod said of the new site, "With an ever growing network of mortgage introducers throughout the UK the introduction of the new mortgage portal was essential to ensure that we maintain our reputation for exceptional customer service for both our business partners and their clients"

People looking for a mortgage can use the company's very popular network of specialist websites that provide a wealth of free educational articles and information on all types of mortgages. Each site is supported by a team of specialist mortgage advisors so that visitors can get immediate answers from experts in Buy to Let, Self Certification, Adverse Credit and Offset mortgages.

Feng Shui Tips for your Home

Feng Shui is an ancient system of balancing the good and bad, the Yin & the Yang. This Chinese approach suggests that the arrangement and positioning of things in our surroundings can affect the flow of energy, producing favourable or unfavourable effects on health and wealth. Here are some Feng Shui tips to improve the flow of good Chi (energy) in your home:

	Clear the way leading to your front door. Keeping this clear will prevent good Chi from flowing into your home.
	Plants with thorns or spikes (e.g. cacti) should be avoided or left outside your home. Instead of cacti, use round leafed plants, wind chimes and crystals. All these are positive and attract good Chi into your home.
	If there is a clear path between your front and back door/window, you risk good Chi rushing straight through and not stopping for Christmas dinner. Place a screen or bookcase, or a piece of furniture in its path so that you hang onto it.
	Find a way to brighten long and dark corridors. They trap bad Chi and prevent good Chi from entering.
	It is good luck to place an aquarium inside your home. Good Chi is attracted to water. A good place to put your fish tank or goldfish bowl is just inside your front door to invite good Chi to enter. To attract wealth into your home, place a water feature in the South Eastern part of your home, South-West for marriage, East for health, West for friends, North for career and North-East for education.
	Don't place your kitchen directly below a bathroom, nor place your kitchen in front or the centre of your house. Ideally, the kitchen should be located at the back of your home. Obviously, we’d be delighted to talk to you about a remortgage to fund moving your kitchen around!
	Open your windows and curtains every day to let fresh air and what little sunshine you’ll get over winter to come in. Good Chi will not come in if your windows are always closed. It also makes sense to get some fresh air for your health. If you’ve got an unused room, remember to open curtains and windows to let good Chi in there too.
	Don't put mirrors that reflect your bed. Put your mirrors in bathrooms, inside closet doors or anywhere else but not in front or the sides of the bed. In Feng Shui, it is bad luck to have your bed reflected on the mirror. We hope this doesn’t cause too much upset for the more adventurous householder.
	It is bad luck to have a table, chair or bed with a beam hanging over. A beam is a heavy object that will pressure you down. If the ceiling is high enough it is best to cover the beam by putting up a flat ceiling. Also, don't put your staircase in front of the main entrance. It facilitates volatile and negative chi to go straight to the upper floor.
	Generally, choose smooth and rounded objects, corners, tables, counters against sharp, jagged and knife like objects. Rounded things encourage the flow of good energy.

Feng Shui is all about the balance of energy and enhancing your environment. For thousands of years, the Chinese have used Feng Shui to enhance harmony, peace and prosperity. We hope it brings some harmony, peace and prosperity into your life through the festive season and beyond.