Welcome to the June 2009 Issue of the Mortgage Broker Newsletter.
Already half way through the year, here is a quick summary of where we stand in the mortgage market.
Hopefully the worst is now behind us. We should not expect a renewed boom however. Expectations for price growth are very modest at just 1.3% more or less in line with likely inflation. Transactions are much more important than prices - unlocking the log jam and getting people moving again boosts consumer spending and provides business for the legion of trades and professions who depend on house moving and renovations. Activity is most likely to recover first in areas where interest in properties is greatest and buyers in London led the way in May. According to propertyfinder.com (May 2009) Buyers made more enquiries per property to estate agents in the capital than any other region in May. The South East and South West of England followed closely behind London for interest, with Scotland also amongst the top regions. By contrast, interest remains relatively low in the North East and North West. Topping the local hotspots were the Orkney Islands, followed closely by the Highlands. There was more buyer interest per property for sale in the Orkneys than anywhere else in the country
2, 3 & 5 year Swap rates have all increased sharply to 2.45%, 3.11% and 3.79% respectively. This will most probably mean that fixed rates are on the way up! Be aware...
House prices rose by 1.2% in May with the annual fall in house prices improving significantly, the latest figures from Nationwide reveal. The Nationwide House Price Index for May puts the average house price at £154,016.
Data released by the Bank of England shows that the number of mortgages approved for house purchase rose again in May. The latest figure of 43,200 compares with a low point of just 27,500 in November, an increase of 57%. Moreover, the year on year change in the number of mortgages approved turned positive in May for the first time since the early part of 2007. A year ago only a little more than 39,000 mortgages were sanctioned. The increase in total net lending to individuals in April (£1.3 billion) was higher than the March increase (£0.7 billion) but below the previous 6-month average.
The latest figures from the British Bankers Association reveal the number of mortgage approvals for house purchase rose slightly to 27,685, compared with 26,671 in March and 23,812 in November. Re-mortgage approvals dipped very slightly from 26,595 in March to 25,418.
Public confidence in the housing market is higher than at any point since September 2007 and the Northern Rock bail out. According to propertyfinder.com’s May survey of confidence in the housing market which found that 60% of the 2,050 respondents thought house prices would rise by May 2010, with only 32.5% forecasting a fall. Around 8.5% of respondents thought house prices would be unchanged in twelve month’s time. The survey shows a healthy rise on April when half of respondents (49.9%) believed house prices would increase in the next twelve months and is the sixth consecutive month of improving confidence. A large majority believe the housing recession is almost at an end.
We hope you enjoy this month’s newsletter in which we also offer the chance to get a free credit check from Experian who are one of the biggest credit check companies and are used by many lenders to evaluate your credit worthiness when applying for a mortgage. Why not see what the lenders see for free!
Darren Pescod
Managing Director
Mortgage Deals of the Month
Every month our advisers scour the whole of the market to bring you what they consider to be the best mortgage deals currently available. As you know lenders change their rates on a frequent basis so don’t hesitate to contact us if you are looking for a new mortgage or wanting to change your existing deal for a better one.
The Best Residential Mortgage Deal for June is…
3.65% fixed until 02/07/2011 – FREE legal fees, FREE valuation, £999 lender set up fees
£616 per month based on a 25 year repayment remortgage for £120,000 on a property valued at £200,000. 60% maximum loan-to-value, the deal reverts to the lenders SVR which is currently 4.24%. The overall cost for comparison is 4.3% APR. An Early Repayment Charge of 3% of loan until 02/07/2011. £995 Lenders arrangement fee.
To grab this great deal while its still available please call one of our specialist advisers quoting "JuneDeal" on 0845 6076193 or click here to fill in a brief enquiry form and we will get back to you within 30 minutes.
The Best Buy to Let Mortgage Deal for June is…
3.49% above the Bank of England base rate until 30/06/2012, CAPPED at 5.49% (3.99% at today’s rate) The deal then reverts to the lenders standard variable rate of 4.74%. The deal comes with a FREE valuation and FREE legal fees!
£405 per month, based on a 120k mortgage on a 200k property interest-only over 20 years, £1999 lender arrangement fee, maximum 60% loan-to-value, the overall cost for comparison is 4.8% APR. An Early Repayment Charge of 4% of the outstanding loan is applicable until 30/06/2012.
To grab this great deal while its still available please call one of our Buy To Let specialist advisers quoting "JuneDeal" on 0845 6010153 or click here to fill in a brief enquiry form and we will get back to you within 30 minutes.
Why You Need To Check Your Credit Score
If you have been searching for a mortgage, or have taken out a mortgage in the past, chances are you will have heard mention of your credit score. But what is a credit score and why is it so important?
Your credit score a credit rating based on the information in your credit report. Some of the credit agencies number this score between 0 and 999. A high score suggests that you will probably find it easier to borrow money or buy goods on credit, in other words it is telling banks and building societies that you are a good borrower.
There are three ratings agencies in the UK – Experian, Equifax and Callcredit – and all of them have a score for you. They equate these in slightly different ways, but essentially they do the same thing. Every time you have taken out credit, it has been recorded and assessed by the credit agencies. Everything, from mobile phone contracts, bank accounts, gym memberships and mortgages; they have documented how much you borrowed, or how well you managed a financial commitment.
If you did well, and paid off a large amount of credit in a timely manner then your score increases. But, of course, if you missed payments or defaulted on a financial responsibility, your score falls.
And this score is essential, because it is the basis on which a lender assesses your worthiness as a borrower. They will take the score and feed it into their own computers to paint a picture of you, as a borrower. The score will be looked at alongside your mortgage application form and even past experiences the lender may have had with you. Each lender also uses a unique calculation to arrive at a score - they may even use different formulae for different products. But essentially, regardless of the method, the higher your score, the better chance you have of securing credit.
Credit scores are more important now than they have ever been. Before the credit crunch, lenders were a lot more ambivalent about a borrower’s score, it was important, but credit calculators allowed lower scores to pass for credit. Now, in the wake of the world crunch, lenders are a lot more risk adverse. The want high scores regardless of how small the loan could be for. So you need to make sure that your score is as good as it can be.
There are many ways in which you can improve your score and amend your score, but the most important thing is to get signed up to one or all of the credit agencies and get a look at what the lenders see. From there you will be able to get a good idea of what sort of borrower you are, and what sort of mortgage you might be able to secure. It’s not expensive and it doesn’t take a lot of time – but it is crucial.
Never has it been so important to have clean credit as it is for mortgage borrowers today. So make sure you are one step ahead by checking your score today.
Get Your Free Credit Check
Now you can check your own credit history for free, just sign up for the Experian free trial by clicking the link below and you will see what the lenders will see when they check your credit history.
Click here to get your free Experian credit report online
Mortgage Servicing At Five-Year Low
While borrowers still need large deposits to be able to enter the market, both first-time buyers and home movers are benefiting from the lowest debt servicing costs since 2004.
According to the Council of Mortgage Lenders, for those with deposits large enough to enable them to buy, the combination of low interest rates and lower house prices mean that their monthly interest payment now equates to only 15.1% of their income, the lowest proportion since June 2004.
Also, first-time buyers accounted for an increasing share of the mortgage market in March - 40% of loans, up from 38% in February 2009. This is the highest proportion since April 2005, although the absolute number of first-time buyers remains low.
Bob Pannell, head of research for the CML, says: “For those who can, the burden of debt payments is low and mortgage interest is consuming proportionately less income than for a number of years. This is good news for now. Even so, a mortgage is a long-term commitment. People borrowing now should be mindful of the years ahead when interest rates eventually rise, as they will.”
If you think you have the means to either get on or move up the property ladder, talk to your mortgage adviser. These figures prove that it’s not all doom and gloom for borrowers in the UK today – there are bargain properties out there and there are great mortgages on the market.
SOURCE: CML, 14/05/09
- Mortgage Deals of the Month
- Why You Need To Check Your Credit Score
- Mortgage Servicing At Five-Year Low
