UK new mortgage agreements halved in January

New mortgages agreed with house buyers fell by 49% from December, after buyers rushed to beat the reintroduction of the old stamp duty thresholds.

The January downturn in the property market has been underlined by the latest figures from the Council of Mortgage Lenders (CML).

There were just 32,000 loans approved for house buyers in January. The number of loans for first-time buyers fell by 54% in January to 11,300.

The CML's figures confirm the picture portrayed by the latest figures on the property market.

In recent weeks:
• the CML said the gross value of all mortgage loans had fallen by 32% from December to January

• HM Revenue & Customs reported that the number of completed home sales in the UK had more than halved to 51,000 in January

• the Bank of England said that the number of home loans approved for house purchases in January, but not yet lent, had fallen by 17% to 48,198 - the lowest for eight months

• both the Halifax and the Nationwide mortgage lenders reported that prices had fallen in February, by 1.5% and 1% respectively.

Another survey, from Acadametrics, suggested that the effect of the slump in lending would last for longer than just one month.

The number of homes sold in England and Wales at the start of 2010 fell back to levels seen at the depths of the downturn it said.

Transaction levels fell to 36,000 in January, a drop of 52% compared with the previous month, and then only crept up to an estimated 40,000 in February.

However, it calculated that prices rose by 1.9% in February compared with January.

Nine out of 10 home owners not remortgaging after deals end

Nine out of 10 home owners are not remortgaging their property when their existing mortgage deal runs out, it has been suggested.

The numbers of people remortgaging reached a record low of just 24,000 in January, a drop of 15 per cent on the previous month- and down 47 per cent on a year ago, according to the Council of Mortgage Lenders.

Experts suggested as many as 270,000 borrowers a month are now paying their lender’s standard variable rate as a result of their initial deal coming to an end.

They claimed home owners were being either better off slipping onto their lender’s SVR or were unable to find a new deal elsewhere due to banks and building societies tightening their lending criteria.

The CML also revealed the number of mortgages approved for those buying a new home hit 32,000 in January, down 49 per cent on the previous month, but up 38 per cent on the same period a year earlier.

Michael Coogan, director general of the CML, said: “We expect lending over the coming months to remain weak as uncertainty over of the state of the economy and the upcoming election are likely to continue to hold back housing market activity.”

Quarter of homeowners live on financial precipice

The UK's recession may be officially over, but more than a quarter of homeowners risk losing their homes after admitting they are still living on a “financial precipice”.

Latest research suggested 26 per cent of borrowers aged between 35 and 44 would be unable to meet their mortgage repayments if they saw a £300 drop in their monthly income.

And one in eight adults in this age range has deliberately over-inflated their income to secure a larger loan, according to the YouGov research.

It comes after the Council of Mortgage Lenders revealed last month that the number of people being evicted from their homes climbed to a 14 year high, with an average of 126 repossessions a day in the past year.

The research also showed a drop in the proportion of people paying off their credit card bills in full each month with 5 per cent of people who previously paid their bills in full now paying just the minimum or a fixed amount. The figure rises to 7 per cent for those aged between 35 and 44 years.

House prices rise may start to slow

Further rises in UK house prices may be held back by more properties coming on to the market, surveyors have said.

The Royal Institution of Chartered Surveyors (Rics) says new instructions outpaced inquiries from new buyers in February.

It was the second month in a row that this had happened.

The rise in house prices during the past year has been attributed by many commentators to a shortage of stock for sale.

Despite the suggestion that the balance between buyers and sellers may be changing, Rics still found more surveyors reporting rising prices than falling prices last month.

Rics said it was the first time in two years that new sale instructions had outstripped inquiries from would-be buyers in a sustained manner.

The actual level of sales recorded by its members was still hampered last month by the effect of the cold weather.

As a result, the number of sales per Rics member remained at 1.4 per week.

Affordable mortgage deals on offer from lenders increase

Mortgage availability for homebuyers has improved over the past months as rising house prices have made lenders more confident.

At the start of March there were 1,798 mortgage deals available which required deposits of between 0% and 40%.

That was 6% more availability than a month ago and 68% more than a year ago.

There are still very few mortgages available with just 0% or 5% deposits, but there are now 489 deals that ask for 10% or 15% down-payments.

That is 90% more than a year ago when there were just 258 such loans on the market.

Among the lenders to cut the interest rates across their mortgage ranges in recent weeks have been Lloyds, RBS, Cheltenham & Gloucester, Northern Rock and Alliance & Leicester.

In another indication of more relaxed lending, RBS has raised its maximum advance for first time buyers from £150,000 to £300,000.

House prices have risen in the UK over the past year, which means that lenders are again lending against appreciating assets and not ones that are going down in value.

Despite the recent trends, the proportion of new mortgage deals that require a deposit of at least 25% is still very high - 57% compared to 65% in March 2009.

Back in August 2007, just before on the onset of the credit crunch, only 16% of the deals on offer asked for such large down payments.

Home buyers younger in north of England

First time buyers in the north of England were the youngest and paid the smallest deposits compared with other areas of the UK in 2009.

People buying their first home were aged 27 on average in the north of England and in Yorkshire and Humberside.

Those in the North paid an average deposit of 19%, the figures showed.

First-time buyers were oldest on average in Greater London at 30, the Council of Mortgage Lenders (CML) said.

The mortgage market is a much tougher place for first time buyers without significant savings than it was a few years ago.

The availability of mortgages has dropped and while some 100% mortgages were available until early 2008, the average deposit was generally between 20% and 25% in 2009, the CML said.

Some 39% of first-time buyers in East Anglia were exempt from paying stamp duty in 2009 because of the concession - the highest proportion.

In Northern Ireland, properties sold under the £175,000 threshold increased from 62% of first-time buyers in 2008 to 86% in 2009.
 

The average home-mover was aged 32 in the East Midlands in 2009 - the youngest in the UK. The oldest average home-mover was in the north of England, at 40 years old.

These home-movers paid the smallest average deposit in the north of England at 29%, with the highest in the South West of England at 45%.

The CML also said the proportion of people who were homeowners was likely to fall in the coming years.

It said many people would instead be tenants, mainly renting in the private sector, owing to a shortage in housing supply, changing consumer preferences and affordability pressures.

UK interest rates kept on hold at 0.5%- after a year

The Bank of England has kept interest rates at a record low of 0.5% for the 12th consecutive month.

The decision was widely expected by economists, who believe that any rise in the cost of borrowing could damage the UK's fragile economic recovery.

Also as expected, the bank has not pumped any more money into the economy under its quantitative easing (QE) programme - for now at least.

Last month the Bank halted QE, having spent £200bn to boost the economy.

Under QE, the Bank has bought assets in order to boost lending to businesses and individuals by commercial banks.

But the Bank has said that the full effects of QE will take more time to filter through to the economy.

Many analysts argue that banks have not in fact increased lending as the economy begins to recover. Banks in turn argue that businesses are looking to pay down debt rather than take out new loans.

The Bank must also be wary of the inflationary pressure caused by QE.

The latest inflation figures, released last month, showed prices rising by 3.5% in January, the fastest annual pace for 14 months. This compares with 2.9% the previous month.

As a result, the Bank's governor, Mervyn King, had to write a letter to the chancellor explaining why prices were rising so quickly.

A letter from the governor is required if inflation is more than one percentage point above or below the government's 2% target.

However, Mr King said that the rise in inflation was temporary, and was largely the result of the rise in VAT to 17.5% in January.

UK house prices see first fall since June

UK house prices recorded their first monthly fall since June with a 1.5% drop in February, the Halifax has said.

The drop was caused by the end of stamp duty relief, the cold weather and more properties being put up for sale. The average home is now worth £166,857.

The Halifax said that prices were still 4.5% higher than a year earlier, but the market had slowed in recent months.

The survey found that prices are also a full 8% higher than the lowest point of the market in April 2009.

The icy weather has been widely noted as a major factor in the latest round of data about the UK housing market.

Weather conditions slowed activity, with many potential homebuyers less tempted to look around homes or finding it difficult to travel.

The end of the temporary stamp duty relief was also regarded as a factor in the slowdown.

Both these issues were cited ast week by the Nationwide building society , which said that prices had fallen by 1% in February.

Mortgage lending also suffered at the start of the year. Recent figures from the Council of Mortgage Lenders also showed that gross lending for home loans fell by 32% in January compared with December, reaching a 10 year low of £9.1bn.

The Bank of England also reported a 17% fall in the number of mortgages approved for house purchase during January.

UK mortgage approvals drop sharply

New figures revealing a sharp drop in mortgage approvals in January have confirmed that the UK housing market made a slow start in 2010.

The Bank of England said that the number of home loans approved for house purchases in January fell by 17% compared with the previous month.

The 48,198 approvals was the lowest number for eight months, but still 43% higher than a year earlier.

Experts have said the end of the stamp duty holiday was behind the drop.

The stamp duty threshold dropped back to £125,000 on 1 January, prompting a rush on mortgage approvals and completed home sales in the final months of 2009.

The government concession, which had temporarily pushed the threshold up to £175,000 for just over a year, had been aimed at halting the rapid slump in the property market.

Gross mortgage lending fell from £13.5bn to £10.2bn in January, with commentators also pointing to the severe winter weather as affecting housing market activity.

A range of groups, including the Council of Mortgage Lenders and the British Bankers' Association, have said that lending and activity dropped at the start of the year.

The Bank of England figures also indicate that the record low Bank rate of 0.5% - and low variable mortgage rates - has deterred people from signing up to new fixed-rate mortgages. The number of homeowners remortgaging dropped to 23,611 in January, from 27,322 in December.

Bank loans refused to nearly 60% of UK applicants

Nearly 60% of UK businesses were refused credit by their banks last year, despite the labour government's efforts to boost lending.
A survey from the Institute of Directors (IOD) found 57% of businesses were denied money, and 20% used credit cards to finance their business.

The report contradicts recent claims by banks that they are lending to companies that need finance.

But banks said the IOD report painted a misleading picture of lending.

The British Bankers' Association (BBA), which represents the major High Street banks, said the sample size of the survey was too small to draw any meaningful conclusions.

The labour government has spent billions of pounds trying to boost lending.

It has pumped £200bn into the economy through its quantitative easing programme in order to provide banks with more capital to lend to individuals and businesses.

The IOD's report also suggests that the government's Enterprise Finance Scheme is not providing the support to businesses that it was designed to give.

It found that of those businesses refused credit, 83% were not offered information on the scheme, which gives government guarantees to business loans between £1,000 and £1m.

The report also found that 20% of businesses surveyed did not apply for bank loans, either because they felt they would not get them or because the costs involved would be too high.

"The fact that over half of all businesses seeking finance last year were turned away by their banks is totally incompatible with the banking sector's position on the state of lending in the UK," said the IOD's director general, Miles Templeman.

He also warned of the increasing reliance on credit cards.

"Any contraction in credit card finance could see significant price hikes, adding to the already grave difficulties that many businesses are having accessing funds."

However, the BBA said that the IOD's report was based on a survey of about 1,000 company directors, only a quarter of whom had applied for bank loans.

Bank of England figures for November showed that net lending to UK businesses, which includes money being paid back to banks, stood at £100m.

This was the first positive net lending figure since January last year.

14m use credit cards for everyday spending

More than 14m Britons are using their credit cards for everyday spending, with one in five carrying three or more cards.

Despite high interest rates, card holders continue to use credit to pay for day to day expenses such as food shopping and petrol, according to a survey from moneysupermarket.com, the price comparison service.

More men than women carry multiple cards, with one in four men having three of more credit cards compared with one in six women.

Worryingly, it is the more financially vulnerable who are most likely to use their cards every day, with those under the age of 20 and older than 70 being the worst offenders.

The research also showed that consumers were utilising their credit card benefits. The most popular use for credit cards was found to be buying online, implying that consumers are taking advantage of the purchase protection offered by credit cards. 

A quarter of card holders are using their card specifically for reward points and one in 10 use their card for cashback and purchases during the zero per cent interest period.

UK house prices rise 3.2pc as sellers stay away

Asking prices by home owners soared by 3.2pc during February as a shortage of sellers left estate agents scrambling for business, research showed today.

The jump seen during the four weeks to February 6 was the biggest increase in asking prices for homes in England and Wales since April 2007, according to property website Rightmove.

It pushed the average cost of a home up to £229,398, 6.1pc higher than a year earlier, while asking prices in London rose to a record high of £427,987.

But the group warned the economic fundamentals could not support further price increases of this magnitude.

It added that in some cases the rise may have been caused by estate agents going along with sellers’ perceptions of what their property is worth in order to win business.

The group said the number of homes for sale was slowly beginning to increase, with 90,000 new listings put on its website during the month.

This was nearly 20pc higher than in January 2009, although figures for that month were distorted by the introduction of a ban on marketing a property until the seller had a Home Information Pack.

But despite the improvement, new property listings are still 37pc below levels seen for January between 2005 and 2008.

Some areas also continue to have an acute supply shortage, with stock levels 45pc and 43pc lower in East Anglia and the South East respectively than between 2005 and 2008.

However, demand from potential buyers is showing little sign of waning, with Rightmove seeing a record level of traffic to its site during January, with 710 million pages viewed, 29pc more than in the same month of 2009.

The group said it received more than one million visitors to its site in a single day for the first time on January 25, while the previous record for site traffic, set in August last year, was broken on 17 days during the month.

Asking prices increased in all areas of England and Wales during the month, apart from the South West, where they fell by 1.7pc, and the North and North West where they dropped by 1pc and 0.4pc respectively.

The West Midlands saw the biggest jump, with optimistic new sellers raising their asking prices by 8pc, while homeowners in East Anglia asked for 7.5pc more than people who put their homes on the market in December.

Greater London and the South East also saw strong gains at 5pc and 3.6pc respectively.

Chip and pin fatally flawed to protect millions of bank customers

Chip and pin technology must be overhauled after it emerged that one in seven people could have already been a victim of a "fatal flaw" in the system.

Experts at Cambridge University believe the system is "broken" after they tricked it into accepting transactions without using a valid personal identification number.

They say the flaw is so fundamental it threatens to undermine the entire security of the system.

Now the Consumer Association Which? has joined them in calling for an investigation and any subsequent overhaul to protect millions of people from fraud.

"We want the banks to look into these potential flaws because we have had many examples where the banks have said a pin was used and the customer said it hasn't," said Cathy Neal, a senior researcher at Which? Money.

"Banks say that using the chip and pin system proves that the customer must have used the card. This shows that that is not necessarily true. We don't yet have enough evidence to say it is fundamentally flawed but there is some evidence it is not perfect."

Which? said that in a recent survey 14 per cent of people – one in seven – said they have had money taken from their bank account and 13 per cent from a credit card.

Of those around half did not get their money back from the bank, even though they insisted they did not use or authorise the "disputed withdrawal".

Professor Ross Anderson, a computer expert, claimed to have developed a way of bypassing security systems which renders chip and pin no longer "fit for purpose".

His team's "man in the middle" technique involves having a separate card reader in a back pack.

The fraudster puts the stolen credit or debit card into the shop's reader but then the second reader in his bag sends a "pin OK" signal to the shop terminal.

The shop terminal then sends back a transaction go-ahead signal to the terminal with the stolen card and money is taken off it.

They claim to have used it a number of times without the banks, who firmly deny it is a threat, being any the wiser.

Prof Anderson, who two years proved that cards could be cloned, accused the banks of lying when they said there was no problem.

"How would the banks know if the fraud has taken place?," he said. "We used it in our canteen and they have never contacted us to say that there was a fraud.

"We have many examples of people who have had their cards stolen and then purchases made using the chip and pin.

"They are adamant they didn't use it but if the banks say chip and pin has been used you have to pay. I think many of these people would have been victim of the kind of technique we have developed.

"The banks are wrong. All the banks are lying. They are maliciously and wilfully deceiving the customer. If there was any justice then the police would be looking into this. The system is not fit for purpose."

Stephen Mason, a barrister who specialises in cases of chip and pin fraud, said at the very least the potential breach of security should be investigated.

"There is clearly something wrong with the system," he said. "I have people who believe as much as £4,000 has been taken from their accounts.

"It is not right for the banks to say our systems are perfect. The banks need to realise there is reasonable doubt about how secure the system is."

But The UK Cards Association, which represents the banks' card operations, dismissed the claim, saying that while the research had shown what it was possible to do in theory, this did not mean it was practical or even possible to do in reality.
 

The Financial Ombudsman Service, which decides on any disputed claims, said any new methods of committing fraud would be taken into consideration in future disputes.

Jay Abbott, director in charge of threat and vulnerability management at PricewaterhouseCoopers (PwC), said:“Essentially, what the scientists have come up with is a very effective and simple way of exploiting weaknesses in the system.

"However, it is important to bear in mind that the fraud requires a very specific scenario to become effective.

"A simple process change by the retailer of asking for the card holder to hand over the card would break the circuit, although this isn’t always possible as sometimes the card reader is fixed to a point on the other side of the counter.

“At present, the customer is accountable for the fraud as banks argue that PIN verified transactions are secure. Given this attack demonstrates a clear method of bypassing the PIN system, this assertion by the banks stands on shakier ground.”

UK home repossessions reach 14 year high

The number of people being evicted from their homes has climbed to a 14 year high with an average of 126 repossessions a day in the last year.

As many as 46,000 people had their home repossessed last year, the highest level since 1995 and 15 per cent more than the previous year.

The figure from the Council of Mortgage Lenders is significantly below the group’s original forecast of 75,000, which was revised down twice to 48,000.

However, the CML predicts a sharp increase in repossessions and the number of people falling behind with their monthly mortgage payments this year.

It blamed uncertainty in the economy and possible interest rate rises putting additional pressure on households’ finances.

Charities and financial experts said it was “unacceptable” that so many people had lost their homes.

The labour Government claims schemes put in place to help borrowers in financial difficulty have helped 330,000 families stay in their homes. 

However, figures suggest only 92 families completed the Mortgage Rescue Scheme, where eligible families can either get an equity loan to reduce their mortgage, or sell their home and remain as tenants.

It comes as lenders are criticised for continuing to offer the best deals to those with a significant deposit.

The CML also revealed a sharp decline in the number of mortgages for landlords.

It said 93,000 buy-to-loans were approved last year, down 58 per cent on the previous year’s 222,700 and the lowest annual figure since 2001.

UK mortgage rates fall to new lows

Tracker mortgage rates fell to a record low during January as competition continued to return to the mortgage market figures from the Bank of England show.

The average interest rate charged on one of the deals dropped to 3.63pc from 3.92pc during the month, the lowest level since Bank of England records on the product began in 1997.

There was also an improvement in the cost of fixed rate mortgages, with two-year loans falling to an average of 3.97pc, a level last seen in July 2003, while the cost of a five-year deal dropped by 0.12pc to 5.55pc.

Competition in the mortgage market has been steadily improving since the beginning of the year, with more than 300 new mortgage products launched during January, while a flurry of lenders also cut their rates on existing deals. 

Significantly, there has been a big improvement in the number of deals available to people with only small deposits, with a 26pc jump in mortgage availability for people borrowing up to 90pc of their home's value during January.

Commentators said the move showed lenders were feeling increasingly optimistic about the housing market, following 12 months of rising house prices, while they were also more confident about pricing in risk.

Bank of England figures also showed that personal loan rates eased slightly during January.

The average interest charged on a £5,000 loan fell to 13.32pc after reaching a record high of 13.38pc in November, while the cost of a £10,000 loan dropped to an average of 10.91pc, down from 11.08pc the previous month.

But the cost of credit card borrowing continued to rise, increasing to 16.4pc in January, its highest level since July 2006.

UK house prices- housing market seizes up in Britain's big freeze

The recent snow and freezing temperatures almost brought the property market to a halt last month.

The latest survey from the Royal Institution of Chartered Surveyors found a fifth more estate agents reported a fall rather than a rise in the number of new buyers during January.

It is in sharp contrast to the 18 per cent more estate agents who reported a rise rather than a fall in house hunters during the previous month.

But despite the slowdown in activity, house prices continued to rise, with 32pc more surveyors reporting price increases in January than those who saw falls, up from 30pc more in December.

Surveyors remain confident that the dip in activity is temporary, with the proportion who expect prices to continue rising doubling during the month from a balance of 12pc to 24pc.

10,000+ Britons being declared insolvent every month

At least 10,000 Britons are being declared insolvent every month- the highest level on record new official figures reveal.

Despite the recession being declared over, many households are still unable to live within their means.

And experts warned insolvency numbers will rise further once interest rates begin to head above their current low level of just 0.5 per cent.

The latest figures showed 134,142 people in England and Wales were declared insolvent last year, the highest level since records began in 1960 and a sharp increase on the previous record of 107,288 personal insolvencies in 2006.

The individual insolvencies consisted of 17,007 bankruptcies during the last three months of 2009, - which were up 24.9 per cent on the same period a year ago - and 13,219 of its less stringent form, Individual Voluntary Arrangements (IVAs) – which were up 26.3 per cent on the same period in 2008.

An IVA is an arrangement that is entered into with those owed money, while a bankruptcy involves a formal court order where assets are sold to pay off creditors.

An alternative to bankruptcy – a debt relief order – was introduced last April, but various restrictions limit those who can apply, such as not owning your own home and having debts of less than £15,000. There were 5,348 of these orders during the final quarter, up from 4,505 in the previous quarter.

Do you need advice? For more information, please see Re-Mortgager's page at:

http://www.re-mortgager.com/debt-management-uk.htm.

Bad debt advice service can't cope with leap in demand

The labour Government's free debt advice service is being forced to turn people away after being unable to cope with a 28pc jump in demand.

MPs described the labour Government's approach to advising people in debt as a "triumph of bureaucracy over practicality" and urged it to "shake up" its strategy to meet the increasing demand for help in the current economic climate.

The Public Accounts Committee said the Department for Business, Innovation and Skills' approach to debt advice was "unnecessarily complex", with more than 50 different projects and a number of funding streams. Edward Leigh, the chairman of the committee, said: "The whole thing is undermined by poor co-ordination and a lack of clarity about who is in control of it all."

Consumers owed £1.46 trillion in debt at the end of last year, with personal borrowing representing 160pc of household annual pre-tax income. The recession has caused demand for debt advice to soar, with research suggesting around one in 10 people are struggling to keep up with their borrowings.

But the Government's free face-to-face service struggled to cope with the 28pc rise in the number of people contacting it during the year to July 2009, leading to a quarter of agencies either turning consumers away or forcing them to wait for more than a month for help.

Richard Bacon, a member of the Public Accounts Committee, said: "At present, the Government is not always using the most cost-effective means of reaching people in need of help with their debts. It costs an average of £265 to provide face-to-face debt advice, but telephone advice costs just £51 and internet advice is cheaper still."

He said one in four people who saw a debt adviser face to face said they would actually have preferred to have been given advice over the telephone or through the internet.

He said: "The Department for Business, Innovation and Skills needs to use the money it deploys more effectively in order to address the gap between the demand for debt advice and the Department's current capacity to provide it."

Personal insolvencies hits record high

The number of people who were declared insolvent in England and Wales hit a record high in the last quarter of 2009 and during the year in full.

The figures from the Insolvency Service marked the depth of the recession, with 35,574 people declared insolvent in the last three months of the year.

That was a rise of 25% on the same period a year earlier.

Over 2009 as a whole, there were 134,142 people declared insolvent in England and Wales. This was up 26% compared with 2008, and higher than the previous record - in 2006 - of 107,288. Records began in 1960.

The quarterly total was made up of 17,007 bankruptcies - down 5.5% on the same quarter of the previous year, 13,219 Individual Voluntary Arrangements (IVAs) - up 26.3% on the corresponding quarter of the previous year, and 5,348 Debt Relief Orders (DROs) - which were introduced in April.

These DROs allow people with debts of less than £15,000 and relatively few assets to write off these debts without a full-blown bankruptcy.

Record low interest rates would have staved off insolvencies for some people, but long-term unemployment would make it difficult for others to avoid the situation.

IVAs could also have risen as people cutting hours instead of being made redundant had some funds to pay back debts instead of going bankrupt.

Many experts have suggested that there will be more pain to come despite the UK coming out of recession.

In the last quarter of 2009, the number of companies going bust fell by 7% to 1,465, compared with the previous quarter.

The figures continued the downward trend in receiverships, administrations and company voluntary arrangements which has been seen during the past year.

Even so, 2009 as a whole still saw a record number of companies being declared insolvent with an annual total of 6,355, a 1% increase on 2008.

The number of companies being liquidated - the end stage of the insolvency process - fell in the last three months of 2009. There were 4,566 company liquidations, down by 2% on the previous quarter and 1% fewer than a year earlier.

For the whole of 2009, the number of firms being liquidated rose to a record 19,077, an increase of 23% compared with the previous year.

Mortgage home loans improve for first time buyers

The availability of UK mortgages is on the rise again providing a glimmer of hope for first time buyers.

The number of home loan deals on the market in the UK has jumped in the last month and the trend in lenders relaxing their criteria has continued.

The number of deals on offer is up 20% compared with the start of the year. Some of these include deals requiring a relatively small deposit of 10%.

The fall-out of the credit crunch has been felt particularly hard by first-time buyers who have needed significant savings to get on the property ladder.

Many have turned to their parents for financial assistance, although the debt risks associated with taking high loan-to-value deals has fallen.

Mortgage providers have started to become more generous with their criteria since October, when 66% of deals on offer required a deposit of at least 25%.

This figure fell to 61% at the start of January, and fell further to 58% at the start of February.

The availability of mortgages could have been affected by recent property price rises, making the deals less of a risk for lenders.

The number of deals on the market - some 1,700 - is the highest since November 2008 and suggests there is more competition in the market.

This trend could continue if lenders start to raise the cost of their variable rate deals and pick certain mortgages to promote to those who might be considering remortgaging.

Housing sale and rent back deals must give five year tenancy agreements

Homeowners who swap the ownership of their home for a tenancy under a sale and rent back agreement should be guaranteed tenancies for a minimum of at least five years.

The new rules should severely restrict the sale and rent back firms and forms a key part of final regulations published by the Financial Services Authority.

They will come into effect on 30 June 2010 and are designed to protect homeowners in financial difficulty from falling prey to predatory companies.

The rules confirm proposals made last September.

The main aim of the new rules, which build on interim regulations introduced in July last year, are to ban "exploitative advertising and high-pressure sales techniques.

The FSA said its rules would:
• Ban exploitative advertising and high-pressure sales techniques and stop the use of emotive terms like "fast sale", "mortgage rescue" and "cash quickly" in promotional literature
• Introduce a 14 day cooling-off period so consumers can change their minds
• Ban cold calling and dropping promotional leaflets through letter boxes
• Ensure people have security of tenure for a minimum of five years
• Bring in an affordability and appropriateness check across all sales to ensure the sale and rent back deal is right for the consumer.

In 2008, an enquiry by the Office of Fair Trading (OFT) found that some firms offering these deals were devious and dishonest.

The companies had been accused of luring people into selling their homes at a discount, only to evict the former owners within months so their homes could then be sold at a large profit.

Sale and rent back firms typically target people facing repossession. Such firms must now be regulated by the FSA and be run by people it deems to be fit and proper. About 80 firms have applied for authorisation, the FSA said.

Demand for home loans back on the rise

New borrowing on credit cards, loans and overdrafts has outstripped the amount being paid back by UK consumers for the first time since June 2009.

The number of mortgages approved for house purchases dipped slightly compared with November, to 59,023.

This was still higher than the average of the past six months, when the housing and mortgage markets picked up.

The trend during the downturn has been for consumers to pay off debts, often instead of saving when interest rates are so low.

For five consecutive months, repayments outstripped new unsecured consumer credit. However, in December, the trend reversed, the Bank of England's figures show.

This was primarily the result of borrowing on credit cards, which rose by £195m. Demand for personal loans and overdrafts remained low, with repayments outstripping new borrowing by £143m.

Total net lending to individuals rose by £1.2bn in December, double the average of the previous six months. The vast majority of lending is in the form of mortgages.

There were 1,022 fewer mortgages approved for house purchases in December compared with November, although this marked a typical seasonal drop.

However, it was the first drop in approvals since November 2008 and many commentators argue that the housing market will remain relatively static in 2010.

Net mortgage lending slowed from a £1.6bn increase to £1.2bn in the same period, but the December level was still up on the average of the previous six months.

The number of people remortgaging rose slightly - to 27,276. This was still a traditionally low level as people chose to benefit from low interest rates by staying on their mortgage provider's variable rate when their fixed-rate deal came to an end.

The Bank rate is widely expected to remain at record lows for some months.

UK house prices could rise by 10% a year according to Nationwide

The rate of UK house price increases could soon rise above 10% a year the Nationwide building society has announced.

Its latest survey shows that the average UK house price rose by 1.2% in January, pushing the annual rate up to 8.6%.

It means the average UK home now costs £163,481.

The Nationwide said prices had now been rising for nine months in a row, and the rate of increase was the fastest since October 2007.

The three-month on three-month rate, regarded as a less volatile measure of house prices, saw prices rise by 2.1% in January, down slightly from 2.3% in December.

The relative lack of supply in the housing market is one of the reasons why prices have continued to rise.

Many commentators have suggested that the pace of price increases may ease off this coming year.

Activity in the market has been picking up briskly since the spring of 2009.

Recent figures from HM Revenue & Customs (HMRC) showed that the number of homes sold in December jumped to a two-year high of 104,000.

This may have been influenced by buyers rushing to complete their purchases before stamp duty went up again.

Both the Bank of England and the British Bankers' Association have reported further increases in the number of mortgages being approved - a good short term indicator of future trends in the market.

New rules on mortgage arrears proposed by FSA

New rules to protect UK mortgage holders who are in arrears have been proposed by the Financial Services Authority (FSA).

The FSA says it wants to ensure that those borrowers are treated fairly, especially ones who have borrowed from specialist lenders.

It wants to ensure that repossession is a last resort and that borrowers in arrears are not levied unfair charges.

But the Council of Mortgage Lenders (CML) described one of the proposals as "heavy-handed".

The proposals are part of the FSA's current review of the way the mortgage market functions.

As of last September there were 194,600 mortgages in arrears by 2.5% or more of their outstanding balance.

Earlier in the year, the FSA's own research had identified the aggressive treatment, by some lenders, of their borrowers in arrears as a particular problem.

The main points of the its latest consultation are that:
• firms must not add early repayment charges onto any arrears charges, or charge interest on those charges
• firms must not levy a monthly arrears charge if the firm and the customer have agreed a plan to repay the arrears
• firms must consider all options for borrowers and use repossession as a last resort
• payments by customers in financial difficulties must go to clearing arrears first, with arrears charges being paid off later
• all telephone calls and records about customers arrears must be kept for three years.

UK mortgage approvals are on the rise

The number of UK mortgages approved for house purchases rose at the end of last year, according to the major UK banks.

But overall, mortgage approvals in 2009 were 27% lower than the previous year and the lowest since British Bankers' Association records started in 1997.

Some 45,897 home loans were approved for house purchases last month.

This showed the extent of the recent recovery in the mortgage market as it was double that of December 2008.

The association's statistics director David Dooks said the proportion of mortgages approved by the major UK banks had grown.

He said the squeeze on mortgage lending during the downturn had come from specialist lenders largely withdrawing from the market and a contraction in building society finance.

Gross mortgage lending by the High Street banks rose from £9.6bn in November to £10.2bn in December.

This was also 12.5% higher than December 2008, and was boosted - according to the British Bankers' Association (BBA) - by borrowers bringing loans forward before the stamp duty holiday came to an end.

The temporary stamp duty holiday on properties worth between £125,000 and £175,000 ended on 1 January 2010. It means buyers will again have to pay 1% tax on the value of homes worth more than £125,000.

According to the BBA, the level of those remortgaging remained low in December - at 23,480 - as people continued to choose to move to their lender's standard variable rate (SVR), rather than move to a new fixed-rate deal when their term came to an end.

It remains to be seen whether this trend will continue after a recent move by Skipton Building Society to raise its SVR sharply, and whether this will produce any possible response by other lenders.

US home sales see steep drop in December

Sales of existing US homes fell 16.7% in December, according to the National Association of Realtors (NAR).

Sales had risen from September to November as first-time buyers took advantage of tax credits.

The decline in December was expected as buyers rushed to complete deals before the original 30 November deadline.

The first-time buyer tax credit has since been extended until 30 April, and the NAR said there was likely to be another surge in sales in the spring.

December sales fell to a seasonally-adjusted annual rate of 5.45 million from 6.54 million in November, but are 15% higher than the level seen in December 2008.

The average sale price of a previously-owned home was $178,300 (£110,200) in December, up 1.5% on a year ago.

Total sales in 2009 were almost 5% higher than in 2008 - the first annual gain since 2005.

Govt spending cuts could hit affordable housing plans

The number of planned affordable UK homes built over the next 10 years could be halved by labour government spending cuts.

The labour government has promised three million new homes by 2020 - a third "affordable" below market rates.

The National Housing Federation said pre-Budget report figures suggested the housing budget could be cut by 17.98%.

The National Housing Federation (NHF) warned 556,000 affordable homes - which are categorised as more expensive than council properties but priced below market rates - would not be built, affecting 278,000 jobs.

It said 1.25 million people would join the record 4.5 million people on waiting lists for affordable housing if the target of one million homes was not met by 2020.
   
The federation called for housing budgets to be protected in similar fashion to services such as health and education.

Shadow housing minister Grant Shapps said no previous government had a worse record of affordable house building than "this fag-end Labour administration".

"As a result there are nearly twice as many families languishing on the social housing waiting list than when Labour came to power," he said.

"With this appalling housing record, no one should take lectures from Labour housing ministers who seem to come and go faster than most people have hot dinners," he said.

The NHF based its figures on analysis of the pre-Budget report by the Institute for Fiscal Studies.

Buying UK houses are less affordable than 50 years ago

UK houses are now less affordable than they were 50 years ago although the quality of homes has improved.

Prices increased the most in the last decade, and separately lenders warned that lending to first time buyers would be constrained for "some time to come".

"The last 50 years have witnessed some remarkable developments in the UK housing market," said Martin Ellis, chief economist at the Halifax.

Owner-occupation in the UK accelerated the most in the 1980s. The Halifax figures show that 43% of homes were owned by their residents in 1961, compared with 68% in 2008.

Privately rented homes fell from 33% to 14% over the same period, although it has crept up in the last 20 years or so, probably owing to the increase in student numbers.

Four big house price booms have occurred in the last 50 years, the research concluded. They were: 1971-73, 1977-80, 1985-89, and 1998-2007.

Over the last 50 years, the biggest rise in prices was in greater London, whereas the smallest increase was in Scotland. This might have been mitigated, to a degree, by an increase in homes with two incomes rather than just one.

In a sign that buyers might be getting more for their money now, the proportion of households without an inside toilet fell from 14% in 1960 to 0.2% in 1996.

Although getting on the property ladder might have become more difficult, the rise in prices would prove that homes have been a good long term investment for some people.

The average home has almost quadrupled in value, having risen by 273% since 1959 in real terms, the Halifax found. In today's money, a typical home would have cost about £43,000 in 1959.

UK mortgage lending described as a seasonal dip

The UK has seen a "seasonal dip" in mortgage lending, according to the Council of Mortgage Lenders (CML).

The number of new mortgages granted to home buyers fell to 53,000 in November, a 4% drop from the previous month.

However, reflecting the upward trend seen for most of last year, the figures were still 66% higher than in November 2008.

The CML said first-time buyers were still having to put down an average deposit of 25% of a property's value.

But with interest rates still at historically low levels, the CML noted that the level of income that home buyers had to devote to mortgage interest repayments was at its lowest for more than five years.

"It is encouraging to see that mortgage interest payments are so affordable for home movers and first-time buyers," said the CML's director general Michael Coogan.

"But with substantial deposits still needed to secure a mortgage, the market will continue to be relatively restrained for some time to come," he warned.

The CML's latest data, suggesting a recent slowdown in the property market, chimes with that published earlier this week by the Royal Institution of Chartered Surveyors (Rics).

Its survey suggested that the pace of house price increases slowed in December.

Not all house price surveys are pointing in the same direction.

The Department for Communities and Local Government (DCLG) found this week that UK property prices rose by 1.7% in November, leaving them 0.6% higher than in November 2008.

UK govt debt fears cause interest rate rise thoughts

There was limited demand for the £2.25bn worth of long dated gilts sold by the Debt Management Office last week.

However, other government bonds, such as the 10-year gilt, were under pressure following comments about stimulus measures from Andrew Sentance, who sits on the Bank's Monetary Policy Committee.

In a newspaper interview, Mr Sentance said policymakers were nearing the point where they would want to pause Quantitative Easing (QE) and wait to gauge its impact on the economy.

The central bank's £200bn (QE) programme is due to come to an end just before the Bank of England's policy meeting in early February.

The fears are that UK debt will fuel mortgage interest rate rises in the near future.

Number of mortgage holders looking for a lodger up a quarter

The number of UK households looking for a lodger rose by 27 per cent during the first couple of weeks in 2010.

The number of live in landlords advertising online for a lodger to help pay their mortgage costs jumped to 2,487 from 1,955, according to Spareroom.co.uk.

A total of 65 per cent of respondents said they were overstretched financially and that the costs of Christmas had forced them to take action.

Matt Hutchinson, director of Spareroom.co.uk, said: “It seems that Christmas has acted as a tipping point for many home owners whose finances have been stretched to the limit by the impact of the recession.

“With Christmas over and done with, homeowners are using the start of a new year as the motivation to get their finances in order. As a result, we have seen unprecedented levels of live-in landlords advertising in the first two weeks of 2010.”

The group said it had seen a record number of people advertising for lodgers during 2009, and it expected the trend to continue this year.

The average weekly rent stands at £87, meaning they could pay off the average Christmas debt of £435 in five weeks, according to Spareroom.

But it will take longer for those looking to clear off the average household debt of £9,106 – they will need two years worth of rental income.

The labour Government’s Rent a Room scheme allows households to earn up to £4,250 a year tax free.

Monthly mortgage payments lowest for 13 years

Monthly mortgage payments have fallen to their second lowest level on record, according to new official figures.

Borrowers who bought a new home in November spent an average of less than 11 per cent of their income on paying the interest element of their mortgage, according to the Council of Mortgage Lenders.

The figure was the lowest level for 13 years and the second lowest since records began in 1974.

It is the latest sign of financial pressures easing on home owners across Britain despite the worse recession since before the Second World War.

Several lenders have recently reported that house prices are rising again whilst mortgage rates are beginning to drop as competition returns to the market.

The CML said home movers spent just 10.6 per cent of their income on paying their mortgage interest in November, the lowest figure since a brief spell in 1996 when it dropped to 10.2 per cent.

During the first few months of the credit crunch the figure stood at 17.9 per cent in December 2007, while in the previous recession it reached 28.1 per cent in the third quarter of 1990.

The CML attributed the current low level to a combination of lower mortgage rates and a change in the type of deals people took out during the month.

Only 58 per cent of borrowers opted for a fixed-rate mortgage during November, down from 66 per cent in October, while 42 per cent took out a variable rate deal.

First times buyers find house prices rise six times faster

House prices for UK first time buyers increased more than six times as fast last year as for other buyers, figures show.

Experts attributed the rise in prices to the Stamp Duty threshold being raised last year.

The cost of an average home for a first-time buyer rose by 3.9 per cent in November compared with a decline of 0.7 per cent for those already on the property ladder, according to the latest house price index from Communities and Local Government

Experts attributed the rise in prices to the Stamp Duty threshold being raised to £175,000 last year, which prompting more buyers into the market. The threshold has since been lowered to £125,000.

Overall, house prices were 0.6 per cent higher than in November 2008 and 0.7 per cent higher than in October 2009.

A Communities and Local Government spokesperson said: "The Government continues to take unprecedented action to support first-time buyers aspiring to enter the market by increasing opportunities to buy a share of a home."

Re-mortgage dilemma- should you opt for a fixed interest rate?

With the Bank of England suggesting interest rates may increase soon should remortgages refinance on fixed rates?

Borrowers should consider locking into current low interest costs before a potential sterling crisis forces the Bank Rate up to defend the pound, some experts said this week.

Historically, Sterling has moved in relation to UK base rates and the outlook for the economy, causing some experts to fear that mortgage rates may rise substantially in future.

Oliver Gilmartin, senior economist at the Royal Institution of Chartered Surveyors (RICS), said: "We expect the Bank Rate to be raised during the second half of the year, which will inevitably filter through into higher mortgage rates. 

Significantly, the standard variable mortgage rate will be moving off a low base, which is currently more than 40pc below historic norms, meaning that small movements in interest rates have a bigger proportional impact on monthly payments.

"Mortgage approvals have now been rising consistently for a year and the latest credit conditions survey from the Bank of England continues to suggest a gradual improvement in the lending environment over the coming months."

Much depends on the decisions by the Bank of England, which has held the rate at a record low of 0.5pc since April last year.

If you have a 30pc deposit, borrowers can fix for three years at Alliance & Leicester for 3.99pc, but this product has a fee of 2pc, so remember to do your sums. For loans of 65pc, consider Leeds Building Society at 2.99pc until February next year, reverting to 3.49pc until 2012.

For borrowers who want to fix for even longer, there are some good five-year deals available.

But, of course, nobody can be sure about the future and opinion remains divided.

So what does this mean for borrowers? Is now the time to remortgage and opt for a fixed rate?

Fixed-rate deals also offer security to first-time buyers and those whose budgets are stretched, as they have the peace of mind that monthly mortgage payments will not suddenly rise.

With the number of mortgage approvals rising over the past year, some experts feel the recovery of the housing market will also have an effect on interest rates.

UK house prices fall as more properties join the market

The recent rise in UK house prices is grinding to a halt as more sellers are joining the market.

The number of houses coming on the market is increasing, while the number of people looking to buy is falling, which will lead to a stagnation in the rise of prices.

Values climbed last year due to a lack of properties for sale and heightened demand among buyers.

The latest survey from the Royal Institution of Chartered Surveyors said the number of new enquiries rose by 20 per cent in December, the slowest pace in a year.

Around 17 per cent more estate agents reported a rise than a fall in properties being put up for sale.

Jeremy Leaf, a spokesman for RICS, said: “The recent loss of momentum in prices and the moderation in new buyer interest can be in part attributed to the housing market pulling down its shutters for Christmas. It is likely that the New Year will see more interest and activity in the market as those who held back start to market their property with renewed optimism.”

Million homeowners use credit cards to pay mortgage

An estimated one million homeowners have resorted to using credit cards to pay their monthly mortgage payments during the past year.

Kay Boycott, director of policy and campaigns at Shelter, said: "This is a shocking discovery, that over a million households in Britain are in such desperate circumstances that they need to borrow money on credit cards to pay for basic housing costs.

"If people are already struggling to the extent that they fear losing their home, increasing credit card debt cannot be the answer."

The group warned that many of the people who had resorted to using their credit card to cover their housing costs could find themselves facing homelessness this year, particularly as defaulting on their credit card repayments could lead to their property being repossessed in the worst case scenario.

Its research found that around 6pc of households said they had used their plastic in order to keep up with their housing costs during the past 12 months, according to housing charity Shelter. People in working class professions were most likely to have resorted to using debt to cover their mortgage or rent but many so-called middle class people admitted they had been forced to use their credit card in this way.

Shelter urged people who were struggling to keep up with their housing costs to seek advice urgently.

Shadow housing minister Grant Shapps said: "The fact that one million households are now resorting to credit cards to help pay their mortgages is a damning indictment of this Government's lack of real help for hard-pressed families.

"Figures we uncovered recently revealed that just one of Labour's ill-thought-through schemes has assisted only 15 families, so ministers must take direct responsibility for their part in failing to prevent the credit card mortgage payment scandal.

"We can't go on with ministers believing that everything is fine when the reality of this report shows us a different picture."

Shelter has a network of advice services across the country who are ready to give free advice on a range of subjects including debt and housing issues.

House prices up by £10,000 despite recession

House prices increased by £10,000 last year, confounding expectations of heavy falls at the beginning of the recession.

Average values rose for the sixth consecutive month in December, reaching £169,042.

However, the rate of increase has eased with the 1 per cent rise in December being slightly lower than the previous five months.

It means prices increased for the second successive quarter following falls in both the first two quarters of 2009.

House prices have risen by 9.4 per cent since reaching a low in April 2009.

Home buyers finding it as difficult to get a mortgage

Banks and building societies insist they are offering mortgages again, but latest figures suggest home buyers are having a hard time.

Three quarters of home buyers said it was as difficult or harder to find an affordable mortgage in the last three months of the year, compared to the previous three months.

The figure is up 2 per cent, from 73 per cent, for the three earlier months.

It comes despite high street banks receiving £200 billions of financial support after the economy faced a meltdown.

This time last year, confidence in the property market was at rock bottom and the outlook was bleak. But, a year is a long time in the housing market and, while the recovery is still in its infancy, optimism is now back to levels not seen since the credit crunch began in 2007.

UK lenders raise standard variable mortgage rates

Five more lenders have increased the standard interest rate charged on their mortgages despite the Bank of England leaving lending official rates unchanged since March last year.

Marsden Building Society is raising its standard variable rate (SVR) by almost half a percentage point, from 5.49pc to 5.95pc, while Mansfield, another building society, is increasing its SVR from 5.24pc to 5.59pc.

Four other building societies – Cambridge, Kent Reliance, Scottish and Accord – have increased their SVRs by at least 0.25 of a percentage point since the middle of last year, according to Savills Private Finance, the mortgage broker. Meanwhile Nationwide introduced a new SVR for new customers last year so they didn't get the previous rate of 2.5pc.

Borrowers should always be wary of any mortgage linked to the SVR as it can be moved at the lender's discretion. We expect lenders to raise their SVRs this year as an easy way of improving their balance sheets. 

Borrowers who are enjoying a cheap standard variable rate should therefore be vigilant – if the lender raises it, look around for another fixed or discounted deal.

Number of home loans approvals doubles last year

The number of mortgages approved for house purchase has more than doubled during the past year as the UK property market continues to recover.

A total of 60,518 loans for people buying a new home were in the pipeline during November, the highest level since March 2008 and more than double the record low of 27,162 seen in November of that year.

Net lending, which strips out redemptions and repayments, also increased for the third month in a row to stand at £1.46 billion, a level last seen in February, according to the Bank of England.

The improvement in mortgage lending has been driven by increased activity on the housing front, as recent price rises tempt both buyers and sellers back to the market.

But unsecured lending contracted for the fifth month in a row as consumers continued to focus on paying down their debts.

People repaid £376 million more of unsecured debt than they borrowed during November, slightly down on October's net repayment of £591 million, but nearly double the level seen during the past six months.

Within the total, credit card borrowing increased by £215 million, but this was offset by net repayments of £591 million on personal loans and overdrafts.

Consumers collectively repaid £7.85 billion of loan and overdraft debt during the 12 months to the end of November.

The Bank of England also reported that the number of people remortgaging remained broadly unchanged during November at 24,897, although this was still down on the recent six-month average of just over 29,000 as homeowners continued to sit tight.

Meanwhile, figures from the Building Societies Association showed that mortgage lending by mutuals contracted for the 11th month in a row during November.

Building society mortgage customers repaid £543 million more than they borrowed during the month.

The sector also suffered on the savings front, with customers withdrawing £775 million more than they deposited, the ninth consecutive month this has happened.

UK homeowners reduce mortgage debt over 18 months

UK homeowners reduced their outstanding mortgage debt for a straight sixth quarter paying back £4.9bn.

Bank of England figures today showed homeowners injected the equivalent of 2pc of post tax income into their homes in the third quarter.

This is a far cry from the final quarter of 2003, when homeowners boosted their income by around 8.5pc through releasing money that was tied up in their homes.

However the rate at which people are paying down their mortgage slowed for the third consecutive quarter, according to the figures.

The level of repayments peaked in the first quarter, when homeowners injected £8.1bn back into their properties.

Consumers' focus on paying down their mortgages is in stark contrast to previous years, when people released equity from their properties to fund large purchases.

The rate at which people unlocked money from their homes peaked during the final quarter of 2003, when a record £17.03bn was released.

But since homeowners stopped unlocking equity in the second quarter of 2008, they have repaid a total of £33.89bn.

Equity withdrawal enables homeowners to cash in on rising house prices by increasing their mortgages to convert some of the rise in the value of their home into cash. The money is typically used to fund big purchases such as cars or home improvements, or for debt consolidation.

But while people feel confident about increasing the size of their mortgage debt when house prices are booming, they are far less inclined to do so when they are falling and unemployment is rising, leading to the current trend to reduce mortgage debt.

House prices have also fallen by around 20pc from their peak to their trough earlier this year, leaving many people with insufficient equity to withdraw.

It has also become more difficult for people to increase the size of their mortgage after banks and building societies tightened their lending criteria in the wake of the credit crunch.

But while people's focus on paying off their debts may be more prudent than tapping into their housing wealth to supplement their spending, it is bad news for the economy.

UK mortgage market still growing

The UK's appetite for taking out a home loan to buy a property in the UK appears to be growing, although the levels are still low compares to a year ago.

As well as the increase in mortgage approvals, net mortgage lending - which strips out redemptions and repayments - rose to £3.3bn in November, its highest level since February 2009.

In the housing sector, prices have continued to edge up and approvals for house purchase are now back at a similar level to that of two years ago.

As a result, there were 22,360 remortgaging deals approved, down 25% on a year ago and 63% lower than two years ago.

The number of approvals for the withdrawal of equity from homes was about half the level of two years ago, the BBA said.

Bank of England unanimous in keeping interest rates at 0.5%

All nine members of the Bank of England's Monetary Policy Committee (MPC) voted to keep interest rates unchanged at its December meeting.

Minutes from the meeting also showed that the MPC was unanimous in voting to maintain the £200bn quantitative easing (QE), or asset buying, programme.

The MPC agreed that the medium term outlook for inflation had not changed since its November inflation report.

In November, the committee extended its existing £175bn QE programme by £25bn. That decision, however, had been split.

Seven members voted for a £25bn expansion, while chief economist Spencer Dale favoured no expansion and David Miles wanted a £40bn increase.

The December minutes said that the two still thought "a slightly different scale of asset purchases could still be justified".

"But the lack of significant news on the month meant that the case for deviating from the programme of asset purchases announced in November was outweighed by the benefits of completing it as planned," the minutes said.

The British Chambers of Commerce agreed that there was "no immediate need" to increase the size of the programme.

Cost of labour's scheme to avoid repossessions is £165,000 per household

A labour Government scheme to help homeowners avoid repossession has cost the equivalent of £165,000 for each of the households it has rescued.

The Homeowner Mortgage Support Scheme was announced in a big fanfare a year ago to help struggling borrowers stay in their homes, but has ended up helping just 15 families so far.

The labour Government confirmed today that the scheme has cost the taxpayer £2.5 million.

Experts criticized the cost as “unbelievable” when it had helped so few home owners.

With the average price of home £165,000, they suggested the Government may have just have bought the homes outright for the 15 families it had helped.

Shadow housing minister Grant Shapps said: “These figures will be a slap in the face for the 1,000 families who are being repossessed every week. It’s unbelievable that during the deepest recession since records began the Government is spending millions on a scheme that has been mired in uncertainty and helped just 15 families"

The Homeowner Mortgage Support Scheme is one of several labour Government measures to help struggling home owners. It allows those facing a loss of income to reduce their monthly mortgage payments for up to two years.

Increasing numbers of home owners are falling behind on their mortgage payments, with almost 270,000 at least three months in arrears at the end of September this year, compared to 166,000 during the same period a year earlier, according to the Council of Mortgage Lenders. And the number of repossessions stands at one household in every 1,000.

Other Government measures aimed at those at risk of having their home repossessed include the Mortgage Rescue Scheme, where eligible families can either get an equity loan to reduce their mortgage, or sell their home and remain as tenants.

Is now a good time to re-mortgage?

There has been a considerable recovery in UK property prices since April which has left many homeowners in a stronger position to re-mortgage. 

Some remortgage experts believe that borrowers who are on their lender's standard variable rate (SVR) should think about remortgaging now – especially as the only plausible direction for bank base rate to move is up.

That's a return to the situation before the credit crunch, when conventional wisdom dictated that anyone on their lender's variable rate could get a better deal elsewhere and should remortgage. However, the banking crisis and record low bank base rates turned that on its head with most people better off sticking with their existing deals.

Data from the Council of Mortgage Lenders (CML), shows that remortgaging accounted for less than a third of all mortgage lending in October 2009, the lowest it has been since the CML started recording data in 2002.

The equity situation has improved over the past nine months because of house price rises, so much so that brokers and lenders believe most borrowers would now fall into a lower loan-to-value (LTV) bracket if they were to remortgage, increasing their ability to find a competitive rate.

But the partial recovery in property prices means that the borrower's equity would have improved by October 2009, as the LTV on the outstanding balance fell to 78.42 per cent, giving the homeowner a rise in equity of more than 4.5 per cent in six months.

The situation was even more marked for those who bought in September/October 2007, just before the crash in property prices. By then the average house price was £183,000, but a borrower with 20 per cent deposit would have seen their equity fall to just 7.14 per cent by April 2008. That would have risen to 12.16 per cent by October.

UK mortgage lending falls by 10 per cent

Mortgage lending in the UK in November was down 10% from the previous month and was at its lowest level since May.

Gross mortgage lending totalled £12bn during the month, down 14% on November 2008, the Council of Mortgage Lenders (CML) said.

Lending on home loans had been rising steadily during the autumn.

The group said the latest month-on-month fall could not be solely explained by seasonal factors.

It said that a modest seasonal decline between October and November was typical, but a 10% drop was larger than normal.

In the pre-Budget report, Chancellor Alistair Darling confirmed that the 1% stamp duty would be levied on properties sold for more than £125,000 from the end of the year, compared with £175,000 now.

The traditional highs and lows in the market depending on the time of year would be the dominant factor during 2010, he said.

However, he signalled little fresh cheer for first-time buyers, who still generally face having to find a large deposit before getting on the property ladder.

The Bank of England's Trends in Lending report, also published on Friday, revealed that major UK lenders expected a "muted recovery" in mortgage lending in 2010.

Consumers are likely to continue to show little appetite for other forms of borrowing - such as loans and credit cards - in 2010, the report said.

This reduction in unsecured consumer credit would be driven by an expected fall in the number of applications for personal loans, the High Street banks told the Bank of England.

Number of first time buyers at lowest in a year

The proportion of first time buyers purchasing UK property fell to its lowest level for a year during November.

Only 19pc of properties sold during the month went to first-time buyers, the lowest level since December 2008, when people buying their first home accounted for just 11pc of agreed sales. The figure was also less than half the recent peak in May, when first-time buyers accounted for 45pc of agreed sales, according to the National Association of Estate Agents (NAEA).

The group partly blamed the decline on the approaching end of the labour Government's stamp duty holiday on properties costing up to £175,000, and warned that first-time buyer numbers were likely to fall further in the future. The threshold at which the tax kicks in is due to revert to £125,000 at the end of this year.

But on a brighter note, the group also reported that the market had failed to suffer its traditional seasonal lull, with the number of sales agreed remaining unchanged at eight during November. There was also a slight rise in the number of homes for sale that estate agents had on their books, with the number rising from an average of 57 in October to 58.

However, there was a fall in the number of house hunters registered with estate agents, with the average agent having 279 potential buyers registered, down from 287 the previous month.

Bankers' bonuses boost price of UK luxury homes

Bankers’ bonuses have boosted the price of large UK country homes to almost the same level they were at the beginning of the year despite the recession.

Price rises among properties worth more than £1 million come despite repossessions among typical British households reaching one in every 1,000.

It is the first time since the autumn of 2007 that every region covered by the Knight Frank survey has seen a rise in the price of luxury manor houses, farmhouses and cottages.

The biggest gains were seen in the Home Counties, the traditional heartland of bankers’ luxury properties. Average prices rose by 3.1 per cent during the last three months, and ended the year 1.4 per cent higher than at the beginning of 2009.

Values across the whole of the country rose by 2.3 per cent in the final quarter of this year. It means buyers need £1.4 million to buy the average price country home.

Farmhouses have seen the largest increase during the last three months, rising 2.6 per cent to £1.1 million, while manor houses have risen by 1.8 per cent to £2.6 million. Cottages rose by an average value of 2.5 per cent to £450,000.

The north of England and Scotland are recovering more slowly with prices down 11 per cent on an annual basis, but up 0.5 per cent in the last three months.

Knight Frank said the rises were a due to a lack of supply and an increase in the number of overseas buyers returning to the housing market, looking for properties of more than £5 million.

Housing- stamp duty blow to first time buyers

The labour Chancellor's decision not to extend the stamp duty holiday on lower-value homes was a "poke in the eye" for first-time buyers, analysts warned yesterday, adding that the move threatened the fragile recovery in the housing industry.

The Chancellor told the House of Commons that the break from stamp duty, under which anyone buying a property for £175,000 or less avoids paying the 1 per cent tax, would end on 1 January. The threshold has been in place since September 2008 when Mr Darling increased it from £125,000. The threshold will go back to £125,000 at the start of next year.

Research has indicated a steady improvement in house prices in the last six months. Halifax's House Price Index, published on Tuesday, showed a bigger-than-expected 1.4 per cent jump in November. However, market analysts have suggested that the rise has been because of restricted supply, rather than a genuine thawing of the market. Most argue that higher unemployment could force prices back down in 2010.

While the removal of the stamp duty holiday will have little impact in London, where average prices are well above the £125,000 threshold, other areas of the country will be hit hard.

Housebuilder Barratt Developments said that it would continue paying the stamp duty on all its homes up to the value of £250,000.

Mortgage applications 43pc up on last year

The number of people applying for a mortgage jumped by 43pc in the year to November, according to one mortgage broker.

Short term mortgages generated the highest number of applications with nearly nine out of 10 customers opting for two or three-year products, Countrywide Mortgage Services said.

The uncertainty over the future of Bank Rate, coupled with competitive pricing from lenders, has meant applications for two-year fixed-rate and tracker mortgages increased by 10pc in the month of November alone, the broker said. 

Tracker mortgages were returning to favour, Countrywide said – applications increased for the fourth consecutive month by 8pc from October to November.

Remortgage activity also increased, with 5pc more applications in November than in the previous month.

Lenders are lowering their rates in a bid to entice last minute customers before the year end. This means affordable deals for homebuyers and those looking to remortgage.

There is still time to avoid stamp duty tax rise

Home buyers were dealt a blow by the Chancellor when he confirmed that the stamp duty "holiday", under which there is no tax to pay on properties worth up to £175,000, would be scrapped.

From January 1, the stamp duty threshold will return to its previous level of £125,000. Properties costing more than this will be subject to a charge of 1pc.

The tax is payable on the whole price, not just the part of it above the threshold, so the stamp duty on a home costing £125,000 will be £1,250.

The rate of duty rises to 3pc of the entire price at £250,000 and to 4pc of the whole value at £500,000. These higher thresholds have remained unchanged.

The holiday, originally intended to last for a year, was introduced in September 2008 in an attempt to support the housing market during the economic crisis. In his Budget in April, Alistair Darling extended the moratorium to December 31 this year. But he has defied calls from the property industry to prolong it further.

Anyone now in the process of buying a home worth between £125,000 and £175,000 still has a chance of avoiding stamp duty – but only if they can complete the transaction this month.

So if this day falls next year, you will be liable to pay the duty. Someone buying a property worth £175,000 could save £1,750 by finishing the deal this month.

There are steps you can take to try to ensure that you complete this year. First, make sure your own mortgage offer is in place.

Mr Darling also said that the generous rate of interest used to calculate a state benefit that helps meet mortgage payments would be maintained.

Support for Mortgage Interest, which helps meet mortgage interest payments when borrowers have experienced a fall in income, is calculated at a flat rate of 6.08pc irrespective of the rate that the borrower actually pays. Mr Darling said this interest rate would be maintained for a further six months, benefiting about 220,000 home owners.

Mortgage lending at two year high

The number of mortgages advanced to people buying a UK home reached its highest level since December 2007 during October, figures showed today.

Around 55,300 loans were taken out for house purchase during the month, 43pc more than a year earlier and more than double the low of 23,000 seen in January this year, according to the Council of Mortgage Lenders.

First-time buyer numbers also held steady during the month, with 19,700 people buying their first home with a mortgage in October, a third more than a year earlier.

But for the ninth month in a row, first-time buyers put down average deposits of 25pc.

The average income multiple they were lent also fell back slightly to 3.08 times their pay, after rising in recent months, in what had been interpreted as a sign that lenders were loosening their lending criteria.

Despite the pick-up in lending for house purchase, the remortgage market remained subdued during October.

Only 33,000 people switched to a new deal during the month, 52pc down on the level seen in October 2008 and the second lowest figure since the CML began to collect data in this format in 2002.

Record low interest rates have meant many people are better off staying on their lender's standard variable rate when their current deal comes to an end, while house price falls have also cut the equity homeowners have in their properties, reducing choice in the current mortgage market.

Fixed-rate mortgages, which currently appear expensive alongside tracker deals, are continuing to fall in popularity, as borrowers expect interest rates to remain low for some time.

Nationalised bank cuts borrow back facility on flexible mortgages

The Royal Bank of Scotland has dealt a blow to its flexible mortgage customers by cutting the amount they are able to "borrow back" from their home loans- just before Christmas.

Flexible mortgages effectively give borrowers a loan facility that they can use at will and on which they pay interest at the mortgage rate, which would be much cheaper than other forms of borrowing. 

Customers often make overpayments on their mortgages in the knowledge that they can have access to the money if they need it.

RBS's decision follows a move by Northern Rock, another state-backed bank, in April, when it introduced stricter affordability criteria when deciding whether to allow flexible mortgage customers to "borrow back".

Customers of RBS who have a mortgage called Foundations, which is no longer available to new borrowers, are affected by the bank's decision. Many have received letters telling them that the amount available to borrow has been cut.

A spokesman for RBS said: "As part of our ongoing policy of annually reviewing Foundations facility usage, we have reduced some of our customers' credit limits. This is based on the customer's level of unused facility over the past 12 months. Customers are assessed on an individual basis and in line with their terms and conditions."

According to the terms and conditions of the Foundations mortgage, RBS "reserves the right to increase or decrease the amount of total credit at any time if we reasonably think this is necessary”.

UK house prices rise more than expected claims Halifax

UK house prices rose more than expected last month leading to the fifth successive rise since the summer.

The 1.4 per cent rise in values during November means house prices have jumped more than £13,000 since their low in April this year to £167,600, according to the latest house price index from Halifax, Britain’s biggest mortgage lender.

Prices were volatile at the beginning of the year, switching between monthly rises and falls of 2 per cent amid uncertainty in the economy.

But an increase in demand for property, a shortage of supply and a fall in some mortgage rates has helped to produce the latest run of price increases.

A difference in the samples used in the research means the Halifax rise was much higher than the 0.5 per cent rise in house prices reported by Nationwide earlier this month.

Deamnd grows for more cash in UK cash machines

The Bank of England has said it will urge banks to increase the availability of £5 notes in their cash machines.

It will also ask shops to give out more fivers in change to meet demand from consumers for the note.

While all UK cash machines must have the capacity to hold all denominations of notes, demand and efficiency means most give £10 and £20 notes only.

In the past two years the value of £5 notes in supply has increased from about £1bn to £1.3bn.

However, owing to the regularity of use, a £5 note only lasts in circulation for a year before being too damaged to use. The lifespan of a £50 note is usually five years or more.

The Bank had asked HSBC and supermarket Sainsbury's to issue more £5 notes, and feedback from HSBC showed the case for stocking some cash machines with fivers was stronger than previously envisaged, he said.

HSBC had stocked 100 of its cash machines in the Midlands and south west of England with more fivers than usual.

Meanwhile, Sainsbury's reported that by using more £5 notes it had been able to speed up payment processing at the checkout

The move was welcomed by some in service industries, including Chris Haines, a London taxi driver, who said the shortage of fivers had become a real problem.

"A lot of London cabbies have to buy a cup of tea or buy a sandwich to get enough fivers in their hands to give out as change," he said.

Find your cheapest mortgage

Since October the winds of change have swept through the mortgage market with a rash of new deals being introduced each week. 

Rates have dropped - the average two-year fix for example has fallen under 5% for the first time since June, and there is now a good choice of tracker mortgages below 3%.

Though, despite significant rate cuts in October and early November, there have actually been a few tweaks upwards in recent weeks, and some best buys have been pulled - albeit with rather less fanfare from lenders than the cuts! Still, mortgages are more competitive overall now than they were two months ago, and the number of products has also risen.

There has also been a rise in the number of mortgages available to those who have a more modest deposit to put down, for example those with just 15% or even 10%. These hard-pressed borrowers have really struggled to find competitive mortgage finance in the last 18 months, but the number of products requiring a minimum of 15% upfront has risen from 169 to 231 since March, and those requiring a minimum of 10% have risen from 89 to 105.

Lenders are willing to offer more products to this sector because of the continuing trend of house price stability. They offer you a mortgage at a certain price on two counts: firstly your ability to pay it back taking into consideration your income, outgoings, and credit history. And secondly, the asset they are securing the mortgage against - are you buying for a fair price, what's likely to happen to the value and how big is their safety net - i.e. your deposit - if you default?

If prices are dropping, as they were in 2008, large deposits are required because they give lenders more chance of recouping their money if they have to repossess your home and sell it. If prices are stable or rising then in theory they should be able to accept a smaller deposit, while still being confident that their asset's value will cover the mortgage debt should you default on the loan.

But while there are more products available to those with a small deposit, the truth is there is still a gaping divide between the haves and the have-nots.    

Indeed according to recent research first-time buyers who can't raise the average 25% deposit face paying up to 50% more in their monthly repayments than those who can stump up the cash. It states that average rates for those who can put down 25% upfront are 3.14% but shoot to 4.68% for those with 20%, and rocket to 7.01% for those with just 10% upfront.

The research says that on a £150,000 loan the average borrower with a 75% loan-to-value (LTV) deal will pay £729 a month on a repayment basis. But at 80% that will rise to £858 a month and then to £1,073 a month for a 90% deal - nearly 50% more than the 75% LTV mortgage.

That's a massive price to pay for not having a large deposit, even if you have an otherwise clean bill of financial health!

Those who have a significant deposit to put down are still the borrowers that lenders really want since this type of business is low risk. Statistics show that those who can afford to put more down upfront have less chance of falling into arrears as well as less chance of falling into negative equity.

Amassing 25% may get you access to a wide range of competitive mortgages but even that is not always enough to get the best deals. A new 30% deposit tier has emerged in recent months and many lenders have their cheapest rates reserved for those who only need to borrow up to 70% of the property's value. This is of course a massive amount of money on top of all the other costs of buying a property - £48,600 on the average £162,000 property according to Nationwide.

At the other end of the scale are those who can only manage to find 10% of their property's value as a deposit. This is still a significant sum of course and it's the minimum that any new borrower will need in order to get a mortgage (remortgagors may find their own lender more accommodating).

While deals are still limited for borrowers with a 10% deposit, there are increasingly mortgages offered to those with 15% or 20% upfront. So if you don't have the magic 25% deposit but you do have a bit more than 10% to put down, a few more options will become open to you at least.

Of course, it may be worth continuing to save rather than buying now if you want to access more competitive deals, especially if you know prices in the area you want to buy are either still falling or are static. Only you can make that judgment though because, let's face it, most people buy property because it's the right time in their life to do so, not just because it's the right time financially. 

But if you are happy to wait in order to access cheaper mortgage rates and therefore lower monthly repayments, it could be worthwhile.