The figures suggest that this year’s modest revival in sales has ended and that mortgage [...]]]> The number of new mortgages approved for home buyers, but not yet lent, fell in September for the first time in five months.The Bank of England said approvals for home buyers were 50,967 in September, down 1,380 or 3% from August.

The figures suggest that this year’s modest revival in sales has ended and that mortgage related sales may fall again in the coming months.

In September, completed sales fell for the second month in a row, to 72,000.

The figures from HM Revenue & Customs (HMRC) showed that sales last month had fallen by 11,000 from the July peak of 83,000.

Prices are likely to trend down over the coming months in the face of very low consumer confidence amid persistently weak economic activity, markedly rising unemployment and muted earnings growth.

The committee cited a sharp deterioration in the international outlook as a key factor.

The vote [...]]]> The Bank of England’s Monetary Policy Committee (MPC) was unanimous in voting for another £75 billion of quantitative easing (QE) to support the weak UK economy.Minutes from the MPC’s meeting earlier show members considered injecting between £50 billion and £100 billion.

The committee cited a sharp deterioration in the international outlook as a key factor.

The vote for more QE marked a sharp turnaround in the members’ positions.

At the previous meeting in September only one MPC member, Adam Posen, had pushed for more QE.

All members voted to keep interest rates unchanged at their record low of 0.5%, despite inflation running well above the 2% target rate.

Figures released on Tuesday showed consumer price inflation rose to 5.2% last month.

The MPC’s minutes showed that the committee was expecting inflation to be above 5% in the near term, boosted by increases in energy prices.

But its view is that domestically generated inflation had remained contained and would fall back next year.

In a speech on Tuesday evening, the governor of the Bank of England, Mervyn King, said inflation would fall sharply in 2012 when the January 2011 rise in VAT dropped out of the data and the effect of past oil price rises started to fade.

The MPC minutes echoed this, saying that there was “little further upside news” on the outlook for inflation. In fact, the Bank was more concerned that without extra QE, that could fall below target.

They also pointed out that financial markets were trading on the expectation that UK and US interest rates would remain unchanged for two years.

The MPC said it did not expect the impact of this round of QE to be materially different to the £200 billion of purchases made between March 2009 and February 2010.

A Bank report into the effect of the first round of QE found the stimulus measure helped gross domestic product increase by about 1.5% to 2%

It was the third fall in the past four months and means the annual rate of house price decline has changed little [...]]]> House prices in England and Wales continue to stagnate, according to the latest figures from the Land Registry.Average prices fell by 0.3% in August to £162,347, leaving them 2.6% lower than a year ago.

It was the third fall in the past four months and means the annual rate of house price decline has changed little during that time.

With small fluctuations each month, house prices in England and Wales have hardly changed since the end of 2010.

The Land Registry said that prices in London continued to diverge strongly from the rest of the country.

They rose by another 0.5% last month and are now 2.1% higher than they were a year ago.

This makes London the only region to experience a rise in prices in the past year, with property prices now averaging £348,686.

By contrast, in that time prices have fallen by 7.8% in the North East of England and by 5.5% in Wales.

The continued stagnation of prices and sales has been mainly due to the rationing of mortgage funds by banks and building societies, which has been in force since the height of the banking crisis in 2008.

A report from the Bank of England – its latest quarterly Credit Conditions Survey – has found that lenders continue to find it difficult to raise funds in the financial markets, which they can then lend to customers.

Lenders told the Bank that there had been more demand for mortgages in the third quarter of this year.

And they expected to be able to offer a little more money to would-be borrowers in the coming months.

But the Bank warned that things might take a turn for the worse.

“In both the household and corporate surveys, lenders pointed to adverse wholesale funding conditions as a key factor which might constrain future lending,” the Bank said.

“More recent discussions with some of the major lenders suggested that although these factors had not yet led to reduced credit availability, a period of sustained tight funding conditions could act to constrain their ability to extend loans going forward,” it added.

New mortgages approved for house purchase, but not yet lent, rose to 45,940 in May from 45,447 in April.

Despite the slight increase, May’s approval figure was lower than [...]]]> Mortgage approvals are still subdued new figures from the Bank of England suggest.Which means that the UK property market is set to remain subdued in the forthcoming months.

New mortgages approved for house purchase, but not yet lent, rose to 45,940 in May from 45,447 in April.

Despite the slight increase, May’s approval figure was lower than the average for the previous six months.

The data suggests that house sales, which have been running at half their pre-2007 levels, will also stay low in the coming months.

Meanwhile, building societies have complained again that National Savings & Investments (NS&I) is being too agressive in trying to attract savers’ money.

NS&I recently relaunched its inflation-proofed investment policies.

The Building Societies’ Association (BSA) said this had contributed to another outflow of funds from its members in May, of £613m.

Households have now [...]]]> UK Homeowners added £5.8 billion into their properties in the first quarter of 2011- marking three years in which they have injected equity, according to the Bank of England.The Bank’s economists think that while some people may be trying to cut debt, the shift to equity injections more likely reflects falling house sales.

Households have now added £63.6 billion to their housing equity – the share of their housing wealth that does not have lending secured on it – since March 2008.

The latest net injection followed a record £7.1 billion the previous quarter.

In contrast, the housing boom years saw a trend for equity withdrawal, as many cashed in on the value of their property by using at as security to borrow and spend.

There is concern that, just as withdrawals supported spending, injections – such as lump sum payments on the mortgage principal – could have a reverse effect.

The shift has often been attributed to households’ desire to shore up their finances.

However, Bank economists think that, while some people may be trying to cut debt, the shift more likely reflects falling house sales.

The overall effect of a housing chain of buyers and sellers would normally be an equity withdrawal, since the equity injected by a first-time buyer is typically “dwarfed” by the withdrawal made by the person at the end of the chain.

“Fewer homeowners trading down and selling a property without buying another mean that a large source of equity withdrawal has disappeared,” a Bank report noted.

Analysts said the data may have been affected by the number of public holidays in April.

However, the [...]]]> The number of mortgages approved for house purchases hit a new low in April Bank of England official figures show.At just 45,166, the number of new approvals was the lowest April figure since the Bank’s records began in 1992.

Analysts said the data may have been affected by the number of public holidays in April.

However, the figures suggest that the UK property market will remain subdued in the coming months, with a low level of sales and falling prices.

The number of approvals was 4% lower than in March and 9% down on April last year.

The UK’s mutual lenders, mainly building societies, reported that their own mortgage lending, despite falling between March and April, was still noticeably higher than a year ago.

But they were cautious about the outlook for the property market.

Separately, the investment bank Morgan Stanley predicted that UK house prices would continue to fall and drop by 10% between the end of 2010 and the end of 2012.

This would lead to higher losses on mortgages, with Lloyds bank in particular exposed to the rising negative equity of its borrowers.

This is despite the [...]]]> UK interest rates have been kept at the record low of 0.5% again by the Bank of England’s Monetary Policy Committee.
Data this week pointed to a slowdown in growth in manufacturing, construction and services, which economists took as a sign that the Bank would not change rates with the recovery still weak.

This is despite the fact that inflation is currently at 4%, double the Bank’s target rate.

The MPC did not reveal any new quantitative easing measures either.

The Bank has faced a difficult choice – either keep interest rates low to try to aid the economic recovery, or raise them to try to cool inflation.

Raising interest rates takes demand out of the economy and slows down inflation, but it also increases the cost of borrowing, and there are concerns this may tip the UK back into recession.

The economy shrank by 0.5% at the end of last year, but returned to growth in the first three months of 2011, expanding by 0.5%.

Although the Bank was widely expected to leave rates unchanged, some members of the committee have been pushing for an increase.

Millions of homeowners will be [...]]]> Mortgage interest rates have been held at a record low for 25 months now- should you fix your rate or stick on a variable rate?
With the Bank of England’s Monetary Policy Committee voting on interest rates many think that it is a question of when, not if, rates will go up.

Millions of homeowners will be affected when they do change- and they have to decide if switching to a fixed rate deal would be a better option.

About 69% of people with mortgages are on variable rates, according to industry figures.

That means many of them, who are enjoying unusually low monthly payments now, could be affected immediately when interest rates do rise.

With predictions that the base rate will be at 2% by the end of 2012, maybe rising to 3% after that.

The biggest benefit of switching to a fixed-rate mortgage is that it gives you peace of mind. You know exactly how much you need to pay each month, and so you can budget accordingly.

However it might not be the cheapest option.

Many companies charge expensive fees for swapping from one mortgage deal to another and the new rates are not always particularly attractive.

So the fixed-rate deal would not save them any money until base rate had gone up several times, to 1.75%.

Home-owners could in fact find it difficult to switch to cheap fixed-rate deals.

The best ones are only available for people who can pay big deposits, or have large chunks of equity in their homes.

Here are some steps you can take to boost your chances of getting the best possible rates.

• The first thing to do is overpay. Reduce the amount you owe as much as possible.

• Check your credit history, make sure there are no mistakes on there.

• Pay any debt you have. So, if you’ve got any debts on your credit card, pay that down first.

They returned £7 billion in the final three months of the year, [...]]]> UK homeowners paid off more of their mortgage borrowings last year than they had done in any other single year official Bank of England figures show.
Mortgage borrowers paid back more than £24 billion to lenders in 2010, the highest since records began in 1970.

They returned £7 billion in the final three months of the year, a record amount during any quarter since the Bank started collecting the figures.

The figures also include money paid as deposits by homebuyers.

Lenders demanding higher deposits and rationing home loans would also increase the financial stake that homeowners have in their properties.

In the boom, people used extra mortgage borrowing to cover other spending. From July 1998 to March 2008 homeowners borrowed an extra £328bn against the rising value of their homes

This is known as housing equity withdrawal. Homeowners cashed in on the increasing value of their homes to buy cars and holidays.

Now the opposite is happening, as families try to reduce their debts and lenders demand higher mortgage deposits.

Borrowers have also taken advantage of low interest rates to pay back more of their home loans while mortgage costs are low.

There has been an injection of housing equity for 11 quarters in a row, the figures show.

Homeowners have now collectively injected £57.4 billion into their housing equity since the second quarter of 2008, when the trend switched from withdrawal.

Lenders demanding higher deposits has also increased first-time buyers’ financial stake in their homes.

The latest figures show that households spent the equivalent of 2.7% of their post-tax income on reducing their mortgages.

During the boom times, equity withdrawal was providing homeowners with the equivalent of a 9% post-tax boost to their incomes.

Mortgage rationing through demands for higher deposits has contributed to the trend in equity injection.

He said: “Why do banks in [...]]]> Banks are trying to maximise short-term profit at the expense of customers, the Bank of England governor has said.
Mr King said that, over the past two decades, too many people in financial services had thought “if it’s possible to make money out of gullible or unsuspecting customers, that’s perfectly acceptable”.

He said: “Why do banks in general want to pay bonuses? It’s because they live in a ‘too big to fail’ world in which the state will bail them out on the downside.

“We’ve not yet solved the ‘too big to fail’ or, as I prefer to call it, the ‘too important to fail’ problem. The concept of being too important to fail should have no place in a market economy.”

He also said there was “too much weight put on the importance and value of takeovers” and that “it doesn’t make sense to destroy a company with reputation” in the hunt for short-term profits.

He went on to draw a contrast between manufacturing companies, which he said largely cared about their workforces, customers and products, and the banks.

“There’s a different attitude towards customers. Small and medium firms really notice this: they miss the people they know,” he said.

“The majority of lenders have increased rates since [...]]]> Fixed rate mortgages were at their most expensive for six months at the start of February, according to research by financial information service Moneyfacts.
It said that lenders were finding that the cost of raising money themselves had risen in recent months, and this was being forwarded to customers.

“The majority of lenders have increased rates since the start of the year, with some mortgage deals seeing rate rises of more than 0.5%,” said Michelle Slade of Moneyfacts.

“On a mortgage of £150,000, a 0.5% increase in rate would add £42 per month to a borrower’s repayments.”

She said this rise could continue in the coming months, although it could mean better news for savers. Lenders would want to attract savers’ cash and so could start to offer better rates on savings accounts.

The Bank of England is meeting this week to decide whether to alter the Bank rate from its current record low of 0.5% as debate grows about rising UK inflation rates.

Quantitative Easing (QE) is the Bank’s policy of putting new money into the financial system to try [...]]]> Last week the Bank of England’s Monetary Policy Committee (MPC) voted to keep interest rates on hold with no increase in Quantitative Easing.But re-mortgager asks with rising unemployment and government cutbacks- should more be done to stimulate the economy?

Quantitative Easing (QE) is the Bank’s policy of putting new money into the financial system to try to stimulate the economy.

Mr Posen- a member of the MPC wants an extra £50bn to be added to QE programme.

Economists have warned that while putting up interest rates may help reduce inflation, it would also restrict the spending power of homeowners with tracker mortgages and people repaying other debts – further endangering the recovery.

Consumers’ spending power is already being squeezed, because pay packets are not keeping up with inflation – with a report by Vocalink on Thursday suggesting that the growth of take-home pay had fallen sharply in the past three months.

Consumers have also been faced with record petrol prices in recent weeks, and VAT rose from 17.5% to 20% on 4 January pushing up the cost of many goods and services.

Recent data has suggested that manufacturing is the only section of the UK economy to be showing signs of strength.

Official figures released on Thursday showed that growth in car production and food processing had helped manufacturing increase by 0.6% in November – a little faster than expected. However industrial output was slower than predicted, according to the Office for National Statistics.

Meanwhile, business group the CBI said the Bank would come under pressure to increase rates later this year “as its anti-inflation credibility comes under greater pressure”.

At the MPC’s December, November and October meetings there was [...]]]> The Bank of England’s Monetary Policy Committee (MPC) has kept UK interest rates on hold at 0.5%, and unveiled no new quantitative easing (QE) measures.
Both decisions were expected, but it will not be clear whether they were unanimous until the minutes of the meeting are released.

At the MPC’s December, November and October meetings there was a three way split among its nine members.

In those meetings, one member voted for a rate rise and conversely another for more QE.

However, most MPC members continue to favour keeping rates on hold to aid the UK’s economic recovery.

The most recent official figures showed that the economy grew by 0.7% in the July-to-September period, but a number of independent estimates have since said that the rate of expansion has slowed.

However, the latest official data showed that Consumer Prices Index (CPI) inflation rose to 3.3% in November, well above the target rate of 2%, led by food and furniture prices.

So the Bank faces a difficult choice – either keep interest rates low to try to aid the economic recovery, or raise them to try to cool inflation.

The Bank’s key interest rate has been at 0.5% since March 2009.

In each of the last three monthly MPC meetings, Andrew Sentance has called for rates to rise in order to cool inflation, while his colleague Adam Posen has voted for QE to be expanded.

The CPI inflation rate has now remained above the government’s 2% target by one percentage point or more for 12 months. Premature interest rate increases, while fiscal policy is still being tightened, risk derailing the recover

Consumers’ repayments of unsecured debts outstripped new borrowing.

The figures showed that £121m more was paid back on credit [...]]]> Approvals for home loans – notably for people remortgaging their properties – picked up slightly in November official Bank of England figures show.
Approvals for remortgaging were up by nearly 4,000 on the previous month to 34,262 in November.

Consumers’ repayments of unsecured debts outstripped new borrowing.

The figures showed that £121m more was paid back on credit cards, overdrafts and personal loans than was taken out in new borrowing.

The slight rise in mortgage approvals for house purchases still left the figure below the average of the previous six months – of 48,145.

This showed that mortgage lending remained muted at the end of 2010.

Last month, the British Bankers’ Association (BBA) said that home loan approvals for house purchases by the major UK banks had fallen to a 20-month low in November.

The latest Bank of England figures provide a more comprehensive picture across the industry.

The sets of figures from the BBA and the Bank of England both showed that remortgaging had picked up as borrowers replaced maturing fixed-rate deals.

Some lenders have suggested this could also show that some borrowers were expecting interest rates to rise.

One has been the Bank of England’s determination to keep interest rates as low as possible, for as long as possible.

And the other has been the lower than expected rise in [...]]]> With unemployment growing and government cutbacks in the pipeline will UK house prices plummet?Maybe not- with two factors stopping sales and prices falling more sharply.

One has been the Bank of England’s determination to keep interest rates as low as possible, for as long as possible.

And the other has been the lower than expected rise in unemployment.

The recession may be formally over, but big government spending cuts are in the pipeline, with the jobless count likely to rise significantly.

Many economists think that interest rates will stay as they are through 2011, but one of the biggest lenders, the Halifax, reckons they may in fact rise by the end of the year.

It is forecasting a 0.25% increase in the Bank of England’s bank rate by the time 2011 is over, if the economy picks up a bit more.

Will this cause fear and panic among borrowers accustomed to the historically low rates they have enjoyed over the past 18 months or so?

Re-Mortgager thinks not, whilst interest rates may be more expensive, compared to inflation- which may rise top 5%- the overall costs will be lower.

At the MPC’s November and October meetings, there was a [...]]]> The Bank of England’s Monetary Policy Committee (MPC) has kept UK interest rates on hold at 0.5%, and unveiled no new quantitative easing (QE) measures.
Both decisions were expected, but it will not be clear whether they were unanimous until the minutes of the meeting are released.

At the MPC’s November and October meetings, there was a three-way split among its nine members.

In those meetings, one member voted for a rate rise, another for more QE.

However, most MPC members continue to favour keeping rates on hold to aid the UK’s economic recovery.

This comes ahead of VAT rising to 20% from 17.5% on 1 January, and the possible negative economic impact of the government’s spending cuts.

Since June, MPC member Andrew Sentance has been voting in favour of raising interest rates from 0.5% to 0.75%.

Meanwhile, at the MPC’s meetings in October and November, Adam Posen voted in favour of £50bn of extra QE.

QE involves the Bank printing new money into the financial system in an attempt to stimulate the economy and inflation.

Recent official UK economic data showed that manufacturing output grew by 0.6% in October, the fastest pace since March with the overall UK economy growing by 0.8% between July and September.

He said the “great majority” of Lloyds’ customers were satisfied, and [...]]]> The UK’s mortgage banking sector is already “enormously competitive” and banks do not need breaking up, the boss of Lloyds Banking Group has pleaded.
Eric Daniels, Lloyds’ chief executive, added in his testimony before the Treasury Committee, that “concentration does not lead to lack of competition”.

He said the “great majority” of Lloyds’ customers were satisfied, and denied that banks overcharged customers.

The Treasury Committee is investigating competition in the banking sector.

Mr Daniels has led Lloyds Banking Group since January 2009 when it was established following the merger of Lloyds TSB and HBOS.

The government currently has a 40% stake in Lloyds, as a consequence of the bank requiring a bail-out, which took place at the start of 2009.

Responding to criticism from members of the Treasury Committee that four banks – Lloyds, Barclays, HSBC and RBS – have a 73% share of the UK current account market, Mr Daniels said this compared well with the international picture.

Mr Daniels added that while the US was often given as an example of a country with a large number of different banking providers, he said this was not the case on a state-by-state basis.

When questioned on the fact that Lloyds charges up to 19.3% for unauthorised overdrafts, Mr Daniels said this “did not provide a particularly high return”.

He said this was because the bank had to cover the cost of raising its own funds, covering losses caused by some overdrafts, and assorted administration fees.

Mr Daniels also denied that it was difficult for customers to switch their bank account provider.

The study by the Treasury Committee comes as the Independent Commission on Banking is continuing to explore the idea of reforming the banking sector, including the possibility of breaking up banks into their retail and investment banking arms to reduce risk.

Some 47,185 mortgages were approved by banks and building societies in October, an eight month low.

This is down [...]]]> The UK housing market seems set to remain in the doldrums for some months yet, with the latest Bank of England figures on home loans showing few signs of life. New statistics on consumer confidence are alos falling.

Some 47,185 mortgages were approved by banks and building societies in October, an eight month low.

This is down from 47,639 in September and the recent peak of 59,215 reached in November last year.

Analysts say this is “highly likely” to maintain the downward pressure on prices that has emerged recently.

Putting this is context- mortgage approvals at the rate of 70,000 a month are regarded as consistent with a healthy market.

Despite the weakness in approval numbers, the value of lending rose to £1bn, from £200m the month before.

However such monthly figures are volatile.

The Bank’s favoured measure of money supply barely shifted – just 0.1 per cent up on the month.