This increase follows a rise in the rate at which banks lend to each other – Libor – which has been [...]]]> Mortgage interest rates could start to rise again as a result of the turmoil in the eurozone brokers are warning.Some lenders, including Woolwich, Halifax and Santander, have pushed up their tracker rates for new borrowers.

This increase follows a rise in the rate at which banks lend to each other – Libor – which has been inching higher amid worries over the eurozone crisis.

The increase in Libor indicates that banks are less confident about lending to each other.

Although the average tracker rate has hardly altered since the summer, there are straws in the wind which suggest that the direction could be shifting from down to up.

On Wednesday, the Chelsea Building Society put up the cost of some of its most competitive tracker mortgages by 0.2%.

In recent weeks, the Halifax raised its two-year tracker by 0.15% to 3.34%, while Woolwich increased the rate its trackers revert to after two years by 0.4%.

Santander pushed up its Abbey-branded lifetime tracker in two moves from 2.95% to 3.09%. Nationwide and ING have also raised some rates as well.

One indication of the pressure on lenders comes from Libor – the London Interbank Offered Rate – the short-term interest rate at which banks will provide funds to each other.

While some lenders draw mostly on their customers’ savings to fund mortgages, others have to borrow large amounts on the money markets, hence the importance of rates such as Libor.

Since August, three month sterling Libor has risen from 0.83% to 1%.

This is a significant change compared with the Bank of England’s key rate, which has been stuck firmly at 0.5% since March 2009. On Thursday, the Bank said it would keep rates on hold again following the latest meeting of the Monetary Policy Committee.

The figures were [...]]]> Average private sector housing rents in England and Wales rose by another 0.7% last month, to hit a new monthly high of £718, a report has said.It means rents have risen by 4.3% in the past 12 months, with tenants paying an average £29 a month more than they were a year ago.

The figures were compiled by LSL Property Services, which owns a number of estate agents and letting agencies.

LSL said rents had risen fastest in the South East and East Midlands.

David Newnes of LSL said rents were rising everywhere, due to high demand from people who were still unable to buy a home, and were being forced to rent instead.

“In many cases, buying a home is now cheaper on a monthly basis – provided renters can get past the stumbling block of the substantial deposit requirements,” said Mr Newnes.

“For the majority, saving a £25,000 deposit is a Herculean task as inflation and rents climb – and most would-be buyers are biting the bullet and prolonging their stay in increasingly costly rental accommodation.

“As things stand, we won’t see competition amongst prospective tenants diminish without a substantial expansion in the supply of rental properties available on the market,” he warned.

Earlier this month, the housing charity Shelter said private rents had become unaffordable in 55% of council areas in England.

It said homes in these areas cost more than 35% of median local take home pay.

The CML has predicted that a total of [...]]]> Low interest rates have kept the level of UK mortgage arrears and home repossessions steady according to the Council of Mortgage Lenders (CML).A total of 9,000 homes were repossessed in the second quarter of the year – 100 fewer than in the previous three months, the CML said.

The CML has predicted that a total of 40,000 people will lose their homes this year, up from 36,300 in 2010.

It said its view remained unchanged despite turbulence in the markets.

The Bank of England has held its Bank rate at 0.5% – a record low – for more than two years.

This has assisted mortgage holders who may have faced difficulty in keeping up with their monthly payments otherwise during a period out of work or as they face other financial pressures, such as rising energy bills.

The total number of mortgages in arrears was broadly unchanged in the second quarter of the year, the CML figures show.

The number of mortgages in arrears of between 1.5% and 2.5% of the outstanding balance edged up from 77,800 in the first three months of the year to 78,500 in the second quarter.

Those in arrears of more than 2.5% of the balance declined from 166,700 to 164,500 over the same period.

The number of householders who have lost their homes owing to mortgage payment difficulties was 7% lower in the first half of 2011 compared with the first half of 2010, and 28% down on the first half of 2009.

“Mortgage repayment problems have stabilised against a current backdrop of stable employment and low interest rates,” said CML director general Paul Smee.

The CML has predicted that the number of repossessed homes will rise to 45,000 in 2012.

“Despite current uncertainty in financial markets, we see no need to revise our forecasts. Anyone with debt worries should take advice and speak to their lender at the earliest opportunity, as most temporary financial problems can be resolved,” Mr Smee said.

Debt advisers said the continued willingness by banks to show leniency to people struggling to meet their mortgage payments had helped to keep the numbers of repossessions down.

And in June, Bank of England governor Sir Mervyn King said that when there was an increase in the Bank rate, there would be a delay in it feeding through to other borrowing costs.

Housing Minister Grant Shapps said: “The worst thing anyone struggling to pay their mortgage can do is bury their heads in the sand hoping the problem will go away. No one in financial difficulty should be embarrassed to seek help if they need it.”

And those specifically to first time buyers reached a 10 month high, up 24% from May to 18,100.

Although the level of [...]]]> Mortgage lending jumped in June- allbeit from a very low level, the Council of Mortgage Lenders (CML) has said.The total number of new home loans to house buyers rose by 22% from May, to 46,700.

And those specifically to first time buyers reached a 10 month high, up 24% from May to 18,100.

Although the level of lending was still significantly lower than a year ago, the CML said the latest figures were encouraging.

“Recent increases in Bank of England approvals figures also show that more completions are expected in July, so the more encouraging numbers may persist for a while,” said Paul Smee, director-general of the CML.

The number of new mortgages arranged in June was back to the level recorded last October.

It was also 63% higher than in January this year, when newly arranged loans had been at their lowest monthly level for nearly two years.

Despite more first time buyers coming on the scene, they still had to put down an average deposit of 20% of the value of the home they were buying.

The CML said although this was down from the high point of 25% recorded during 2009, it was still much higher than the “historic norm” of 10%.

Potential buyers are also being helped by a fall in the interest being charged on new fixed rate deals.

The financial information service Moneyfacts said the average five-year fixed-rate deal was now at 4.99% – and that this was the first time since 1988 that such offers had been below 5%.

This has been due to the expectation that the Bank of England is unlikely to raise its bank rate above [...]]]> Interest rates on new mortgage deals have fallen to their lowest level for 23 years since 1988, according to new research.
This is due to lenders finding it cheaper to raise funds in the wholesale financial markets.

This has been due to the expectation that the Bank of England is unlikely to raise its bank rate above 0.5% anytime soon.

However most mortgage deals still require buyers to put down at least a 20% deposit.

The intra bank swaps rate determines the cost of borrowing for banks and building societies when they want to borrow longer term money in the financial markets at a fixed rate to lend onto their customers.

The market provides an indication of when banks expect the Bank of England to raise short term interest rates.

Until recently, a rate rise had been expected as soon as September.

But following a set of weak economic data, as well as the decision by a new member of the Bank’s rate setting committee to vote for no change in rates, markets now do not expect a rate rise until well into next year.

According to Moneyfacts, the average two-year fixed rate deal is now at 4.32%, three year fixed deals now average 4.92%, five-year fixes are at 5.29% and the average two-year tracker deal is now at 3.37%.

More than 40% of mortgage borrowers are now on standard variable rates- which generally start after cheap introductory mortgage deals [...]]]> The consumer group Which? has accused banks and building societies of raising interest rates on homeowners who have standard variable rate mortgages.
Which? warns that thousands will be pushed into financial difficulty when interest rates go up.

More than 40% of mortgage borrowers are now on standard variable rates- which generally start after cheap introductory mortgage deals expire.

The highest are around 6%- double the cost of the best value mortgages.

Which? research suggested that 95% of lenders had failed to pass on cuts to standard variable rate customers in full when the Bank of England reduced interest rates.

Examples of standard variable rates (SVRs)

• Newcastle BS: 5.99%
• Birmingham Midshires: 4.84%
• Clydesdale: 4.59%
• Natwest: 4.00%
• Royal Bank of Scotland: 4.00%
• Nationwide: 3.99%
• Halifax: 3.99%
• HSBC: 3.94%

Source: Moneyfacts

Since then, 20% of lenders have actually put their rates up, while the Bank’s rate has stayed at a record low of 0.5%.

The Council of Mortgage Lenders said that the standard variable rate, or SVR, is dependent on the cost of attracting deposits from savers, rather than the Bank of England.

But its director general, Michael Coogan, said that lenders have been widening their profit margins after losing heavily during the crisis.

An increasing number of families with large loans are trapped on their lender’s standard variable rate because other banks and building societies don’t want their business.

These financially stretched households could suffer badly when the Bank England starts to push interest rates higher.

Homeowners in the 10 areas with highest growth rates in [...]]]> The average house price rose in the 10 most prosperous areas by 219%
The value of homes in the most economically prosperous UK locations – including Cornwall, the Isles of Scilly, Bournemouth and Poole – surged ahead of properties in the country’s poorest areas, a survey showed.

Homeowners in the 10 areas with highest growth rates in economic activity per person saw the value of their property nearly quadruple between 1998 and 2008 the Halifax found.

The average house price in the 10 most prosperous areas rose by 219% over the period to £214,162, while the average price in the 10 least prosperous regions rose by 195% to £165,430.

The average house price in the 10 areas with the highest levels of economic activity in 2008 is 61% higher than the average in the 10 locations with the lowest levels of activity, the survey found.

Also the survey found that house prices have fared better in the most economically resilient locations since 2008 during the market downturn.

House prices have fallen on average by 24%, Halifax said, in the 10 areas with the biggest falls in economic activity since 2008.

This is almost double the average 13% decline in house prices in the 10 areas that recorded the smallest falls in economic activity since 2008 – including Cornwall and the Isles of Scilly, and Dorset.

Seven of the 10 local areas that have seen the smallest falls in economic activity over the last three years are in southern England but all 10 locations that have recorded the largest falls in economic activity are in the northern regions of the UK.

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.

Bank of Ireland’s 2009 loss was almost three [...]]]> Bank of Ireland has seen its net loss for 2010 fall to 609m euros, (£544m) after negotiating debt write downs from its bondholders.The results came as a surprise to analysts, who had forecast at least double those losses in line with the wider problems in Dublin’s banking sector.

Bank of Ireland’s 2009 loss was almost three times as high at 1.76bn euros (£1.46 billion).

The bank is currently trying to stay out of total government control- who are the bank’s biggest shareholder with a 36% stake.

If the bank can raise £3.5 billion in the coming months it will be deemed strong enough to stand alone.

The bank is shaping up to be the strongest survivor of the Irish Republic’s banking crisis.

Years of over generous lending, largely for property development, proved unsustainable and led to a 70bn euro support package backed by fellow European partners and the International Monetary Fund.

Its once-bigger rival, Allied Irish Banks (AIB), is so weakened by the Irish banking crisis it is 93% -owned by the Irish state.

Earlier this week, AIB reported a £8.6 billion loss for 2010. It needs to raise £10.8 billion- three times the amount the Bank of Ireland needs.

The Bank of Ireland also recorded nearly £2.1 billion in 2010 losses on its state-ordered sale of property-based loans and assets to the Irish Republic’s so-called “bad bank”, National Asset Management Agency.

Unemployment among 16 to 24-year-olds stood at 963,000, with the jobless rate for [...]]]> UK unemployment fell by 17,000 in the three months to the end of February to 2.48 million- the first drop since last autumn official figures show.
The Office for National Statistics (ONS) said the rate of unemployment in the UK had fallen to 7.8%.

Unemployment among 16 to 24-year-olds stood at 963,000, with the jobless rate for young people remaining above 20%.

The number of people claiming jobseeker’s allowance rose by 700 in March to 1.45 million, the ONS said.

It added that the number people in employment rose by 143,000 to 29.23 million, compared with a pre-recession peak of 29.56 million recorded for the three months to the end of May 2008.

While the number of unemployed men fell by 31,000 in the three months to the end of February, the number of jobless women rose by 14,000.

Although the number of unemployed 16 to 24-year-olds rose by 12,000 over the quarter to 963,000, there had been fears the number could breach the one million mark.

The rate of unemployment among 50 to 64-year-olds was unchanged at 4.8%, while the rate for those over 65 fell to 1.9% from 2.5%.

Within the overall unemployment figures there were wide regional variations, with the North East generating 11,000 extra jobs but the East of England seeing 15,000 job losses.

The ONS figures showed that average earnings rose by 2% in the year to February, while earnings excluding bonuses grew by 2.2%.

Both measures were well below the rate of inflation, as measured by the CPI index, which stands at 4%. Analysts said this provided further evidence of the squeeze consumers were feeling in their spending power.

Despite the fall in the number of unemployed, analysts warned that the jobless number was likely to rise again as the government is starting to introduce spending cuts designed to bring down the budget deficit.

New research showed that UK interest rates offered on relatively short-term fixed-rate bonds have been rising since August 2010.

However, they have been increasing from an all-time low of 2.52% for a one-year bond.

The movement signals an expectation of a [...]]]> Savers and borrowers could benefit by locking in the best interest rates for more than a year.

New research showed that UK interest rates offered on relatively short-term fixed-rate bonds have been rising since August 2010.

However, they have been increasing from an all-time low of 2.52% for a one-year bond.

The movement signals an expectation of a Bank rate rise in the coming months.

Moneyfacts said that the average interest rate for a one-year fixed-rate bond was now 2.85%, the highest since March 2010.

For a two-year bond, savers receive an average of 3.42%. Tying in money for three years garners an average rate of 3.7%, and when investing for five years the average interest rate is 4.17%.

“The biggest increase in rates is on short-term deals, which are the most popular amongst savers,” said Michelle Slade, of Moneyfacts.

“Most of the best deals are from smaller building societies. If savers want to make the most of their money they may need to look further afield than their local High Street.

“The markets expect a rise in Bank base rate in the not too distant future and this is being factored in to the rates being offered to savers.”

However, she warned savers that they would receive a hefty penalty if they needed access to their funds during the fixed-rate period, and so they should consider their financial situation before committing.

Many first-time buyers find it difficult to purchase a home because lenders are asking for [...]]]> Councils are to help first time buyers get on the housing ladder by topping up their deposits.
Five councils are pioneering a scheme aimed at buyers who can afford the monthly mortgage repayments but do not have a lump sum saved up.

Many first-time buyers find it difficult to purchase a home because lenders are asking for hefty deposits.

The councils will put 20% of the price in a Lloyds TSB account, with the lender asking for a 5% deposit.

The funds will not go to the buyer and the mortgage rate will be lower.

The councils risk losing money if a buyer defaults, but they get a generous interest rate themselves.

The scheme could benefit up to 300 first time buyers in each area, but if other councils join, thousands could potentially benefit.

Another 10 councils are waiting to join the scheme- which is called Local Lend a Hand.

The councils involved so far are Warrington, Northumberland, East Lothian, Blackpool and Newcastle-under-Lyme.

The scheme was welcomed by Housing Minister Grant Shapps, who encouraged the industry to offer greater help for first-time buyers at a recent summit.

Figures from the Financial Services Authority (FSA), published earlier this week, showed that only just over 2% of new mortgage lending in the final three months of 2010 was to those who could offer a deposit of less than 10% of a home’s value.

The figures were released [...]]]> Many first time buyers must save the equivalent of more than a year’s salary to be able to afford a deposit for a home, the Council of Mortgage Lenders (CML) have warned.
The typical deposit stood at £12,700 at the start of 2007, but rose to £31,500 by the second half of 2010.

The figures were released as housing and lending bodies faced government calls to help first time buyers.

However, the actual lenders themselves were not invited to the meeting.

Housing minister Grant Shapps summoned various parties to “frank and open” discussions on difficulties facing first-time buyers.

The government estimates 1.4 million households want to own their own home, but face a mortgage squeeze.

Mr Shapps used the meeting to discuss options such as creating new products specifically aimed at helping people get on the property ladder, as well as shared ownership or specialist insurance for lenders.

The CML and the Building Societies Association – which represent lenders – attended the summit along with watchdogs and

Mr Shapps said that he wanted members of the industry talking between themselves, but not to return to reckless lending levels.

“I do not want to see the current generation completely locked out of the market,” he said.

“The pendulum has swung too far the other way, where even if you have a good salary and save to get a deposit, you still cannot get a deposit.

“We want to do more to help aspiring first-time buyers – the average age of the first-time buyer with no support from their family is now 37, and there are 1.4 million households who aspire to own a home but are simply unable to do so because of house prices and mortgage availability.”

However, the CML questioned the minister’s figures, saying that the typical age of a first-time buyer who did not receive help from relatives was 31.

The lenders’ group said that funding problems for lenders and stricter regulations – which required lenders to hold more capital for lending to “riskier” borrowers – meant that things could not change quickly.

“First-time buyer numbers will only recover slowly over time, and may take several years to approach the annual rate of 400,000 to 500,000 purchases that we have seen historically,” the CML said.

“A range of initiatives – including shared ownership, product innovation and mortgage insurance – could all potentially play a part, but none is likely to be a magic bullet that restores normality to the mortgage market, for first-time buyers or anyone else.

“This is likely to be a gradual process as confidence in funding markets and lending decisions is restored.”

“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.

A lack of demand among buyers and low levels of supply of good, [...]]]> Cautious buyers and sellers failed to give any fresh impetus to the housing market in January, a survey has found.
All the key elements of the UK market pointed to a “sluggish” start to the year, the Royal Institution of Chartered Surveyors (RICS) said.

A lack of demand among buyers and low levels of supply of good, new property from sellers led to the lack of activity, it said.

Prices held up more in London than in other areas of the country.

Rics said that buyers were cautious about the outlook for the economy and the possibility of mortgage rate rises later in the year.

In January, more surveyors saw a decline in new instructions of sales than an increase, while actual sales slipped down in the three months to January to 14.6 per surveyor.

Overall, 31% more surveyors reported house prices fell rather than rose in January, although the majority said prices were unchanged in January compared with December.

Price falls were felt the most in the East Midlands, as well as Yorkshire and Humberside.

Surveyors were expecting sales to pick up slightly in the coming months, the report added.

Other housing surveys have also suggested a lack of activity during the turn of the year.