Mortgage Rates on the Rise!

New analysis by the price comparison site, MoneySupermarket.com, has shown that average mortgage rates have begun to rise.

Coupled with the fact that a number of lenders have announced hikes to SVR rates which come into force on May 1, now is the time for borrowers to check they're on the most competitive mortgage deal.

The analysis by MoneySupermarket.com found the average rate for two-year fixes hit a low in October 2011 falling to 3.82 per cent - the lowest figure since April 2009 - but has now risen back up to 4.15 per cent. This means a difference of £27.31 per month or £327.72 over the year for repayments based on a £150,000 mortgage.

Similarly, five year fixed rates hit a low in January this year with an average rate of 4.57 per cent but this has crept up to 4.72 per cent adding an extra £12.81 per month or £153.72 over the course of a year.

For two-year trackers, the average rate was at its lowest in August 2011 at 3.37 per cent but now stands at 3.63 per cent, hitting consumers with an extra £20.91 per month payment or £250.92 over the year.

There have also been a number of SVR rises announced by lenders recently which come into effect in May. Approximately one million customers will be affected by these increases announced by providers including Halifax, Co-operative Bank, Bank of Ireland and RBS/NatWest. Overall, the average increase to SVRs is 0.62 per cent which will add an extra £52.58 to a £150,000 mortgage or £630.96 over the year.

Clare Francis, mortgage expert at MoneySupermarket.com, said:

"Mortgage rates are nudging upwards so anyone looking for a mortgage or whose mortgage deal will end in the next few months should act sooner rather than later to secure one of the current rates in case they rise further.

"Borrowers paying their lender's SVR should also reassess their mortgage arrangements. One of the consequences of the low base rate has been the fact that SVRs have been similar to the rates on new mortgage deals and in some cases the SVR has been even lower. As a result an increasing number of people have opted to stick with their existing lender and move onto the SVR when their fixed or introductory tracker or discounted period ended, as opposed to remortgaging elsewhere.

"However, as around one million borrowers are about to find out next month, many SVRs can rise even if base rate doesn't.

"Economists are expecting base rate to remain at 0.5 per cent for the foreseeable future. A lot of people may therefore be happy to opt for a variable rate mortgage. Tracker mortgages are directly linked to base rate so any changes directly mirror moves in the Bank of England base rate. This is different to discounts which are linked to the lender's SVR, so given the forthcoming SVR increases; a tracker is a safer option.

"If the prospect of higher mortgage repayments worries you, a fixed rate deal will give you peace of mind and protect you from interest rate increases for a set period of time."

Here at MDS Sutton, our mortgage comparison computer programs allow us to compare potential new deals with existing rates or what you are being offered. This takes into account the differences between interest rates and set up fees, so as to compare total cost. We don't charge for an initial consultation, so why not give us a call on 020 8652 9944 and see if you can save money?

Should borrowers rejoice? Check your SVR!

The Bank of England base rate has remained at an all-time low of 0.50% for three years, the longest hold for 60 years, report Moneyfacts.

Moneyfacts research shows that as the current economic climate took hold three years ago the average deposit needed for a mortgage rose to 40%. Currently it hovers around the 25% mark, thanks to an increase in higher loan-to-value deals. Although we have a stagnant base rate, credit cards and overdraft charges have risen. Loans, however, are becoming cheaper.

By comparison, initial residential mortgage rates have continued to fall in most cases compared to three years ago; although mortgage fees are the highest since Moneyfacts records began over two decades ago. However, this could be about to change as despite no move in base rate, some lenders have announced increases to their standard variable rates.

Rachel Springall, spokesperson for Moneyfacts.co.uk, said:

"Over the last three years mortgage choice has almost doubled, which will be good news to prospective borrowers. The number of higher loan-to-value mortgage products has increased, giving more choice to borrowers with limited deposits. While the number of mortgage deals has increased, fees are at their highest since Moneyfacts records began, so consumers need to check the true cost of any mortgage offer".

"Borrowers affected by an increase to their SVR should review their repayments and consider shopping around for the best deal rather than assume it will come from their current lender".

"Personal loans are becoming more affordable and this may be due to a set repayment scheme over a specific term, which is great news to consumers looking to consolidate their debts. Credit cards continue to work on a minimum repayment system, so if customers are not careful the interest applied each month could mean that a debt would never get repaid."

At MDS Sutton our mortgage sourcing systems allow us to compare the actual costs of re-mortgaging compared to your actual current pay rate or indeed any possible new deal being offered by your existing lender. It's free to find out if we could save you money, so why wait?

Women who wait until December will pay up to 20% more for their life cover.

For a long time the cost of insurance has been going down, but with the gender directive coming into force at the end of this year, the cost of insurance for women will be going up. Industry experts have speculated that life premiums could rise by as much as 20%.¹

The changes will take effect in December, so if you want to take advantage of cheaper life insurance, the message is clear: now is the best time to buy!

It's not just working mums who need life insurance. Despite the fact that many women bring home the bacon, there are still as many who are at home cooking it. The value of the work a mum does around the home could be as much as £30,000 a year.² This includes the cost of household chores such as cooking, cleaning, ironing, and shopping, as well as the cost of bringing up the children. The day-to-day costs of looking after the little ones have gone up 8% over the last 2 years, from £132 a week to £143.

Even those mums who have part-time jobs don't hugely reduce the amount of time dedicated to parenting - the value of part-time working mums comes to £28,664 and.it is important to plan for a future where mum might not be there.

At the moment, over 50% of mums don't have life insurance. With the government's austerity measures hitting families hardest, and the cost of living continuing to rise, a chance to protect mums while the cost is low could be some good news in these difficult times?

Sources:

¹ ABI research paper, 'The use of gender in insurance pricing', 2010.

² And all other figures, www.legalandgeneralgroup.com, March 2011.

Nationwide Building Society 95% mortgages through Newbuy scheme

From Tuesday 13 March 2012, Nationwide has started to accept applications under the Government's NewBuy scheme. The scheme could help you buy a new build house or flat with a mortgage up to 95% Loan to Value (you only need a 5% deposit).

Initially, Nationwide will only accept NewBuy cases from customers who have applied through an intermediary (Mortgage Broker). 

The property must be your main residence and cannot be used for a holiday or second home, or a Buy to Let and must be owner occupied.
Applicants who are non-EEA nationals must have indefinite leave to remain.
Applications are subject to standard affordability and underwriting policy.
NewBuy applications are only accepted on a capital and repayment basis

A minimum deposit of 5% is required on all NewBuy cases which can only come from: The applicants own resources, a gift from family/friends (the gift must not be repayable under any circumstance and have no conditions attached) or a combination of both.

Builder cash backs/deposits and other financial incentives such a payment towards legal fees, stamp duty, mortgage subsidies or part-exchange of your clients existing property will not be permitted in conjunction with a NewBuy application. Non-financial incentives such as soft furnishings, white goods, carpets etc are allowed. 

The only acceptable builders are : Barratts, Bellway, Bovis, Persimmon, Redrow and Taylor Wimpy.

Skipton BS withdraws from "Whole of Market" for two weeks

As a result of the almost daily changes and increases we have seen in some fixed rates and variable margins in 2012, Skipton has just made the following announcement:

"What strange and challenging times we operate in! It's not often a lender writes to it’s broker supporters to say we are doing too much business,but that’s exactly the reason why I need to inform you of a significant short term change to Skipton’s Intermediary, whole of market product range.

Last year thanks to your support we were one of the few lenders to exceed it's lending target. 2012 has started unbelievably well, with new business in January pushing 150% of forecast. Consequently, you will have seen that over the last couple of weeks we have tried to withdraw and re-price various products as a means of controlling volumes.

However,we still find ourselves taking too much business on a daily basis with our products still "flying off the shelves" across our current mortgage range. If we allow this to continue it will impact both on our service standards and existing pipeline business, which we are not prepared to allow. Therefore, after full and careful consideration we have decided to withdraw all our whole of market residential products from close of business today with no immediate replacements. This will give us the opportunity to redesign our residential product range and align ourselves with those areas of the market we want to fully participate in".

This is maybe represented in that when I compared a 2 year fixed rate available in September with Santander (Abbey) at 85% LTV, I witnessed a 2 Year Fixed rate that was 4.09% with a £495 Fee now available at 4.69% and a £995 Fee?

New restrictions from Santander (Abbey)

The following update has been received this morning and serves to further restrict interest only lending (most lenders currently do above 75% LTV), restrict borrowing capacity and a warning that might in the future restrict your ability to move house without penalty!

"On Friday 10th February, we are making some important changes to our lending criteria.

1. We constantly review our offering to ensure it best meets the needs of your clients and following a review of our interest criteria we have taken the decision to reduce our maximum LTV on our residential mortgages where any loan part is on an interest only basis to 50%.

2. At the same time, we are also reducing the maximum number of applicants from four to two. Any paper applications received after Monday 13th February, will be rejected.

In addition to the above changes, we have also clarified the following area in our lending guide:

ERC waivers for existing mortgage customers moving home
We’ve amended our customer and intermediary guides to make it clear we may withdraw this concession in the future. We are not withdrawing the concession at this time".

Strong resurgence in low deposit mortgage availablility

Reported in the "Guardian" on Saturday:

"Low-deposit mortgages are making a "strong resurgence", but there are not enough deals around generally to satisfy homebuyer demand, according to financial data provider Moneyfacts.

The choice of residential mortgages on offer has increased over the past 12 months from 2,527 to 3,180, with 90% and 95% loans making notable comebacks. But deals tend to be around for just 27 days before becoming fully subscribed, compared with a historic average of 30 days. Moneyfacts found 49 mortgages available at 95% loan-to-value (LTV) - more than double the 24 recorded in January 2011, and a huge leap from the three found in April 2009. There are also 280 deals on offer at 90% LTV - a rise from 199 in January last year and 72 in April 2009."

So if you want to see what might be available, then just give us a call!