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EU Commission Fines Rate-Rigging Banks

EU Commission Fines Rate-Rigging Banks

EU Commission shocked that competing banks were in collusion

The European Commission has fined eight banks – including RBS – a total of £1.4 Billion (GBP) for forming illegal cartels to rig interest rates. The cartels operated in markets for financial derivatives, which are products used to manage the risk of interest rate movements.

A number of banks were engaged in the rigging of interest rate products intended to reflect the cost of interbank lending in euros, while another group fixed prices for products based on the Japanese yen.

The rates are used to set the price of Trillions of dollars (USD) of products, including mortgages.

Some were involved in both markets and more than one cartel, including RBS, which was fined a total of £325 Million (GBP). The fines are the first ever penalties for interest-rate rigging by the EU.

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Mortgage Loan Approvals Increase

Mortgage Loan Approvals Increase

More “Help To Buy” Mortgage Lenders Announced

The number of mortgages given to first-time buyers increased by a third in the 12 months to August 2013 according to the latest data from the Council of Mortgage Lenders (CML), with new entrants to the property market accounting for 44% of all residential property purchases during the month.

The CML figures were published as Barclays became the latest high street lender to confirm it was signing up to the second part of the government’s Help to Buy scheme, which is designed to make more 95% mortgages available to first-time buyers, second steppers and home movers.

Barclays join Santander, RBS, Halifax and HSBC in confirming it will use the taxpayer-backed guarantee to make high Loan-To-Value (LTV) mortgages available for property purchasers, meaning that more than half of UK mainstream mortgage lenders are now signed up to provide more mortgages at higher loan to value ratios.

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Is Funding For Lending Working For First Time Buyers?

Is Funding For Lending Working For First Time Buyers?

FIRST-TIME buyer numbers are up by almost a quarter year-on-year, lenders said yesterday, amid signs that government efforts to encourage mortgage lending are finally percolating down to people with smaller deposits.

A total of 21,700 loans worth £2.7 Billion (GBP) were made available to first-time buyers in November 2012, one of the highest monthly totals in the last three years, the Council of Mortgage Lenders (CML) said.

These figures mean that first-time buyer numbers were up by 24% compared with a year earlier, and increased by 8% month on month.

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Getting a mortgage to purchase property saves money, according to Barclays, who’s research suggests that people will save almost £200,000 (GBP) over their lifetime by buying property rather than renting.

The bank put the average cost of renting a residential property over 50 years at £623,000 (GBP), compared to just £429,000 (GBP) for buying a property, paying a mortgage and maintaining home – making a difference of £194,000.

The Barclay’s study said that around 50% of expenditure goes on mortgage payments, with around 40% going on capital repayment and interest costs, over 50 years of home ownership.

Barclay’s head of mortgages Andy Gray said that whilst the initial cost of getting on to the property ladder “can be a big barrier” for people, due to high value of deposits now required, there are still clear long-term benefits.

As inflation rises, so does the value of owning a property. While rental prices rise and fall with inflation, once a residential mortgage is paid off, all a homeowner has to pay for is the maintenance of the property and annual insurance to protect it.

While it may be cheaper to rent in the short-term, over the long-term PRS rents will inflate and tenants will be no nearer to owning property, whereas after 25 years, a home buyer will own their home outright and have financial security in their retirement.

If only getting a mortgage was that easy…..

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