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Bank Of England States That 2% Interest Rate Rise Would Put 480,000 Property Owners Into Mortgage Arrears

Bank Of England States That 2% Interest Rate Rise Would Put 480,000 Property Owners Into Mortgage Arrears

Bank Of England States That 2% Interest Rate Rise Would Put 480,000 Property Owners Into Mortgage Arrears

UK property buyers have an average mortgage debt of around £83,000 (GBP) plus many will have unsecured loans of up to £8,000 (GBP), however many are typically earning less than £43,000 (GBP) a year

The Bank of England has warned that up to half a million property owners could be at risk of falling into mortgage arrears once interest rates rise from their historic 0.5% low.

The BoE said the number of UK property owners expected to run into difficulties would increase by a third to approximately 480,000 in the event of a two-percentage-point increase in the cost of borrowing.

The BoE stressed the proportion of borrowers having trouble paying their mortgage loans should remain well below the record mortgage arrears levels of the early 1990’s, when the UK suffered its worst post-war property crash, provided that earnings incomes rose alongside interest rates.

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Are Property Price Rises Slowing?

Are Property Price Rises Slowing?

Is The UK Property Market Just Experiencing
A Seasonal Slowdown Or Is It Something Worse?

There are a lot of reports in the media attempting to suggest that the UK property market is doomed to failure, with the latest House Price Indices (HPI) published by mortgage lenders suggesting that the UK property market is slowing, however there are fears that it might be in more serious trouble.

Halifax latest figures show that property prices in the three months prior to September 2014 were 2.7% higher than in the preceding quarter but there was an average 0.6% property price rise across the UK during September, resulting in an average property price of £187,188 (GBP).

Halifax say that this is the second successive decline in the quarterly rate and predict that the annual house price growth rate has already peaked at 10% and future growth will be at a considerably slower pace. 

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Is The Mortgage Market Review Slowing The UK Property Market?

Is The Mortgage Market Review Slowing The UK Property Market?

Is The Mortgage Market Review Slowing The UK Property Market?

The number of new mortgages being approved by lenders dropped to an 11 month low in May 2014 as the new affordability rules brought in by the Mortgage Market Review (MMR) caused borrowers to be put off and delayed hundreds of existing mortgage applications.

The Mortgage Market Review brought in on the 26th April 2014 requires all UK based mortgage lenders to carry out rigorous affordability checks on the financial status of borrowers.

These stringent affordability checks include stress tests designed to determine if a borrower could continue to repay their loan if interest rates rise significantly.

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Demand For High Risk Mortgages Reaches New High

Demand For High Risk Mortgages Reaches New High

More property buyers with small deposits are taking out high risk loans worth over 3.5 times their take home income

The number of residential property buyers who can only raise a small deposit of less than 10%, and who don’t qualify for the Government’s Help To Buy scheme, are taking out high risk loans worth over 3.5 times their take home income, has risen to its highest level for over five years.

New figures published by the Bank of England (BoE) show that the number of high risk mortgages being taken out by property investors and existing landlords has increased in the first three months of 2014.

Mortgage lending to new borrowers who had less than a 10% deposit and a Loan-To-Income (LTI) multiple of more than 3.5 times a single person income, or 2.75 times for joint income borrowers, has increased to 2.6%, the highest recorded figure since the last quarter of 2008.

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Mortgage Market Review Already Causing Delays For Borrowers

Mortgage Market Review Already Causing Delays For Borrowers

Mortgage Market Review Already Causing Delays For Borrowers

Would be residential property buyers are dismayed about the change of the rules on residential mortgages, with strict lending criteria tightened following the introduction of the Mortgage Market Review (MMR).

Since 26th April 2014, mortgage lenders have been required to carry out much more detailed checks of a borrower’s financial situation to be sure that they can truly afford to purchase and continue to afford the property, both now and in the future.

The introduction of the MMR is supposed to help regulate the residential property purchase market and does not yet apply to buy to let mortgages, but that could happen in time.

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Help-To-Buy Heralded As UK Property Market Saviour

Help-To-Buy Heralded As UK Property Market Saviour

RICS Claim Help-To-Buy Is Reason
For UK Property Market Recovery

The Royal Institute of Chartered Surveyors (RICS) have stated that the Government’s Help-To-Buy scheme and other financial initiatives have seen the UK property market turn the corner after the post recession slump.

In its monthly report RICS said property prices are up for a fourth consecutive month as the largest number of property buyers in 4 years return to the market.

The RICS report particularly picked out the West Midlands and the North East, as two areas which had suffered more than most in the UK property market crash, but these areas experienced the biggest increase in property buyer activity during July.

The widespread pick-up in the UK property market has seen residential property prices rise at their fastest rate since the peak of the property market in November 2006.

There is a growing chorus that the Government’s Help-To-Buy scheme, which was introduced in April to provide equity loans for first time buyers of up to 20% towards the cost of a new build property worth up to £600,000 (GBP) is creating a new property bubble.

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FCA Not Interested In Mis-Selling Of Interest-Only MortgagesFCA Claim There Is No Evidence Of
Mis-Selling Interest-Only Mortgages

The Financial Conduct Authority (FCA) has stated that there will be no further investigation into whether interest-only mortgages were widely mis-sold in the UK.

The FCA have concluded that the vast majority of borrowers with interest-only mortgage deals understood exactly what they were taking on, diminishing the chance of lenders facing mass claims for mis-selling mortgages.

Martin Wheatley, Chief Executive of the Financial Conduct Authority (FCA) responded to an enquiry from the Treasury Select Committee, saying: “The vast majority of customers understood the mortgage product they were sold and understand the need to repay the mortgage balance and have plans, albeit in some circumstances imperfect, on how to repay”.

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Help To Buy Scheme Could Cause New Property Bubble

Help To Buy Scheme Could Cause New Property Bubble

Critics Warn Help To Buy Scheme Will Cause New Property Bubble

The Chancellor of the Exchequer has launched the second phase of the ‘Help to Buy’ scheme and laid out the terms of a programme that will underwrite UK residential property purchases up to the value of £600,000 (GBP) following a meeting with mortgage lenders and house-builders.

A number of groups, however, have warned that, if this scheme is allowed to drive up house prices in the UK, it will cause another property ‘bubble’ and encourage people to take on huge mortgages.

George Osborne is hopeful that the terms of the scheme will prevent another property bubble, as there are now strict income checks and other lending criteria imposed by mortgage lenders and the loan scheme will not be allowed to be used by purchasers to acquire second homes.

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Top Economist Warns Of Fresh House Price Crash

Top Economist Warns Of Fresh House Price Crash

Disastrous House Price Crash Could Be Caused By
Government’s Funding for Lending Scheme

One of the UK’s leading economists has warned of a potentially disastrous house price crash and points the finger at the Government home buying scheme for being the cause of another unsustainable property bubble.

Chief Economist at the Institute of Directors (IoD), Graeme Leach, said the introduction of the new Help-To-Buy scheme, under which UK taxpayers are underwriting thousands of new mortgages for property purchases, means the world must have gone mad.

Mr Leach said “The Funding for Lending scheme is very dangerous because it will drive up property prices at a time when it seems likely that (property) prices are already over-valued.”

The scheme is one of Chancellor George Osborne’s financial initiatives where the Government will underwrite mortgage loans allowing new and first time borrowers up to 20% of a property’s value as part of their deposit, effectively giving the Government a proportionate stake in the value of the mortgaged property.

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Post Office Offering Lowest Ever Fixed Rate Mortgage Deal

Post Office Offering Lowest Ever Fixed Rate Mortgage Deal

Post Office Top Mortgage Charts

The Post Office has cut the rates on a variety of its mortgage products and are now offering their lowest ever fixed rate mortgage deals, taking some of their mortgage products to the top of the best-buy mortgages tables.

The Post Office says it will now be offering their best ever mortgage range, slashing rates among its mortgage products.

Three of its fixed rate mortgage products are now the best mortgage deals available in the UK mortgage market.

Topping the list are the 2 year fixed rate mortgage deals that have no arrangement fee.

The market-leading products are:

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