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 Avoid Committing Mortgage Fraud

Avoid Committing Mortgage Fraud

How To Guard Against Mortgage Fraud

Following fresh warnings from the National Fraud Authority about the rising level of mortgage fraud in the UK, lenders want more done to protect their interests.

Mortgage fraud was a widespread problem before the financial meltdown and collapse of the property market back in 2007/8 due to the availability of self- certification mortgages with buyers, brokers and mortgage advisers able to ‘self-declare’ earnings with little, if any, proof required by an industry too busy to carry out proper rules and checks on applicants.

Mortgage fraud costs the industry around £1 Billion (GBP) a year, leading the Financial Conduct Authority to want to instruct mortgage lenders to better acquaint themselves with the solicitors they work with.

The new stricter mortgage rules introduced in the Mortgage Market Review in April 2014 are intended to reduce the number of people who attempt to make false claims and self-certification mortgages are now a thing of the past.

However, this won’t stop mortgage fraud or prevent homeowners and property investors from being a victim of identity or registration fraud.

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Banks To Be Stress Tested On 35% Drop In House Prices

Banks To Be Stress Tested On 35% Drop In House Prices

Banks Stress Tested On 35% Drop In House Prices
And 5% Rise In Interest Rates

UK and Continental banks are to be stress tested using a worst case scenario in an effort to assess if they could cope with a house price slump of 35% or a sudden spike in interest rates to more than 5%, the exercise will be monitored by the Bank of England.

Sky News broke the story on Monday ahead of an official announcement on Tuesday by the Prudential Regulation Authority (PRA), after learning that banks would be subjected to an armageddon style scenario to see if they have sufficient capital to withstand another economic slump.

A series of commercial real estate losses is expected to be applied to the banks’ balance sheets as part of the tests, but it’s not certain whether or not the interest rate hike will be quantified as part of the tests, but the 35% slump in property prices could reveal if banks and building societies would need to raise billions of pounds of fresh capital to survive, unless they can demonstrate their ability to withstand such a huge slump.

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2014 UK Property Prices To Increase Further

2014 UK Property Prices To Increase Further

UK Property Prices Continue To Increase

There could be more good news for UK property investors over the coming months as projections for the rest of 2014 indicate that property prices are set to rise even more, providing the potential of greater Return On Investments (ROI).

Since the UK housing market crash in 2008, UK property prices slumped and were depressed for some time afterwards due to uncertainty in the economy, however, the end of 2013 saw the UK property market spring back to life.

According to data from the Halifax House Price Index (HPI), there were over 1 Million residential property transactions in 2013 for the first time since 2007, and residential property sales increased for the ninth month in a row in December 2013,  30% higher than in 2012.

The data from Halifax is great news for property owners and shows that the UK property market is well and truly back on its feet.  So, if you’re a property investor who is planning on investing in property in 2014, you can expect to see property prices continuing to rise.

2014 started with residential property prices on the increase and more people buying and selling. The introduction of the 2nd phase of the Government’s Help-To-Buy scheme in October 2013 allowed property purchasers to get 95% Loan-To-Value (LTV) mortgages, heralding the return of the first-time buyer to the UK property market. 

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Demand May Outstrip Supply As Lenders Brace For Help-To-Buy Stampede

Demand May Outstrip Supply As Lenders Brace For Help-To-Buy Stampede

Demand May Outstrip Supply As Mortgage Lenders Brace For Help-To-Buy Stampede

Over 600,000 residential properties are eligible for the £12 Billion (GBP) scheme, while Zoopla says buyers will still need average £10,000 (GBP) deposit

More than 600,000 residential properties on the market are eligible for inclusion in the £12 Billion (GBP) second phase of the Help-To-Buy scheme, according to the latest in a series of surveys leading to predictions that UK mortgage lenders will be inundated due to the expected demand for the government-backed mortgages.

Details of the 95% mortgages, which are available to existing property owners as well as first-time buyers, are to be unveiled by Chancellor of the Exchequer, George Osborne, with some banks expected to invite loan applications within hours of the announcement expected next week.

The second phase of the Government’s flagship scheme to allow more first-time buyers and second steppers, wider access to the UK’s residential property market has already been brought forward by three months, with high street bank Santander claiming that up to 1.7 million people want to use the scheme.

The Help-To-Buy scheme will cover existing residential properties as well as new-build properties, but as yet there are no plans to allow Buy-To-Let property investors use the scheme.

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2nd Consecutive monthly fall in residential property mortgage approvals

2nd Consecutive fall in residential property mortgage approvals

Mortgage approvals for UK residential property

purchases dropped in February

The Bank of England (BoE) has confirmed that residential mortgage lending fell for a second successive month in February 2013 reinforcing previously released data from the Council of Mortgage Lenders (CML) and the British Bankers Association (BBA).

The Bank of England figures show that 51,653 residential property mortgages were approved in February, the lowest number since September 2012.

The overall figure was down on the Bank’s revised figure of 54,187 mortgage approvals expected for January, and the amount of mortgage approvals for the purchase of residential properties were less than was originally predicted for February.

Economists had forecast a fall in mortgage approvals, down to 53,700, according to a panel of estimates by Bloomberg. However, the Bank of England have said that remortgage lending in February had increased by 3.8% to 26,771.

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A CHEAP mortgage bonanza could revive the housing market as lenders roll out exceptional deals.

Cheaper Mortgages On Way For UK

Cheaper Mortgages On Way For UK

The number of record-low mortgages have boomed since Christmas 2012, with several major  lenders launching fixed-rate products with an interest rate below two per cent.

Aaron Strutt, mortgage broker at Trinity Financial, said: “It’s been a great start to 2013 with lenders launching fantastically cheap rates. Many are once-in-a-lifetime deals.”

HSBC is the latest major lender to launch a fixed-rate deal below two per cent.

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Mortgages for private property purchases and Buy To Let landlords and business credit are becoming more widely available, thanks in part to the Government’s financial initiative, the Funding for Lending Scheme.

Mortgages More Widely Available in 2013

Mortgages More Widely Available in 2013

An indicator that moves to ease lending restrictions and free up credit appear to be working.

The £80 Billion (GBP) Government scheme, launched in August 2012 was intended to boost the flow of credit to private households and businesses.

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UK Funding For Lending Scheme Flops

UK Funding For Lending Scheme Flops

The UK Government initiative to get banks lending again has become a bit of a laughing stock according to some economists.

The funding for lending scheme (FLS) was dubbed a “white elephant” after the first data showed that in the three months to the end of September 2012, just £500 Million (GBP) of lending was released by all the 35 banks and lenders signed up for the scheme, which was launched in August this year.

The funding for lending scheme was supposed to reduce borrowing costs for banks and other lenders, who are required to pass on the lower costs to their customers. But so far the lending appears to be lowering mortgage rates rather than helping small businesses.

Only six banks and building societies have used any funds from the FLS in the three months to the end of September 2012 and their net lending – which takes account of loans being repaid – was negative by £1 Billion (GBP) because customers repaid existing loans faster than new loans were granted.

At three banks, more loans were repaid than new loans actually taken out, leading to negative net lending at Royal Bank of Scotland of £642 Million (GBP) and Lloyds Banking Group took £2.7 Billion (GBP) from the economy during the third quarter while Santander removed £3.4 Billion (GBP).

The biggest injection of credit came from Barclays at £3.8 Billion (GBP), whilst Leeds Building Society added £212 Million (GBP) and Nationwide Building Society £1.8 Billion (GBP).

According to the latest research data released by Halifax; “Average mortgage payments for new borrowers as a proportion of disposable earnings” were at their lowest in the second half of 2011, meaning that UK Residential Property affordability in the UK is at its best since 1997!

The Halifax data is obtained by tracking the affordability of residential housing in 386 local authority districts across the UK

Typical mortgage repayments for both First Time Buyers (FTB) and home movers, (as new borrowers) at the long term average Loan To Value (LTV) ratio stood at 27% of disposable earnings in Q4 (Fourth Quarter) of 2011.

Halifax said this is well below the average of 37% recorded over the past 27 years.

There was a modest fall in payments relative to earnings over the past year from 29% in Q4 of 2010 and mortgage payments have almost halved as a proportion of income in recent years from a peak of 48% in Q3 of 2007.

The Halifax data highlights lower house prices and reduced mortgage rates as being the main drivers behind the significant improvement in affordability.

Lower house prices and mortgage rates have resulted in significant improvements in affordability in most local authority districts since 2007.

Martin Ellis, housing economist at the Halifax said “The falls in house prices and cuts in mortgage rates in the last few years have resulted in a significant improvement in housing affordability for those able to raise the necessary deposit to enter the market. Mortgage payments for a typical new borrower are now at their lowest in proportion to earnings since 1997. The marked improvement in affordability was a key factor supporting housing demand in 2011. The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels in 2012. This should support the market over the coming 12 months, helping to offset the impact of the downward pressures on demand from the ongoing difficulties faced by households regarding their finances and uncertainty about economic prospects”.

The data does not include remortgages or Buy-To-Let mortgages, whilst it may be great news for First Time Buyers and normal homeowners, it does little to reflect the UK BTL market for property investors, however with higher LTV products emerging for FTBs, it cannot be too long before the lenders realise that us investors do actually know what we are doing and we could even see the return of 100% mortgages….I can live in hope!

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The panic over the economy is spreading. As reported here on Spotlight by Mike Clarke on Sunday in his post “UK Banks Panic Over Buy-To-Let Loan Boom!

Major lenders have hiked their tracker rates and arrangement fees over the past week

Banks and building societies’ own funding costs are to blame as London Inter-Bank Offered Rates (Libor), the rates at which lenders lend to one another, hit levels not seen in over two years.

In part, Libor reflect the confidence that lenders have in one another, and the sovereign debt storm in the Eurozone has been pushing rates up over the past six weeks.

With the crisis ongoing, the rises in tracker rates and arrangement fees seen so far could mark the start of a trend, and good mortgage brokers are advising homeowners to review their borrowing arrangements, especially as attractive five-year fixed rates are still to be had.

The Confederation of British Industry (CBI) is also calling on the Government to ease the plight of would-be first-time buyers.

CBI Director General, John Cridland has previously stated that UK housing market activity is a “game-changer” for economic growth and wants first-time buyers to be able to access savings locked in their personal pension pots, through loan-back schemes.

This would allow members of company pension schemes to borrow money for a house purchase from their own pension pot at a low cost, paying the loan back through their salary at any time during their working life.

According to the Council of Mortgage Lenders, (CML), only 36,200 first-time buyers bought homes in the first quarter of 2011 compared to 43,600 in the same period of 2010.

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