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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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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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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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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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Banks and building societies have made widespread changes to their UK mortgage rates in recent weeks, with a growing number of lenders raising rates on tracker loans as the escalating Eurozone debt crisis drives up the cost of funding these mortgages.

This week, Nationwide Building Society and Halifax – part of Lloyds Banking Group – became the latest high-street lenders to increase their tracker rates.

Halifax has upped the rates for tracker mortgages by as much as 0.30 percentage points, raising its two-year tracker from 3.04% to 3.34%.

It is available for loans up to 75% of a property’s value, with no fee.

Woolwich, Santander, Northern Rock, Accord & Barclays Wealth are among the other lenders to have raised their rates over the past month.

Not all mortgage rates are heading upwards.

At the same time as increasing several tracker rates, Nationwide Building Society cut the cost of some fixed-rate products – including its five-year fix, which was reduced from 3.69% to 3.59%.

Other mortgage lenders have eased their criteria and launched attractive products. On Wednesday, Barclays re-entered the 90% loan-to-value market, after it stopped offering these loans three years ago.

Coventry Building Society also launched a new range of fixed and capped rate products that come with no early redemption charges this week.

These are the current ‘best-buy’ mortgages deals available now.

Remortgages

While tracker rates have been going up, mortgage brokers say there are still a number of competitive deals available. Santander has a two-year tracker at 1.95% – Bank of England (BoE) base rate plus 1.45% – available up to 60% loan-to-value with a £1,995 fee. It comes with a free valuation and free legal work.

For those who want a longer-term tracker,

HSBC’s lifetime tracker at 2.49% – BoE base rate plus 1.99% – is a fabulous deal. It comes with no fees and no early repayment charges, which means borrowers can remortgage to a fixed-rate deal at any point during the mortgage term.

Fixed-rate deals remain cheap and have not seen any major rate movements. Leeds Building Society is still offering its 2year fix at 1.99%, available up to 75% loan-to-value (LTV), with a £1,999 fee.

Chelsea Building Society’s five-year fix at 3.29%, available up to 70% loan-to-value (LTV) with a £1,495 fee, is the market leading longer term fix.

First-time buyers: 90% deals

Barclays’ move to increase its maximum loan-to-value from 85 per cent to 90 per cent has provided first-time buyers with more options. According to Moneyfacts, the financial data provider, there are now 253 mortgages requiring only a 10% deposit, compared with 206 in October 2010 and just 101 in October 2009.

It is offering a three-year fix at 4.99% with no fee or a five-year deal at 5.49%, with a £499 fee. Its maximum loan size is £500,000.

Cambridge Building Society and Melton Mowbray Building Society are also offering five-year deals at 5.39%.

Large loans

Competition has increased in the large-loan market recently, with more high-street lenders offering these type of mortgages.

RBS Private Banking has a two-year tracker at 2.19% – BoE base rate plus 1.69% – available up to 50%loan-to-value, with a £999 fee.

NatWest has a two-year fixed-rate at 2.65%, available up to 60% loan-to-value, with a £999 fee.

Most wealthy borrowers will typically be better off opting for Barclays Wealth’s two-year tracker at 2.49%.”

Self-employed

Skipton Building Society has some of the most competitive deals for self-employed borrowers as it will consider retained profits in a limited company. It offers a two-year tracker at 1.98% – BoE base rate plus 1.48 percentage points – available up to 60% loan-to-value, with a £1,995 fee. It also has a two-year fix at 2.48%.

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UK Government Housing minister Grant Shapps is expected to urge UK banks and mortgage lenders to offer more long term fixed UK mortgages to increase stability in the UK housing sector.

In today’s uncertain world, people want to know where they stand. Yet when it comes to buying a home, there are no mortgages available for them where they can fix their payments for a long time, the longest fixed-rate mortgage currently available for many is a maximum of five years.”

Mr Shapps calls for longer-term mortgages, possibly as long as 30 years, could help cash-strapped families to be able to plan ahead by letting them know how much they will have to pay in the years and decades to come.

Lenders should look at the case for 30-year mortgages and how the UK can move to a more stable housing market where first-time buyers can get their first foothold on the property ladder at a cost they know they can afford.

While mortgage lenders have cut their rates in recent weeks, longer-term fixed mortgages often require house buyers to pay a huge deposit.

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Property investors are being advised to consider fixing their mortgage rates now, as five-year rates fell to their lowest level in history – and mortgage brokers said they are unlikely to get any cheaper.

It follows a flurry of rate-cutting by banks and building societies, resulting in ten lenders now offering five-year fixed rates below 4%.

Brokers are already reporting a surge in the number of borrowers looking to remortgage from their lender’s standard variable rate.

Rates are not expected to fall further, though, as lenders have little scope for further cuts. Five-year swap rates – the rates that banks use when lending to each other and pricing their mortgages – have now fallen to 2.2%, but lenders still need to make a profit on the rate, and repair their balance sheets.

Borrowers with large mortgages have even paid heavy redemption penalties on existing fixed-rate deals in order to switch to the new lower fixed rates.

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