HSBC today became the latest of the large mortgage lenders to lower the cost of its mortgages. They have reduced its interest rates by up to 0.31%. In addition to cutting the cost of its fixed-rate mortgage deals – its two-year product will fall from 6.74 per cent to 6.43 per cent a year – HSBC stated it would also reduce some of the arrangement fees that it charges for the loans.
The bank, which has been one of the most aggressive mortgage lenders in the UK mortgage market, is cutting prices in response to similar reductions by lenders including Nationwide, Cheltenham & Gloucester, Abbey and Royal Bank of Scotland.
Bank of Ireland, also announced price cuts yesterday. Mortgage experts announced the cuts could sound that some normality was returning to the mortgage market following a six-month period in which many lenders sought to reduce the number of loans on their books. The average cost of fixed-rate mortgages reached a 10-year high last month.
“It is encouraging that, at long last, lenders are responding to the easing in wholesale borrowing costs and passing a discount on to the consumer,” said Darren Cook, a mortgage analyst at market researcher Moneyfacts. “There is a sense that competition is finally returning to the fixed-rate mortgage market.”
Lenders cost fixed-rate mortgages in line with rates in the wholesale swaps markets, where prices for two, three and five-year borrowing spiked in June amid concern about inflation. But since peaking at 6.52 per cent, swap rates have fallen to around 5.7 per cent, enabling lenders to cut the rates they offer to borrowers. Read the rest of this entry »
The Nationwide today announced that the average house price in the UK is now £169,316, thats nearly £15,000 less than it was this time last year in 2007.
There was a 1.7% fall in the value of the average house in the UK in July and there were very few positives contained in the Nationwide report for the UK housing market. Fionnuala Earley , their chief economist points to encouraging signs within the swap market where rates have lowered allowing for fixed mortgage rates to reduce recently. Some mortgage lenders had previously expected the MPC to put interest rates up two more times this year, whereas now the view is that they will not increase at all, which is good news for mortgage borrowers.
Talking about forced sales Ms Earley says that ” estate agents are reporting up to 40% of transactions falling through and the average number of sales per surveyor is at its lowest ever level. This could be partly due to the availability of finance but the Bank of England Agent’s report suggests that this may also be due to the reluctance of sellers to accept low offers. While this does little for liquidity in the housing market, it does indicate that sellers are largely not in a position where they are forced to sell” Read the rest of this entry »
From 31st July 2008 HSBC will be passing on the benefits of lower mortgage funding costs to its customers by lowering the arrangement fees and interest rates on its fixed mortgage deals.
The Abbey this week claimed it has overtaken HBOS as the UK’s biggest mortgage lender with a market share of 26% for the whole of UK residential mortgage lending.
The last listing of HBOS’ market share was 21% two years ago but the Council of Mortgage Lenders is due to post 2007 market share listings later this week.Abbey’s latest results show mortgage balances were up 13% compared to 2007.
The Abbey attributes its strength in the first half of 2008 to an increase in retention of mortgages and its ability to offer higher margin, lower LTV new business, while other lenders were pulling back from the mortgage market.
The government may have to give a taxpayer guarantee to billions of pounds worth of mortgage market bonds in order to revive the market.
The recommendation is part of a report which the Treasury instructed that looks at possible ways to revive the UK mortgage market.
But the move could be seen as the partial nationalisation of mortgage finance with the government backing bonds.
The report states that the shortage of mortgages is to persist till at least the end of 2010.
The assessment of the mortgage finance is due to be published later this year by Sir James Crosby, the deputy chairman of the Financial Services Authority.
His assessment of the mortgage market is about as gloomy as it’s possible to be.
This former banker blames a collapse in demand for mortgage-backed securities, or investments created out of mortgages and sold to banks and big investors.
He fears that a long-term lack of mortgage finance could turn the current downturn in house prices and consumer spending into something much worse.
He also believes it may be necessary for the government to guarantee new and better quality mortgage backed securities, to raise the demand for these securities.
House prices in England are set to rise by 25% by 2013, a National Housing Federation report states.
It sees house prices reducing 4.4% in 2008, 2.1% lower in 2009, recovering by 2010 and rising at over 9% in 2012 and 2013.
There is a huge demand for homes with people living for longer, delaying marriage and getting divorced.
While there are questions over how accurate the five-year forecasts can be, there is a general concern that new homes being built will not meet demand required.
“As soon as the economic outlook improves, house prices will resume their previous upward trajectory,” said the Federation’s chief executive David Orr. Read the rest of this entry »
The mutual is also launching a low fixed rate mortgage deal with a higher fee.The mortgage deal is available at 4.99% two-year fixed rate mortgage with a 3% arrangement fee, of which 2.75% can be added to the loan even if the maximum 75% LTV has been borrowed.
A report by members of the National Association of Estate Agents shows that the first-time buyers are slowly returning to the mortgage market.
Chris Brown, president of the NAEA stated “Members have reported that the first-time buyer market is slowly increasing with 11.8% shown as the percentage share of first-time buyer sales in June. For first-time buyers who have the adequate mortgage funds in place and can secure mortgages, now is a time they can operate as opportunists and take advantage of the market and the properties and prices currently available.” Read the rest of this entry »
A former sub prime, mortgage lender is offering an 8% discount to its borrowers if they redeem their loans early.
Edeus, which started up in early 2006, is making a cashback offer to over 400 customers and may extend to the rest of their customers if it proves popular.
The mortgage lender wants to get the loans off its books but can not find an investor willing to buy.
A spokesperson admitted the idea sounded strange but it was far cheaper than selling the loans in the normal fashion
July 31st, 2008 by 
Guy
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