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Newcastle Building Society has joined the 90% LTV market by launching a two-year fixed rate mortgage and a two-year tracker mortgage. The fixed-rate mortgage is available at 5.95% with a £499 completion fee and a £195 reservation fee while the tracker is available at 4.60%, or Bank of England base rate plus 4.10%, with the same fees applicable.
Both deals are for purchase only, and will be available via the Newcastle’s branches and through its direct mortgage operations centre.

The products allows multiples of up to 3.25 times an individual’s annual salary, or three times the joint salary of a couple.
Steve Urwin, senior sales and marketing executive at Newcastle Building Society, says: “We know there is still the demand throughout the UK from many consumers that want to buy their first home.
“With house prices beginning to recover and a lot of homes remaining affordable to many first-time buyers, we have created these products to give them the opportunity to get onto the property ladder, while encouraging both responsible borrowing and lending practices.”
“The terms and rates we’re offering compare extremely favourably with other products currently on the market without demanding the applicant take other products to qualify for the deal.

The Council of Mortgage Lenders  has announced that mortgage lending in the UK will pick up in before the end of this year. This comes despite the fact that 2010 has begun rather slowly for the UK mortgage market  although this is due in the main to the ending of the stamp duty concession on 31 December 2009.
Despite the fact ot the lack of competition in the UK mortgage market it does believe this will increase slowly and build up throughout 2010. Interestingly 58% of mortgage brokers believe that mortgage enquiries should improve in the first quarter of 2010 with an average anticipated increase in activity of 7.1%.

This is a sector which needs some good news after a rocky few months during which time hopes of a significant firming of the marketplace have been weakened somewhat. The first quarter and the second quarter of 2010 are vital for the UK mortgage arena and the UK property market and all eyes will be on this area of the economy in the next 3 -6 months.

Gross mortgage borrowing dropped by 21 % year-on-year to £9.1 billion  in January this year, the Council of Mortgage Lenders said yesterday.

That showed a 32% drop from December’s level and was the lowest monthly total since February 2000.

The CML said the larger than average drop in January suggested house purchase activity was boosted in December by borrowers rushing to complete house purchases before the end of the stamp duty holiday.

“We remain in a period of uncertainty for the housing market and the economy at large,” said CML economist Paul Samter.

“The market certainly improved over the second half of last year and started 2010 in better shape than most would have predicted twelve months ago.”

HSBC has launched a new range of fixed mortgage and tracker deals. The new products have mortgages up to 90% LTV.
The mortgages include a two-year fixed rate mortgage at 3.69% up to 75% LTV with a booking fee of £999, and a 5 year fixed rate mortgage at 4.64% at max 60% LTV with a £999 booking fee.
HSBC has also launched a discounted mortgage at 3.59% for 2 years at up to 80% LTV and no booking fee.

There is also a fee-free lifetime tracker at 4.99% at 90% LTV.
Martijn van der Heijden, head of mortgages at HSBC, says: “As house prices have stabilised and in most cases increased over the last year, it’s clear that lenders are returning to the market with confidence and more competitive mortgages.”

The Scotland’s housing market is in recovery as nearly all areas showed encouraging quarterly house price increases, according to Lloyds TSB Scotland.

Their Scottish house price monitor showed that in the three months to 31 January 2010, the average house price went up  by 5.9% on the previous three months. The average price reached £160,074 following seasonal and mix adjusting pricing.

Almost all areas experienced a rise in prices, with the highest increases recorded in Dundee with 16.3% and Edinburgh with 11.4%.

However, all areas continue to report an annual fall in prices. Prices in Dundee fell by 2% while prices in Glasgow fell by 12%. On an annual basis, Scottish house prices have now fallen by an average of 6.8%.
Professor Donald MacRae, chief economist at Lloyds Banking Group Scotland, said business surveys point to an exit from recession in early 2010, despite five consecutive quarterly falls in output in the Scottish economy He added: “The level of mortgage availability including for first-time buyers has increased while the cost of borrowing remains low for many mortgage holders. The Scottish housing market is now into recovery.”

After two years in the wilderness, the mortgage market’s heart is starting to beat again. House price in some parts of the UK are recovering and it seems that lenders are starting to lend. For the first time in a long time, we are seeing new mortgage products becoming available. Meanwhile, many borrowers who have been sitting pretty on low standard variable rates have started to see their repayments rise as lenders look to restore their profit margins. So what does this mean for people with a mortgage? In short, remortgaging – moving from one lender to another with a better a rate – is back.
In May 2007, shortly before the credit crunch, 117,774 remortgages went through. In December 2009, the number had dropped to a measly 23,220. Homeowners have had the odds stacked against them. Those who had seen the equity in their properties falling had been unable to remortgage, finding higher loan-to-value (LTV) deals considerably harder to find and more expensive. With 100 % LTV extint, those in negative equity would have had no choice but to stay put. There has also been a limited supply of products on the market and, with standard variable rates so low, little incentive to switch to a product which would invariably be more expensive. However, things are changing. “Life goes on despite recession and people need to move,” says Andrew Montlake, a director of mortgage broker Coreco Group. “If they find a good quality property, people are paying the going rate. This is keeping house prices up.” Rising valuations are pulling people out of the equity slump, nudging homeowners towards the affordable end of the LTV scale. “A lot of people had slipped beneath the LTV line who can now remortgage,” says Mr Montlake. “That’s one reason why we’re going to see levels increasing “Remortgaging is definitely in the air,” says Darren Cook, a spokesman for online financial information service Moneyfacts.co.uk. “Competition is slowly coming back to the market. Lenders are changing products and competing for business and there are banks out there that are looking to lend.” In February alone, the number of mortgage products available has increased by more than 300 and the total for January increased by 1,000. The number of products for the 85-95 % LTV levels has also risen, opening up possibilities for those with less equity. In August 2008, there were 475 mortgages at 90 per cent LTV, dropping to a low of 71 in May 2009. Since then, the number has more than doubled to 144 in February 2010. More competition gives homeowners more options and better rates. “Competition in the market is driving down costs of mortgages,” says Ray Boulger, a spokesman for mortgage broker John Charcol. “This is making it more viable for people to switch. This time last year, it was not worth remortgaging unless you were switching to a fixed rate.”
Rates are improving, but few stand up to the ultra-low SVRs that many continue to take advantage of. Figures show that an average of 50 per cent of mortgage customers are staying on SVRs compared with an average of 30 per cent before the crash. Reluctance to switch has been a factor in the stagnation of the remortgaging market, but changes to lending policy are shaking things up. No longer able to afford customers riding on low SVRs, several building societies, including Skipton, Cambridge, Nationwide and Norwich & Peterborough, have cited exceptional circumstances and boosted their SVRs by more than 1 per cent. Some have claimed that it is in order to protect their savers, but Skipton, the first to act, admitted its business was unsustainable with a 3.5 per cent SVR, demonstrating it is profits and not savers lenders are looking to protect. Higher SVRs are pushing homeowners back into the mortgage market to review their options. “Those who have at least 25 per cent equity can switch to a lifetime tracker that would be sufficiently cheaper than any SVR from 3.5 per cent upwards,” says Mr Boulger.
Much of the reticence in the mortgage market has been prompted by uncertainty. However, some homeowners have seen the base rate in the doldrums for 10 consecutive months and are betting on an imminent rise. At the moment, First Direct has a two-year fixed-rate at 3.29 per cent with a £998 fee (3.7 per cent APR) and ING is offering 4.29 per cent fixed until 2013 with a £795 fee (3.8 per cent APR) both up to 75 per cent LTV. HSBC also has a five-year fixed rate at 4.73 per cent with a £999 fee (4.4 per cent APR), up to 60 per cent LTV.
Others believe base rate will stay low for the foreseeable future and wish to continue paying a low rate, but in order to do so they must remortgage on to a tracker or discount as banks sever the connection between the Bank of England decisions and SVRs. They are looking at lifetime tracker deals like the strong offerings from the Woolwich at base rate plus 2.13 per cent for those with at least 70 per cent LTV and base rate plus 2.39 per cent for 75 per cent LTV. For both of these camps, it appears as if it is just a matter of time. “As soon as we see base-rate movement the remortgage market will come back responsibly,” says Mr Cook. “Banks had their arms twisted to reduce their SVRs so low, but government aid is coming to an end and we’ll see this reflected.” Whichever path homeowners take, they lead to remortgage.
That is unless you fall into a third camp that is unable to remortgage. House prices are rising, but slowly. “For growth to continue, we would need to see an increase in prices of over 1 per cent each month,” says Martin Gahbauer, the chief economist at Nationwide. “Prices are still more than 10 per cent down on the 2007 figures, so although outlook is positive, recovery is still tempered. Homeowners who took out a 90 or 100 per cent mortgage shortly before the crash or have lost their jobs may have difficulty finding a deal. “Although there is definitely a significant increase in the higher LTVs available you still pay a big premium,” says Mr Boulger. “Unless you’ve got 20 per cent there’s not much point in remortgaging.” The option for those with less equity is going to their existing lender. Halifax, Nationwide, Santander and others have competitive products, but Mr Montlake says there are no promises. “There is still a massive chunk of people for whom remortgaging is still a good 12 months away.”

The amount of new buy-to-let mortgages increased for the second quarter in a row in the last quarter of 2009. Read the rest of this entry »

Mortgage rates which track the Bank of England base rate, dropped to a record low last month, providing a much-needed boost for borrowers and the housing market Figures out today from the Bank of England show that the average rate charged on tracker mortgages which have at least a 25 % deposit fell to 3.63 % in January, down from 3.92 % in December and the lowest rate recorded since comparable records began in 1997. The mortgage interest rate on two-year fixed-rate mortgages also fell to a six-year low of 3.97 %, down from  6.35 % in June 2008, when it was at its highest. But while lenders are to attract new borrowers with smaller deposits they are still being forced to pay much higher interest rates. The Bank stopped gathering information on 95 % LTV mortgages in 2008 as there were so few available. But there are small signs that lenders are becoming more willing to lend to borrowers with smaller deposits, although there is unlikely to be a return to the abundance of 95%, 100% and 125 % mortgages seen before the credit crunch. The number of mortgage deals available to customers who need to borrow up to 90 % of the value of their home jumped by over a quarter in January, while Nationwide yesterday said that it was reducing the minimum deposit customers needed to put down to qualify for its best rates from 40% & to 30 % on nearly half of its mortgage products.

Most borrowers on SVRs would now be better off remortgaging, according to research from Moneysupermarket.com. Following the recent rises to SVRs from lenders such as Skipton Building Society and Nationwide’s The Mortgage Works and UCB Home Loans, Moneysupermarket.com says that that slowing remortgage market has staged a comeback And the comparison website says that even when arrangement fees are factored in, the cheapest two-year fixed rate mortgage is still less expensive than the majority of SVRs. Moneysupermarket.com says that the cheapest two-year fixed rate mortgage is First Direct’s 3.29% deal available up to 75% LTV with a £998 arrangement fee. Even taking into account the arrangement fee, the website calculates the actual cost of this mortgage would be 3.8% after two years, which is only beaten by 13 out of 85 current SVRs A spokeswoman for Moneysupermarket.com, says: “The prospect of an arrangement fee can be off-putting but our analysis shows that even when taking the fee into consideration and provided borrowers have at least 25% equity in their properties, the vast majority of SVR deals do not compete with the top fixed rates For trackers, the best deal according to Moneysupermarket.com is Alliance & Leicester’s two-year tracker at 2.49%, available up to 70% LTV and with a £995 fee Once the fee has been factored in, the actual cost of the mortgage equates to 3.07%, beating all but seven SVRs currently available.

The Bank of England has kept interest rates on hold at 0.5% and frozen its quantitative easing programme for the time being.

Analysts widely expected the Bank’s Monetary Policy Committee (MPC) would keep quantitative easing at £200bn after the economy grew slightly in the final quarter of last year.

Office for National Statistics  data showed the economy grew by 0.1% in the last 3 months of 2009.
Some economists say quantitative easing has done all it can to help the economy, and want the MPC to turn its focus to controlling inflation.
Interest rates will remain at 0.5% for the 11th consecutive month. However, rates are widely expected to rise later this year, after inflation hit almost 3% last month due to rising fuel prices and the increased rate of VAT.