Mortgage and Business News » housing

Government home rescue package: Rent first, buy later

Peter — Thu, 17 Jul 2008 07:22:10 +0000

The UK government met yesterday to try and come up with a rescue plan for Britain’s ailing housing market. The rescue package includes a first-time buyers’ “rent first, buy later” scheme along with a new plan that will let councils work with local housing firms to develop surplus land for homes.

UK Housing Minister, Caroline Flint, has said that these proposals were an attempt to help improve the current housing market conditions, we have already seen the removal of the 100% mortgage from the market, making it harder for first-time buyers to get on to the ladder.

According to reports from The Guardian, the government’s new proposal of rent now, buy later will allow households with earning less than £60,000 to rent a property at a lower rate, maybe 80% or less for two to three years, they will then get the option to purchase that property later. This is ideal for those who wish to save for a deposit.

The government need to be able to offer more homes, to do this they will need to help the house building industry, if they want to be able to increase housing supply. The government wants to reach a target of three million new homes by 2020.

To achieve this councils and the private sector will have to work together to help provide homes on land that has been earmarked as surplus. There is to be a pilot scheme, four areas will be doing this, Barking and Dagenham council, and Newcastle, Nottingham and Manchester councils, those councils who are taking part will share a fund of £510 million.

Families who have homes repossessed face six-year housing wait

Peter — Tue, 17 Jun 2008 08:43:00 +0000

As if the fear of losing your home as you slowly fall behind with your mortgage payment was not enough, there is now reports that families who have their homes repossessed because of defaulting on their mortgage payment, have been warned that they could face a six-year wait for social housing. You have to wonder what the UK will be like in just two-year’s time, thousands would have lost their homes as they struggle to keep up with payments, and now it seems as if the current credit crisis will hit people far harder than they first thought.

Not so long ago, families knew that if they had their home reposed they would be moved into social housing, but the news that there is a six-year wait before they are permanently re-housed will come as a shock to them. Local Government Association chairman, Sir Simon Milton has said “by 2010 around five million people would be on social housing waiting lists.”

This is a combination of a number of factors, the first is falling house prices, in turn this has an affect on the mortgage market so restrictions has to be put in place. As the economic downturn worsens, the lack of affordable housing will then continue to push up the number of families onto the ever growing social housing waiting lists. Milton added “With the repossessions, the end of small deposit mortgages and the millions of people already on social housing lists, it will mean that those trying to get a home they could call their own from the council could wait more than six years for a two-bedroom house.”

Sir Simon, made a speech at the Chartered Institute of Housing, he said that the unprecedented pressure on social housing had been caused by strong house price gains in recent years. It is not just people who have mortgages facing problems; first-time buyers are also having troubles, because getting a mortgage is now much harder than it was just a year ago.

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Recovery of house prices could take more than four years

Peter — Mon, 16 Jun 2008 08:02:30 +0000

If you thought that the fall in house prices was just a minor blip, then you had better think again. It seems as if we are in for a long bumpy ride, one that could take more than four years to recover from. House prices have now been falling for the past few months, and if you are looking to sell, then expect not to make as much as you first thought. In a survey carried out by ITV1’s Tonight programme, 60% of 225 Society of Business Economists (SBE) members all agree with the four year forecast. They also agree that house prices could soon drop by at least 20 percent from the top of the market; some even predict it being as much as 30 percent.

Many of the experts from a number of the UK’s banks and building societies are saying that house prices will fall between 6 to 10 percent this year. However; they have said the housing market could hit rock bottom by 2009. Bronwyn Curtis, SBE’s chairman has said “buyers could have to wait a long time to get their money back.” She also added “It doesn’t look like we’re going to see a fall, which is what we’re in the middle of, and a quick bounce back. It does look as though it’s going to go on, and we’ll have slow growth for some time.”

It seems that this latest in a long line of surveys are just proving how horrible the housing market, along with the whole economy really is. With the current housing market being in a bit of a downwards spiral, this is having a knock on affect with UK’s major house builders, as there share prices took a bit of a hammering last week. Estates agents have seen a 30 year low in houses changing hands, estates agents are only selling an average of 17 properties each during March, April and May.

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100% mortgage borrowers now facing negative equity

Peter — Wed, 11 Jun 2008 10:36:31 +0000

If you are one of the 23,200 borrowers who took out a 100% mortgage in the year up to March 31st, then the BBC has said that they could now be facing the prospect of negative equity. This is the result of falling house prices hitting the UK, so your house could now be worth less than the amount you borrowed from your mortgage lender. The Council of Mortgage Lenders is now showing data that the housing market is now slowing down even further. Other figures show that the number of transactions for each estate agent is now at a 30-year low.

These figures are the result of stricter requirements on borrowers, this is to be expected as we are now well into the current credit crunch. When you read that 23,200 100% mortgage borrowers are facing negative equity, do not let that worry you too much for the moment, as they only account for 2.5% of the total mortgages that has been given out in that period, and even lees on the total number of mortgages in the UK.

BBC News

has said that for those of you who are in negative equity please do not worry, if you have no plans in moving then you can just ride out the storm, it will not affect you. The only time you need to worry is if you plan on moving or you are not able to pay your mortgage payments. Future borrowers will not face this situation, as mortgage lenders are turning people away who do not have a deposit.

House prices are now down by 6% in the past five months; in just one month they dropped by 2.5%. However; Michael Saunders who is the head economist at Citigroup, predicted that house prices will fall by at least 15 percent in 2008 and 2009, since then he thinks that this could drop even lower.

250,000 mortgage holders fall into negative equity

Peter — Tue, 03 Jun 2008 13:44:12 +0000

It looks as though things are starting to look even bleaker for mortgage holders, as news has come to light that over 250,000 mortgage holders fall into negative equity. There are also reports that more than a million home owners with a mortgage will be at risk as the housing market starts to enter a crisis.

City Bank has been saying that the house prices have dropped as much as 7 percent in some areas; this means that some home owners owe more on their mortgage than the value of their homes. It seems that we are now entering the same housing crisis as we had back in the early 1990’s. More than 2 million homeowners were in negative equity back then, and it is now feared that we could see a repeat of this.

There are no signs that house prices will stop falling, and if it keeps on then many more homeowners will enter negative equity.

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Mortgage brokers giving up licenses or quitting due to housing crisis

Peter — Mon, 02 Jun 2008 14:08:50 +0000

The housing crisis that is hitting the U.S. is having a massive affect for mortgage brokers, many are giving up their licenses, some are just walking away and quitting. The reason for this is due to underwriting standards rising as home sales have fallen. Government-sponsored mortgages are now soaring, and all though this is a great opportunity for some, it spells disaster for many others.

In Minnesota alone, more than 50 mortgage brokers have now surrendered their license that is double the amount of last year. It seems that the new laws that make it tougher to be working in the business, is now having the desired affect that the government was hoping for. It seems that no matter where you turn, the credit-crisis will get a lot worse before it gets better, and it is not just the U.S. who is being affected, the UK is also seeing an a drop in house sales and a decrease in approved mortgages.

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Mortgage brokers not getting best deal than going direct to lenders

Peter — Wed, 28 May 2008 14:38:03 +0000

As we all know, the Mortgage industry is in a bit of crisis, because of that you would have thought that your mortgage broker would be able to get you a great deal. There are so many adverts on the news, advertising a range of great mortgage deals, and you start to ask your why is my broker not getting me that deal?

Well thanks to The Independent that have come up with the answer, it seems that there are a great range of deals on offer, but many of these deals are being frozen. For a customer to take advantage of these mortgage deals, they will have to ditch the broker and go direct to the lender themselves.

You might ask yourself why on earth mortgage lenders would do this, well that is simple; lenders are now being bombarded with applications. The next part is a little strange; it seems that too much business actually threatens their profit as the lender has to pay expensive commission on deals done via brokers. So with this in mind, you will have to do all the hard work yourself to get the best deal to suit you.