YourMortgage News

This is the news items from April 2009, kindly provided by YourMortgage.co.uk. To see more detailed features from YourMortgage click here.

April News

Mortgage approvals jump in February 1 Apr 2009

The total number of mortgages approved to buy property increased by 19% in February. Figures from the Bank of England revealed that the total number of mortgage deals approved for property purchase went up from 31,791 in January to 37,937 in February. The good news prompted some economists to speculate that the worst could be over in the housing market as buyers re-enter the market to snap up property bargains. Paul Samter, an economist at the Council of Mortgage Lenders, said February's increase was "welcome news", but it was too early to say if the market was showing signs of improvement.

Despite the increase, approvals for house purchase were 44% lower than in February 2008. The news came a week after the first signals that the US housing market also showed signs of a pick up. Sales of existing homes jumped by 5.1% last month, spurred on by first-time buyers snapping up foreclosure bargains.

Home improvements take back seat 7 Apr 2009

Nearly half of people cannot afford to pay for improvements to their homes this Easter, according to comparison site Moneysupermarket. The survey found that despite homes needing maintenance work, a quarter of homeowners cannot afford to repair their homes, while 14% are resorting to undertaking the DIY themselves in order to save money.

A cheeky 4% will be asking friends or family to do their home improvements for them because they cannot do it themselves or pay for the work to be done. Interestingly, DIY is not a hobby most Brits enjoy with only 9% of people saying they will be doing their own DIY because they like it.

Steve Sweeney, head of home insurance at Moneysupermarket, said: "As the recession continues to bite, people are looking for more ways to keep spending down. It is sad so many people cannot afford much needed improvements for their homes. However, with others planning to roll up their sleeves and get on with the job themselves, or more enterprisingly, rope family or friends into helping them do up their house, it seems Easter could be a busy period.

"For those looking to make home improvements themselves to save money, I would advise they ensure they are comfortable with any work they choose to carry out, especially those working without help or guidance from someone with relevant knowledge or experience. It is vital to check the small print of their policy in case of any DIY disasters because unless they have accidental damage cover, their DIY mishap may not be insured."

The research also found that those living in the North-West and Northern Ireland are feeling the pinch the most, with 27% and 29% respectively saying that they cannot afford to improve their homes. To add to this, those in their 30s seem to be being hit the hardest, with a third unable to repair their house.

HSBC to launch 90% mortgages 8 Apr 2009

HSBC is launching a range of mortgage products with loan-to-value (LTV) maximums of up to 90%, backed with £1bn of funding. This is part of HSBC's £15bn fund it has allocated for new mortgage lending in 2009: twice what the bank lent in 2007. The new deals reflect the bank's commitment to continue lending to UK homeowners at competitive rates and will be available from April 14. The mortgages will be available to HSBC Plus account and Premier customers. HSBC current account customers and those not currently with HSBC are welcome to open a Plus account to take advantage of the offers.

Over the past 12 months, neither first-time buyers nor homeowners with relatively low levels of equity have been able to take advantage of the falling cost of borrowing. By making £1bn available to buyers with deposits of just 10%, HSBC is trying to remedy the situation with a market leading rate of 4.99%, fixed for two years.

Joe Garner, group general manager of HSBC's personal financial services, said: "Although house prices have fallen, and continue to fall, they won't fall forever. At HSBC we are standing by our customers through thick and thin and these changes mean we can continue to give customers the best possible deal on their mortgage. This is a one billion pound commitment and it says we appreciate our customers' loyalty."

A two-year fixed rate with a maximum LTV of 90% is available at 4.99% and carries a booking fee of £1,499. The range also includes a two-year fixed rate of 5.49%, with a fee of £199. Both these mortgages are available for house purchase only.

Huge rise in fixed rate uptake 22 Apr 2009

Fixed rate mortgages soared in popularity in the first three months of the year. According to a new index by mortgage brokerage John Charcol, the proportion of borrowers choosing to fix their interest rate shot up from 29.1% in December 2008 to 47.8% in January, 67.4% in February and 80.9% in March. The results are a clear indication that mortgage borrowers expect interest rates to rise in the future. Bank Base Rate is currently at an historic low of 0.5%, but the Government's 'quantitative easing' measures are widely expected to boost inflation in the future, necessitating rises in interest rates.

 "The increase comes as a result of a combination of several factors, the most obvious being that with Bank Base Rate now at 0.5% there is only one way for it to go - the only questions being the timing and the scale and speed of the increase," commented Ray Boulger of John Charcol. Boulger also believes that the extremely large margins being charged on tracker mortgages have also pushed more borrowers to plump for a fixed rate. Trackers are currently typically being charged at around 3% over the Base Rate, which is reasonably attractive at present but could get very expensive when Base Rate rises.

The most competitive fixed rates now available are priced between 3% and 4% for two and three year fixes while the best tracker rates are around 2.25% to 3% over Bank Base Rate giving a current pay rate of 2.75% to 3.5%. The John Charcol index reveals a big jump in the number of mortgages taken out to buy property compared with remortgages, and a significant increase in the number of first-time buyers applying for homeloans.

Andrew Hagger of comparison website Moneynet.co.uk warned that once the UK housing market revives, competition between lenders will increase, with many offering 'gimmicks' which will make it tricky to calculate which is really the cheapest mortgage.

"It is vital that would be borrowers, whether first time buyers, remortgagers or movers check the true cost of any deal before signing on the dotted line,'"he said. "With a range of rate/fee combinations, there is no one deal that fits all, and with fee-free and percentage fee deals only adding to borrower confusion, finding the true cost of a mortgage is key unless you want to be needlessly pouring money down the drain.

"Don't assume that a low rate or no fee deal is best. It's essential that borrowers always compare the total cost of the mortgage they are looking at and not be swayed by a low rate or no fee deal," added Hagger.

House prices fall 0.4% in April 30th April

The latest Nationwide research revealed house prices fell 0.4% in April, leaving the UK average house price at £151,861. Fionnuala Earley, Nationwide's chief economist, said: "This reverses some of the rise seen in March, but is in line with our expectations, given the current economic conditions. April's decline leaves the average price of a typical house down 15% from 12 months ago. The three-month on three-month rate of change, generally a smoother indicator of the short-term trend in prices, improved to -3.1% in April from -4.1% in March.

"The Chancellor announced several measures aimed at boosting the housing market in his Budget. The scheme for Government guarantees for new, high-quality residential mortgage backed securities are welcome and may help to boost the amount of mortgage credit available.

"However, since the availability of credit is only part of the reason why the housing market is in the doldrums it is unlikely to lead to a swift turnaround in its fortunes. Lenders have already indicated that the availability of credit is less of an issue than it has been, but at the same time expect that the demand for secured lending will fall further. Given the weakness of the economy and the expected further increase in unemployment this comes as no surprise.

"The extension of the Stamp Duty holiday is also welcome in so far as it reduces the transactions costs for borrowers at the least expensive end of the market. While there has been no further increase in the amount of the tax free threshold, the impact of falling prices since the initial extension was announced in September 2008 means that more buyers could now benefit.

"Before the increase in the threshold the typical house price was above the old £125,000 limit everywhere except the Northern region. As house prices have come down, the typical house price is now below the new £175,000 threshold everywhere but in London and the Outer Metropolitan region. And for first-time buyers , only London has a typical house price above the threshold."