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YourMortgage News

This is the news items from Aug 2007, kindly provided by YourMortgage.co.uk.

August News

House prices unaffected in the short-term

The US housing market and sub-prime mortgage crisis is unlikely to affect British house prices in 2007, according to research by Nationwide. Growth in house prices is steady, according to the lender, with the average UK property costing £183,898 in August, £16,177 more than one year ago. 

However, a longer-term cooling of the housing market was predicted by the lender, due to factors such as house prices rising faster than earnings and higher interest rates.  A prolonged financial downturn would, according to this report, have a negative effect on the market. 

Fionnual Earley, Nationwide's Chief Economist, says: "Whether the fall out from the US sub-prime crisis will have a more severe impact on the housing market longer term will depend on how long it takes for market jitters to settle."

House prices increased by 0.6% during the month, but the year on year increase fell by 0.3% to 9.6%.

Freedom at 55

Those past the age of 55 have less financial constraints than their younger counterparts, according to a report by Birmingham Midshires. 

While 41% of those in their early 50s are still making mortgage repayments, this figure is cut in half for those over 55.  

Jason Robinson, director of savings operations at Birmingham Midshires said: "After years of bringing up children and working hard, those in their 50s can look forward to a more relaxing way of life, with fewer financial strains."

The report notes that people over 50 in London are most likely to have children still living at home, while those in Scotland are the least likely.

House prices fall in London

In the wake of interest rate rises London house prices have fallen for the first time in a year, according to property website Rightmove.co.uk.

House prices, in London, dropped by 0.1% is giving the average London property a slightly cooler price tag of £394,268.  

Miles Shipside, Commercial Director of Rightmove comments: ‘While a slower market is to be expected in the summer holiday season, our research shows that the balance of power has switched from seller to buyer in most parts of the country'.

The drop in price puts an end to the steady rise of house prices at roughly 2% a month for the last twelve months. 

Customers happier with building societies

Building societies outperform banks when it comes to customer service, a survey has found.

More people at building societies are satisfied with levels of customer service, with 71% saying that they were either extremely or very satisfied, compared to 56% of people saving with banks.

Adrian Cole, director general of the Building Societies Association , said: "Too many people put up with shoddy service from their banks.

"We've always said that building societies are better than banks at working for their customers. It's good to know that theses results back that up."

When asked if their savings provider treated them fairly, 67% of those with building societies said yes, compared to 45% of those using banks.

Both building societies and banks ranked fairly evenly however, when people were asked if they would recommend their savings provider to a friend.

In this case, 69% of building society customers said that they would, as did 62% of banking customers.

The survey also found that mortgage borrowers were harder to please overall, with borrowers showing the strongest levels of disagreement across all the categories of the survey.

The report claims this is because borrowing money is more complicated and stressful than saving it, which causes borrowers to view service levels more critically.

Lenders abandon exit fees

Major mortgage lenders are getting rid of their exit fees, following an investigation by the Financial Services Authority (FSA).

Many British homeowners, who had previously either paid off their mortgage or switched to another lender, complained to the FSA about being charged higher exit fees than those initially agreed upon in their contract.

It is estimated that the average cost of exiting a mortgage has risen by 33% in the last two years.

Clive Briault, managing director of the FSA, said: "What we are seeing achieves our principal aim of stopping customers from being surprised by unexpected increases in mortgage exit fees.

"Customers will know when they sign up for a mortgage what fee they will pay on exit, or should be given a clear idea of how the fee might be varied fairly."

In light of the FSA's investigation, major lenders such as Standard Life, HBOS group and RBS have now opted to get rid of their exit fees altogether.

Other lenders have either reduced their exit fees or transferred the cost of the exit fee to other charges, such as arrangement fees.

Some lenders, such as Barclays and Woolwich, continue to charge exit fees.

Consumers are warned that in some cases, mortgage arrangement fees could increase by as much as £1000, in order to compensate for the loss of the exit fee.

Where lenders have chosen to set an exit fee, those lenders must now only ever change this fee if the reasons for it are clearly explained to the customer at the beginning of the mortgage contract.

Ray Boulger, senior technical manager at John Charcol, said: "There is now no hiding place for lenders.

"They must be open about what they are doing, and will have to be upfront in justifying these fees."

The FSA has issued the following advice to consumers:

•·        "If you think you have been charged a higher exit fee than the fee stated in your mortgage contract, contact the lender to find out if you are eligible for a refund of the difference. You may not need the original mortgage documentation to claim. If you give your name and the address of the property, the lender should be able to find your details."

•·        "From now on, you should know when you sign up for a mortgage what exit fee you will pay, or should be given a clear idea of how the fee might be varied in the future. This transparency and fairness will allow you to make an informed decision about which mortgage product is best for you."

•·        "Check all the mortgage fees as well as the interest rate when comparing mortgages. Consider what impact the fees will have on the overall cost of borrowing."