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YourMortgage News

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

May News

Mortgage borrowers must act now to avoid higher repayments

Borrowers coming to the end of a mortgage deal should pre-book a new mortgage to avoid rate rises, according to MoneyExpert.com.

It advises the 2.3 million homeowners who are due to remortgage this summer to apply for a mortgage now to avoid paying an extra £207 a month.

Sara Gardner, chief executive of MoneyExpert.com, said: "Anyone moving off a fixed rate they took out in 2004 or 2005 is likely to see some increase in their monthly repayments as rates have moved up.

"People forget that many lenders will leave an offer on the table for a few months, allowing you to make a considered decision."

Many lenders leave the mortgage offer open for at least three months, with some allowing you six months to decide whether to sign up.

HIPs delayed until August

The implementation of home information packs (HIPs) has been delayed until 1 August.

Communities Secretary Ruth Kelly announced in the Commons today that the scheme would be delayed.

 The Government has also said it has reached an agreement with the Royal Institution of Chartered Surveyors on its judicial review of energy performance certificates.

Instead of the previous 1 June launch date, HIPs will now be implemented on a phased basis from 1 August, when they will only be required for properties with four bedrooms or more, which the Government has said are the most energy inefficient.

Despite repeated assurances from the Government there would be enough domestic energy assessors ready for the 1 June implemenation, it has admitted now that packs for smaller properties will be phased in as sufficient energy assessors become ready to work.

Ruth Kelly, Communities Secretary, said: "We are pleased we have reached an agreement with RICS and potentially avoided a lengthy court case and months of delays. The approach we have set out preserves the principles of HIPs and EPCs, while ensuring a transition period for the people buying and selling their property."

Other changes include allowing EPCs to be up to twelve months old, and letting people market their properties as soon as they have commissioned a pack, rather than making them wait until they receive a pack.

Yvette Cooper, Housing Minister, added: "Given the serious threat from climate change, it would not have been acceptable for energy certificates to be subject to long legal delays and uncertainty."

Darren Beech, managing director of Promise Homepacks, commented: "The delay to 1 August for HIP implementation, and then only for four bedroom properties, is a recipe for added confusion. How do you determine between a three and four bedroom property - does the smallest room now revert to being simply a 'spare room'? It's madness."

Michael Gove, Conservative Shadow Minister for Housing, said: "The Labour Government is in disarray - they are lurching from one case of incompetence to another. Ministers should now come clean, and take home information packs back to the drawing board. It would seem that the only thing Labour Ministers care about is how to minimise their embarrassment over yet another u-turn, whilst tackling climate change and helping first time buyers have been relegated to after-thoughts."

Homeowners lose millions insuring with mortgage lender

Mortgage lenders' insurance products are a rip off, according to a survey by the Post Office.

Almost five million people who have a mortgage could be losing a combined £600m every year on their home and life insurance, because they buy their mortgage lender's products instead of shopping around.

Post Office Financial Services head of insurance Phil Ashkuri said: "Convenient doesn't always mean cheap.

"Many homeowners don't realise that taking out buildings and contents insurance with their mortgage lender is generally not the best value deal. And it's not compulsory for securing their mortgage."

Nearly half of all homeowners are throwing their money away on uncompetitive insurance products provided by their mortgage lender, the survey found.

Of those, one in 10 did so because they thought it was compulsory to buy home or life insurance from the same company that provides their mortgage.

One in 20 even believed their mortgage was at risk if they didn't buy insurance too.

A shocking 63 per cent of homeowners do not bother to shop around, instead choosing their lenders' insurance because it was convenient.

Interest rates set to rise further

The Bank of England has signalled that further rate rises are on the cards in order to bring inflation back down to meet Government targets.

Mervyn King, the Bank's governor, warned homeowners and businesses that the bank would not hesitate to increase the cost of borrowing should it prove necessary to ensure the health of the economy.

Mortgage borrowers have already suffered four rate rises since August last year.

Stuart Law, managing director of property investment specialist Assetz, believes a further rate rise is not necessary in order to bring down inflation.

He said: "We believe the CPI will drop back to 2% later in the year and the Bank of England concurs.

"It is possible that the MPC is trying to improve its image by portraying a firm control of inflation, after the recent embarrassment of having to write a letter to the Chancellor explaining why the Bank missed its inflation targets."

Self-employed missing out

Self-employed workers could be prevented from getting onto the property ladder because they do not understand the mortgage market, research by Mortgage Express reveals today.

A survey by the mortgage lender shows that nearly three-quarters of self-employed mortgage borrowers don't know how a self-certified mortgage works and the majority don't know whether or not they would be eligible for a standard mortgage.

Andy Wiggans, director of mortgage products at Mortgage Express, said: "Although not ideal for everyone, self-cert mortgages can be the solution for those who are dependent on secondary or variable incomes and want to own their ideal home.

"Yet lack of consumer awareness regarding this product is still preventing many eligible consumers from getting on or climbing up the property ladder."

He added that mortgage brokers are ideally placed to "demystify" self-cert mortgages and to give self-employed clients the best guidance possible.

First-time buyers borrowing more

Struggling first-time buyers broke records today for spending more of their income on mortgage payments than anyone else since 1991.

The proportion of first-time buyers' income consumed by mortgage payments reached 18 per cent this month, the highest it has been for the past 16 years, according to the Council of Mortgage Lenders.

CML director general Michael Coogan said: "With a rise in interest rates widely expected later this week, it is encouraging that those first-time buyers who are getting a foot on the property ladder are opting for fixed-rate products."

The survey also found that first-time buyer income multiples have edged up over the past year to 3.31 times the average first-time buyer income - up from 3.15 times income last time last year.

Homebuyers' stress costs the economy £500 a year

The stress of buying a home detrimentally affects a buyer's performance at work, research by estate agency Your Move has revealed.

Two out of five homebuyers report that they are less productive at work when going through the homebuying process, citing stress as the reason.

Mike Ockenden, director general of the Association of Home Information Packs (HIPs) providers, believes the introduction of HIPs in June will significantly reduce the time taken to exchange of contracts, and so will lower stress levels.

He said: "Even if a very conservative analysis reveals that a 10% loss of productivity is experienced by 40% of all people involved in the house buying and selling process, the cost to the economy is over £500m a year."

From 1 June HIPs must be purchased by vendors before they put their property up for sale. The packs contain important legal documents about a property being offered for sale, such as local authority searches, and an energy performance certificate, which measures the energy efficiency of a property.