YourMortgage News

This is the news items from May 2009, kindly provided by YourMortgage.co.uk.

May News

Woolwich slashes product rates 5 May 2009

Woolwich, the lending arm of Barclays, has announced it is cutting the rates on more than half of its mortgage range by an average of 0.35%. Two, three, four and five-year fixed rates and offset tracker mortgages are included in the cuts. Borrowers can now sign up for two years at 3.69% - a reduction of 0.40% - for loans up to 70% LTV and 4.99% - a cut of 0.70% - for loans up to 80% LTV. Alternatively, a three-year fixed rate is available at 3.99% for loans up to 70%, a reduction of 0.50%. The offset tracker is cut by 0.50% to 2.49% for loans above £200,000 up to 60% LTV.

Andy Gray, head of mortgages for Barclays, said: "Last month we pledged to increase lending to homeowners by £5.5bn and now we are launching even better mortgage rates to our customers. Our attractive pricing addresses all customers' requirements: those who want the certainty of a fixed rate or others who are thinking holistically about their financial situation by looking for offset options."

Developers warn of housing shortage 11 May 2009

A national survey of 4,500 UK homebuilders by Smart New Homes has revealed 45% of all developers expect a further fall in the number of new developments started in 2009, with a quarter predicting a 50% decline on 2008 figures. The predicted halt in price decline by much of the industry is likely to be linked to the imminent lack of supply. New home starts have been severely damaged by the credit crunch, and there is little sign of any uptake on these depressed figures in 2009. Semi-detached and terraced homes were recorded as being in the shortest supply, despite developers reporting that these property types are in the highest demand from homebuyers.

Half of developers are predicting that house prices will stabilise by the end of the year. The majority of respondents believed that the downturn would not last beyond 2010, with some predicting a return to price growth as early as this year. The majority of respondents believed the worst of the UK house price downturn is now behind us, with half predicting market stability for both new homes and re-sale property by the end of 2009, and 30% predicting a further fall of just 5% for the year as a whole.

David Bexon, managing director of Smart New Homes, said: "The optimistic market outlook from developers is an encouraging sign that we may now have passed the worst of the downturn. Prices are certainly no longer in freefall, with increased activity from homebuyers since the start of the year and early indicators of improvement in the mortgage market, prompting signs of stability.

"Homebuyers are returning to the new homes market, taking advantage of hugely competitive prices and a vast range of incentives to purchase the best of the remaining stock. Key areas of demand, such as affordable family homes are disappearing quickly as buyers seize one of the best ever opportunities to trade up.

"We are facing an imminent shortfall in supply, brought on by the severe lack of new home starts and the Government's abject failure to boost production of the very homes desperately needed to meet its own targets."

Lenders increase rates on fixed mortgages 19 May 2009

The cost of the average fixed-rate mortgage has risen in the last month, with borrowers looking for longer-term mortgages being hardest hit, according to Moneyfacts. The average two-year fixed rate now stands at 4.64%, up 0.03% from a month ago. Five-year fixed rates have risen 0.01% to 5.54% and the average 10-year fixed rate has increased from 5.74% to 5.78%. It takes a number of increases to move the market average and Moneyfacts states it could be the start of a worrying trend of rate increases. In the last few weeks a number of providers have all increased rates, including Woolwich, Halifax and Yorkshire Building Society.

Borrowers with no more than a 15% deposit have been hardest hit, with rate increases of up 0.20% since this time last month. Michelle Slade, analyst at Moneyfacts.co.uk, said: "Borrowers hoping to take advantage of this period of low interest rates and lock into a long term fixed are going to be disappointed.

"In the last few weeks, swap rates for longer-term deals have increased and this is being passed on through higher mortgage rates. Two-year swap rates have continued their downward trend, but this is not being reflected in new mortgage rates. Lenders are in effect taking bigger margins from the more popular shorter-term fixed deals.

"The best deals are still to be found for borrowers with a 40% deposit, but even these have not been immune from the increase in rates, even though the risk of foreclosure on such loans is minimal."

First-time buyer numbers on the rise 21 May 2009

Confidence started returning to first-time buyers at the beginning of this year, according to brokerage John Charcol. The index reveals a sharp increase in the proportion of purchases made by first-time buyers in the first four months of this year, with that proportion being 3.5 times higher than in the previous four months. Ray Boulger, senior technical manager of John Charcol, said: "The return of significantly more first-time buyers in to the market this year, despite the lack of high loan-to-value mortgages , is one of the best indicators of confidence we've got at the moment.

"A surprising number of first-time buyers have managed to find deposits of at least 25% in order to access a wider choice of mortgages and get a cheaper deal. Many branches of The Bank of Mum and Dad have proved more robust than many of our high street banks, haven't needed a Government bail-out and recognise that providing their son or daughter with a sizable deposit is often a good way of utilising their savings.

"Banks and building societies bemoan their ability to attract savings in the current low interest rate environment but their mortgage rates give them the best gross margins they have experienced for many a long year. With parents providing bigger than ever deposits for their first-time buyer children, some families have found a way of cutting out part of the middle man's turn."

The proportion of all applications for fixed-rate mortgages continued to climb in the last month, from 80.9% in March to 82% of all business written by John Charcol in April. This number is over 70% higher than the proportion of fixed-rate applications in January, when it stood at 47.8%.

Average home improvement spend reaches £5,300 26 May 2009

More than half of homeowners have undertaken home improvements during the past 12 months, according to Halifax.The average amount spent on home improvements over the last 12 months (not including adding space) was £5,300. Redecorating is the nation's most popular home improvement, with almost two thirds of home improvers choosing to revamp their homes with a new coat of paint and wallpaper. In second place came garden improvements with 39%, followed by new furnishings (26%), new carpets (20%) and a new bathroom (18%).

The main motivations behind all of the home improvements carried out was to improve the look and design of the house (44%) or update and modernise (38%).

Interestingly, more than one in ten respondents has added space to their property within the last 12 months, or plans to do so within the next year. An extension was the most popular choice among one third of respondents, followed by a conservatory (31%) and a loft conversion (28%).

The motivation behind the space adding improvements was to increase people's standard of living (42%) and lifestyle (29%) in their current home. In fact, over three quarters (76%) of respondents adding space intend to stay in their property and have no plans to move within the next two years.

Stephen Noakes, commercial director at Lloyds Banking Group, said: "In the current housing market, many people have decided to stay put rather than move. Therefore it is no surprise that we've seen an increase in people adding space to their property to make it more suitable for their current lifestyle."