Mortgages

Despite the increase in interest rates over the past year, buy-to-let mortgages are still very popular. In fact 12% of all new loans in the past 6 months have been for buy-to-let mortgages. The Council of Mortgage Lenders says these types of mortgage account for 10% of all mortgage types - a rise of 3% from 2002.

There are concerns of another Bank of England base rate increase to 6%. Will this finally slow the buy-to-let market down?

Read the complete article at the Times website here

The Independant recently published a great article on Mortgages. The piece was based on the following question:

‘I want to buy the very best house I can afford before house prices rocket out of reach. How far should I push it, and should I switch to an interest-only mortgage so I can borrow more?’

Statistics from Halifax suggest the average house price in the UK is approximately £199,000, which can lead to first time buyers finding it difficult to get a mortgage. This is increasing the number of those taking out an ‘interest-only’ mortgage which can prove to be a big risk if you have no back up plan to pay off the capital owed.

The article is full of no-nonsense tips for first-time buyers on how best to approach getting and paying your first mortgage, as well the other options available to help you get onto the first rung of the property ladder. Examples include buying with friends, getting a buy to let mortgage or shared ownership.

Read the full article here

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In the past 4 years, first-time buyers have seen a giant increase in the size of their mortgage - it has almost doubled since 2003.

From the article:

‘New figures from Abbey show to get on the property ladder new homeowners are now forced to borrow on average £130,000. This compares to the average amount of £75,000 borrowed by first-time buyers four years ago in 2003.’

It seems to be getting more and more difficult to get onto the property ladder, with many young house buyers having to rely on their parents for financial assistance.

With house prices ever increasing, so too is the amount first-time buyers have to borrow for a mortgage. However people need to be be wary of borrowing too much over their salary as the Bank of England’s base rate, which is currently at 5.25%, may also be set to rise, leading to an increase in mortgage repayments which could mean people struggling to keep up with monthly payments.

Read the article at MyFinances.co.uk

The Prime Minister has made clear his enthusiasm for introducing a 25 year fixed rate mortgage amongst the already vast range of mortgage options available to home buyers today. It has been suggested that this long-term fixed mortgage could be a valid way of stabilising the current state of the UK housing market.

However Abbey Mortgages have completed a survey on this very topic and have found that UK homebuyers are more reluctant than the Government about the popularity of this option.

From the article:

‘Abbey surveyed 1,000 people and found that only 23% could confirm they would consider a 25-year fixed-rate mortgage’

This type of mortgage is commonplace in other european countries but from the results given many of the respondents (54%) said they would not consider this type of mortgage due to the uncertainty of future interest rates.

Read more from the article here Finance Markets

A perspective from across the pond, as our American cousins view the UK’s “looming mortgage crunch”. Bloomberg (the US financial news organisation) has interviewed several brits, including a couple of consumers, a mortgage broker, and an independent financial advisor. The news seems fairly bleak to those borrowers who’re already stretching themselves. From the article:

“Ben Craster says he’ll be drinking less beer this summer, and Christine Baines is cutting back on clothes and cosmetics. They’re among the millions of Britons preparing for a mortgage crunch.”

Plus:

“‘We have a fixed-rate squeeze coming,’ said Alan Clarke, an economist at BNP Paribas in London. ‘Consumers are going to bear the brunt of a slowdown.’”

Read more at the Bloomberg site here

The Motley Fool has 5 of the worst mistakes you’re likely to make when buying your new home. The UK housing market is wobbling at the moment, due at least in part to 5 interest rate rises since August 2006. Cliff D’Arcy at the ‘Fool has identified a few traps for would-be homeowners.

Here are the one-liner tips:

1. Buying in the ‘wrong’ area
2. Not putting down a deposit
3. Borrowing too many times your salary
4. Choosing the ‘wrong’ mortgage
5. Buying at the top of the market

Read more at the Motley Fool website here