Banks oppose FSA over plan to ban Self Cert Mortgages
March 25, 2010
The Financial Services Authority is facing fierce objections from some of Britain’s biggest lenders over proposals to ban self-certified mortgages.
The City watchdog said that large banks and building societies had opposed a ban on the so-called liars’ loans that allow borrowers to state their own income without documentary proof, because it would be unfair on the self-employed and could lead to an increase in mortgage fraud.
The loans, which accounted for half of all lending at the peak of the housing boom in 2007, were blamed for playing a large part in the resulting collapse, after borrowers who had overstated or lied about their income on applications subsequently defaulted on repayments.
However, consumer groups, small lenders, brokers and trade associations supported the ban and argued that “everyone should be able to verify income, even if the income sources are diverse or the income streams irregular”.
The critical response will come as a blow to the FSA, which announced its intention to review the mortgage market last October. The regulator first looked at the loans in 2003, when they accounted for 20 per cent of the market, but ruled out a crackdown.
Sell your house for cash
March 19, 2010
Selling a house for cash is becoming a popular alternative for homeowners who need to sell their property quickly. With the current credit crunch and sluggish market, many sellers are finding it difficult to locate qualified buyers. Instead, they are turning to investors who are able and willing to buy with cash.
Selling a house for cash is no different than selling to a buyer who obtains traditional financing. However, there are benefits with cash transactions that cannot be obtained when the buyer requires funding (mortgage) through a bank.
The primary benefit of selling your home for cash is the deal can be closed in a matter of days instead of weeks. There are no long forms to fill out with the lender and no waiting for approval. Currently, banks are placing tighter restrictions on borrowers. In order for buyers to obtain mortgage approval today, they must have a faultless credit score and able to provide a down payment of at least 20-percent.
It’s no secret the economy is in the dumps. With the ever-growing unemployment rates, people are afraid to buy property for fear they will lose their job and then their home. They aren’t willing to take that much of a risk. Nearly every homeowner is feeling the pain from lack of qualified buyers.
On the other hand, property investors like Equity fast are buying houses all across the UK. Many of them are purchasing properties with cash simply because traditional lending sources have dried up. Although the media likes to project financial gloom and doom, there is still an abundance of private money available. Established investors are able to tap into that money to expand real estate portfolios for their self and clients.
When selling property to a private investor, the seller benefits from their expertise. Many investors are skilled in foreclosure and short sale transactions. Both require extensive knowledge and developed relationships with various lenders.
Short sales are particularly tricky and require specific documentation. Homeowners who have obtained short sale approval aren’t able to profit from the sale of their home. Instead, they must locate a buyer in exchange for the lender accepting less than is owed on the loan. Working with a short sale specialist can increase a successful outcome ten-fold.
Another benefit of selling houses for cash is there is no need for an estate agent. This alone can save thousands of pounds in commission fees.
Total UK personal debt
March 19, 2010
Total UK personal debt at the end of January 2010 stood at £1,463bn. Total lending in January 2010 rose by £2.0bn; secured lending increased by £1.5bn in the month; consumer credit lending increased by £0.5bn
Total secured lending on dwellings at the end of January 2010 stood at £1,237bn. Total consumer credit lending to individuals at the end of January 2010 was £225bn.
The average household debt in the UK is ~ £8,939 (excluding mortgages). This figure increases to £18,623 if the average is based on the number of households who actually have some form of unsecured loan.
Average household debt in the UK is ~ £58,040 (including mortgages). The average amount owed by every UK adult is ~ £30,306 (including mortgages). This is 129% of average earnings.
Britain’s interest repayments on personal debt were £68.3bn in the last 12months. The average interest paid by each household on their total debt is approximately £2,710 each year.
Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,667 per average UK adult at the end of January 2010.
Further rises in house prices are likely to be held back as more properties enter the open market
March 10, 2010
The Royal Institution of Chartered Surveyors (Rics) says new instructions outpaced inquiries from new buyers in February, this being the second month in a row that this had happened.
The rise in house prices during the past year has been attributed by many commentators to a shortage of stock for sale.
Despite the suggestion that the balance between buyers and sellers may be changing, Rics still found more surveyors reporting rising prices than falling prices last month.
The magnitude of the gains going forward is likely to continue to ease, reflecting the fact that new supply coming on to the market is starting to outstrip fresh demand.
Prices
Rics said it was the first time in two years that new sale instructions had outstripped inquiries from would-be buyers in a sustained manner.
The actual level of sales recorded by its members was still hampered last month by the knock-on effect of the cold weather.
As a result, the number of sales per Rics member remained at 1.4 per week.
In the course of 2009 prices rose by 5%, according to the surveys published by two of the major mortgage lenders, the Nationwide and the Halifax.
Both reported a dip in prices in February, which they blamed on the recent very cold weather and on a rush by buyers to push their purchases through before the restoration of the old stamp duty threshold in December.
Rics suggested that this would be just temporary.
The country’s credit card debt is rising!.
March 4, 2010
The latest Bank of England figures showed that in January people owed a total of £61.5bn to credit card companies.
This currently is an increase of £8bn on last year. The current interest rates being charged on overdue balances is 18%! This means that credit card holders are being expected to find over £900m in interest every month.
Experts say that credit was not a problem “when it is used responsibly”. The vast majority of credit card holders behave responsibly and around two-thirds of them pay off their balance in full every month.
On numerous occasions it is the case that credit card companies and store card companies are behaving irresponsibly in the way they are encouraging people to get into debt.
The Government had just finished a consultation on “credit and store card practices” and the response would be published on April 20.
A retired professor of economics, added “Is it not just case of people having to learn, as the Government itself has learned, that if you borrow, you eventually have to repay it.
Blaming the credit card companies, in my judgment, is not always the case. It is people themselves who have be told that ‘I must have it now’ is not a satisfactory way of buying.
Stamp duty rise affects mortgage borrowing
March 1, 2010
Gross lending for home loans fell by 32% compared with December to £9.1bn, the Council of Mortgage Lenders said.
It suggested the decline was due in part to the threshold for paying stamp duty rising at the start of 2010.
However, the figure was 21% lower than January 2009 and the lowest monthly total since February 2000.
Seasonal factors mean that mortgage lending usually falls in January compared with December, but lenders say that the drop was particularly pronounced this year.
The stamp duty threshold dropped back to £125,000 on 1 January, prompting a rush on mortgage approvals and completed home sales in the final months of 2009.
The Bank of England is likely to keep rates low which should continue to help mortgage payment problems and help cushion borrowers from the worst of the recession.
This time last year the mortgage market was at a stand still, but in the past three to four months a lot more products have become available, as lenders once again start fighting for market share.
But while more competitive rates are starting to emerge at higher loan-to-value levels, you still need a faultless credit history if you are to secure a loan.
The Bank of England’s own Trends in Lending report also found that activity in the housing market has dipped owing to the recent poor weather.
More Doom & Gloom on the job front!
March 1, 2010
At least 25,000 council jobs in England will be under threat in the next three to five years.
The forecast is based on answers from 49 councils with a combined workforce of 256,000, suggesting cuts of 10%.
Services such as libraries and nurseries face cuts as councils grapple with the impact of the recession.
Responding to the survey, PM Gordon Brown insisted that, while there was a need for efficiency savings, there was no need for cuts to services.
One expert said the number of job losses could reach 100,000, while one union warned of “social disharmony”.
Councils across the UK say jobs and services will have to be cut if, as they expect, funding from central government is reduced.
More than 70% of councils in England that responded to the survey predicted spending cuts of between 5% and 20%.
Roads, libraries, the arts and leisure appear most at risk of cutbacks. Children’s social services, services for the homeless and planning appear to be safest.
The Local Government Association, which represents English and Welsh local authorities, said town halls had been battling the effects of recession for more than a year.
Sources of income have dropped sharply at a time when more and more people are turning to councils to help them through tough times.
Low interest rates mean councils are much less able to rely on their savings, plummeting house and land prices have hit hard and income from leisure centres and a range of other services has fallen.
She said tough decisions would have to be taken, but “councils will do everything they can” to protect front-line services.
But eight authorities – Kirklees, Leeds, City of Bradford, Sheffield, Stoke-on-Trent, Nottinghamshire, Lincolnshire and Surrey – said 1,000 or more posts might be lost within five years.
Birmingham City Council, is planning savings of £69m in the next financial year, which could mean the loss of up to 2,000 jobs.
Shropshire Council has also said it is planning to cut more than 1,000 posts over the coming years.
