21st October 2011

Third quarter mortgage lending up by 15% on the second quarter of 2011

The Council of Mortgage Lenders has released new data, showing that gross mortgage lending was an estimated £12.9 billion in September. This represented a 2% decrease from the £13.1 billion lent in August but was 4% higher than September 2010 (£12.4 billion).

Gross lending for the third quarter of 2011 (July, August and September) was therefore an estimated £38.6 billion, a 15% increase from the £33.5 billion recorded in the second quarter of this year (April, May and June) and a 2% increase from the third quarter of 2010 (£37.9 billion).

Both house purchase and remortgage lending have held up well in September, but the short-term economic prospects for the UK are not good. The latest spike in inflation and continuing high unemployment figures, coupled with the financial instability of the eurozone, mean that it is more important than ever to get professional, independent advice on how to best manage your finances through this uncertain time.

 

1st October 2011

Eurozone turmoil hits Libor – a return to fixed rates?.

With the Bank of England holding its Bank Rate at 0.5% for the 31st month in a row – and with no sign of an increase in the near future - borrowers may be forgiven for finding the mortgage market a confusing place right now. This is because worries about the worsening economic news in the US and instability in the eurozone are causing lenders to increase the cost of their Libor-tracking variable rate mortgages.

Lenders fund their tracker rate mortgages either by using their savers’ deposits or by using funds borrowed from other financial institutions, the rate of which is determined by Libor (London Inter-Bank Offer Rate) which generally reflects the confidence that banks have in lending to each other. As this confidence decreases, Libor, and the lending rates that track it, increases.

Three-month Libor hit a low point in September 2009 at 0.54% and has risen steadily since, reaching 0.96% today. This increase is filtering through to Libor-linked tracker rate pricing and borrowers who previously were happy to remain on their lender’s variable rate are now considering the value of switching to a fixed rate mortgage for added peace of mind.

The differential between variable and fixed rates is shrinking as the increasing cost of Libor trackers coincides with fixed rates hitting their lowest ever levels. Recently, the lowest ever 5 year fixed rate was launched at 3.39%. Whilst fixed rates might not be cheaper over the next 5 years than trackers, the cost of the security of that fixed rate is low enough to make it worth considering for many borrowers.

For advice on your next move – or whether you could finance your existing property more cost-effectively, please call Private Finance on 0800 980 8777.

 

28th September 2011

UK house prices to stay stable says ratings agency Moody’s

It would appear that the housing market is behaving in the self-regulating fashion that we have come to expect in the UK, despite the continuing economic uncertainty.

A recent report from Moody’s, the global credit rating agency, concludes that the UK’s low housing supply will help keep property prices stable during the downturn.

Unlike consumer goods such as TVs and furniture, there is little surplus of housing stock. People generally have only one unit of the asset to sell and so supply is relatively inelastic.  In addition, new property development has been subdued since 2008; in fact 2010 saw the lowest number of new properties built in the UK since 1923.

It will take several years for supply to return to pre-2008 levels whereas, although demand for homes has been reduced by lower income, higher unemployment and restricted availability of credit, these factors have been offset by a rise in the number of households, due to young people setting up home, immigration and divorce.

In fact, prices are rising steadily where people are trying to move up the property ladder, but established owners at the ‘top’ of the ladder are staying put because of the lack of supply of suitable property for downsizing.

For advice on your next move – or whether you could finance your existing property more cost-effectively, please call Private Finance on 0800 980 8777.

 

14th September 2011

House purchase lending highest in July 2011 since August 2010

Overall lending for house purchase rose by both volume and value in July compared to June, according to figures released this week by the Council of Mortgage Lenders (CML). The value increased from £6.9 billion to £7.3 billion and the volume from 47,800 to 48,800 properties. Both figures were at their highest since last August, though lower than July 2010.

By contrast, remortgaging rose both on a monthly basis, and year-on-year. There were 31,500 remortgages worth £4 billion in July, up from 31,300 worth £3.8 billion in June.

Average deposits for first-time buyers have held steady at 20% for most of the year and they typically borrowed 3.18 times their income in July, down from 3.22 in June. Home movers borrowed on average 69% of their property’s value in July, down from 70% in June, but this figure has varied by no more than 3% for nearly three years.

The popularity of fixed-rate mortgages is beginning to decrease. In July, 60% of borrowers took out a fixed-rate product, down from 62% in June. This drop follows increasing expectation that there will be no rise in the Bank of England Bank Rate in the near future. But the exact path of interest rates is far from certain and many borrowers may continue to opt for fixed rates for peace of mind.

Whatever opinion you have about interest rates and their likely future movements, it is advisable to take professional advice on the most cost-efficient way of financing the property you own.

 

7th September 2011

Boost for landlords as availability of Buy to Let mortgages increases

Accord, part of Yorkshire Building Society, is the latest lender to launch into the buy-to-let market for the first time. With increased demand from investors keen to cash in on rising rents, lenders are returning to the sector, or starting to lend for the first time.

Melanie Bien, director of Private Finance, says: 'This activity is resulting in lower buy-to-let mortgage rates and an easing of criteria, underlining the rude health of the sector. However, there is still a premium on the rate compared with residential deals and landlords need a bigger deposit than owner-occupiers. Most lenders require a deposit of between 25 and 40 per cent, with the best rates typically available to those with the largest down payments.

'Fees can still be expensive - as much as 3.5 per cent of the mortgage amount - so landlords should work out the total cost when comparing products, and ideally seek advice from an independent mortgage broker.'

 

31st August 2011

Fixed-rate mortgages fall to new lows

A number of lenders are cutting their two, three and five-year fixed-rate mortgages on the back of falling money market rates.

Second-quarter GDP figures, released this week, show disappointing growth of just 0.2 per cent. It now looks as though the Office for Budget Responsibility's forecast of 1.7 per cent growth for this year is unrealistic, while the likelihood of an interest rate rise has been pushed back until next summer at the earliest. Money market rates continue to fall and lenders are offering increasingly competitive fixed rates in particular.

Private Finance has access to a five-year fixed rate priced at just 3.64 per cent (5.1 per cent APR) for those with a 25 per cent deposit. For those who don't need the security of a fix, trackers are available from 1.99 per cent (3.9 per cent APR).

Melanie Bien, director of Private Finance, says: 'Five-year fixes in particular are now so low it is hard to envisage them becoming significantly cheaper. While there is still a gap between Swap rates and five-year fixes, lenders must also factor in the cost of repairing their balance sheets and meeting capital adequacy requirements, as well as making a profit. While five-year fixes could edge slightly lower, I can't see that significantly lower rates are possible.

'Those looking for the security of a fixed rate should consider taking action now.'

 

8th August 2011

Interest rates held for another month

The Bank of England has announced that interest rates will be left untouched at 0.5 per cent for another month. This will be the 29th month in a row when interest rates have not moved.

Melanie Bien, director of Private Finance, says: 'While an interest-rate hold is good news for borrowers on variable-rate mortgages, it is necessary because of the underlying weakness in the economy. It is now expected that interest rates are unlikely to increase until well into 2012.

'However, that does not necessarily mean you should stick with a variable-rate deal. There are some fantastic fixed rates available, particularly for five years, with several products priced at less than 4 per cent for those with enough equity in their homes.

'Borrowers who are not sure what to do should seek advice from an independent mortgage broker such as Private Finance.'

 

15th July 2011

Offset mortgages the smart option for savers

Borrowers with offset mortgages earned £1.4bn more on their savings in the past two years than those who opted for savings accounts, according to research from First Direct.

With interest rates unlikely to rise before next year, savings accounts will continue to pay poor rates of interest. Until this improves, borrowers can make their savings work harder by offsetting them against their mortgage, reducing the interest they pay. This will enable borrowers to clear their mortgages more quickly and pay less interest in the long run, while retaining access to their savings in case of emergency.

Melanie Bien, director of Private Finance, says: 'In these uncertain times, more of us feel comfortable with a savings cushion i.e. we want to reduce our mortgage but also need to keep some savings back in case of emergency. This makes perfect sense and an offset gives the benefits of overpaying on your mortgage, while retaining access to your savings.

'Those who have cash sitting in a savings account but who need it for another purpose - such as the self-employed who must pay an annual tax bill - particularly benefit from an offset mortgage. They may not be able to afford to pay off a large chunk of their mortgage but while the cash is sitting in their savings account, it has the effect of reducing the interest they pay on their debt, saving them money.'

There are fewer offset mortgages available than before the downturn so it is important to shop around to ensure you aren't paying more than you need to.

 

12th July 2011

Private Finance celebrates the first anniversary of opening its Mayfair office with launch of equity scheme for business writers

Private Finance is delighted to announce the launch of its equity share scheme. The company, which opened its Mayfair office a year ago, has launched the scheme to assist with recruiting high-calibre candidates in London and the south-east, who are experienced in looking after high-net-worth clients. 

Simon Checkley, managing director of Private Finance, says: 'In an effort to attract good consultants, we are delighted to offer the opportunity to hold an equity stake in Private Finance, along with excellent rates of commission. Consultants also have access to top-end estate agency introducers including Strutt & Parker and Jackson-Stops & Staff, with whom we have exclusive arrangements to offer mortgage advice to their buyers. 

'I am very excited to launch this innovative scheme and hope that it will encourage anyone thinking about a move from their present role to get in touch to see what we can offer. The large loan mortgage market is exceptionally busy at the present time, with high demand from clients, be they: business people, professionals, entrepreneurs and those from the sports and entertainment sector, requiring private finance advice. So there are plenty of opportunities for those with business development and relationship management skills.' 

 

7th July 2011

Interest rates held at 0.5 per cent for another month

The Monetary Policy Committee (MPC) has announced that interest rates will be held at 0.5 per cent for another month. This means that interest rates have been held for an incredible 28 months in a row.

Melanie Bien, director of Private Finance, says: 'There is a growing consensus that interest rates will not now rise until next year at the earliest. Lenders have been reducing the pricing on their fixed and tracker rates in recent weeks, which is excellent news for borrowers, particularly those on expensive standard variable rates who are considering remortgaging. It is important that borrowers are not complacent about interest rates and that they seek advice from an independent mortgage broker such as Private Finance if they are coming to the end of a fixed or discounted mortgage deal.'

 

30th June 2011

Record high for prime London house prices

Prime residential house prices in London have risen by 34 per cent since March 2009, according to Knight Frank's Prime Central London Index.

Prime London property prices rose 0.9 per cent in June, pushing the annual rise to 8.3 per cent. Not only does this demonstrate an impressive rise since the downturn but prices are set to climb further. 

Melanie Bien, director of Private Finance, says: 'Demand for prime London property shows no signs of abating. Overseas buyers are leading the charge, with many turning to London because of its security and growth prospects. While Knight Frank is predicting slightly weaker growth in this market in the second half of this year, it still expects 9 per cent growth over the year.' 

Meanwhile, Halifax's latest house-price index showed that the picture is not so rosy across the UK. While house prices rose 1.2 per cent in June, the average home was 3.5 per cent cheaper than a year earlier.

 

25th June 2011

New MPC member votes for no change in interest rates

The newest member of the Monetary Policy Committee (MPC) voted for interest rates to be held at the June meeting, according to the latest minutes released today. Ben Broadbent, the former Goldman Sachs economist, voted with the majority of members, with 7 voting for a hold and 2 for an increase in interest rates.

Mr Broadbent replaced Andrew Sentance, the most hawkish member of the Committee. Mr Sentance had been voting in favour of a half-point increase in interest rates since February.

Melanie Bien, director of Private Finance, says: 'With the newest member of the Committee demonstrating dovish tendencies, it looks like that inevitable interest-rate rise has been pushed back even further, possibly into next year. It is also more likely that there will be further quantitative easing at some point, to help stimulate the economy.

'However, the minutes show that the MPC is still concerned about inflation so borrowers should not be complacent. Look at your own circumstances and speak to a broker if you are worried about paying your mortgage in the event of an interest-rate rise or if you simply want to ensure you are on the right deal for you.'

 

18th June 2011

Warning over SVR mortgages

Consumer group Which? has warned that thousands of borrowers will get into financial difficulty once interest rates start to rise. This is because many are trapped on their lender's standard variable rate (SVR), some of which are as high as 6 per cent. 

Melanie Bien, director of Private Finance, says: 'The big problem is for those borrowers who want to remortgage but can't because they have very little equity in their home so don't qualify for any of the remortgage deals available. But it's important not to stick your head in the sand; while a rate of 6 per cent may be affordable now, this may not be the case once interest rates start to rise.

'Borrowers should seek advice from an independent mortgage broker to find out what options are available to them. Even if you are on a fairly low SVR, it's worth considering the options. Swap rates - the rate banks pay to borrow from each other - have been falling so fixed-rate mortgages are getting cheaper. It's worth taking a look at what is out there.'

 

15th June 2011

Private Finance client Tom Queally celebrates Ascot victory

Private Finance is delighted to congratulate client Tom Queally for his victory in the St James's Palace Stakes at Royal Ascot on Tuesday.

The brilliant 2000 Guineas winner impressed in the big Group One prize riding Frankel, one of the fastest and most impressive horses of his generation.

Tom became a Private Finance client last July after being introduced via Jackson-Stops & Staff in Newmarket. He is the stable jockey for Sir Henry Cecil. 

Richard Barker, director of Private Finance, says: 'In the past two years, Tom has ridden Group One winners all over the world, including the Breeders' Cup in the US. He rides the unbeaten Frankel who has won the 2000 Guineas at Newmarket and, of course, celebrated his latest victory at Ascot on Tuesday.

'We congratulate him on his latest success and wish him the best of luck in the future.' 

 

9th June 2011

Interest rates held at 0.5 per cent for another month

The Monetary Policy Committee (MPC) yesterday announced that interest rates would be held at 0.5 per cent for another month. This means that interest rates have been held for 27 months in a row.

An eventual interest rate rise could come even later than many economists have been predicting after the International Monetary Fund (IMF) said Chancellor George Osborne should continue with his deficit-reducing plans. It said that the rise in inflation over the past few months was unexpected but that this did not mean that macro-economic policies should be adjusted.

The IMF said inflation will return to the Government’s target of 2 per cent by the end of next year. It backed interest rates at 0.5 per cent and said if growth resumes they should rise, but gradually.

Melanie Bien, director of Private Finance, says: 'This has led many to assume that interest rates will not rise until 2012. But borrowers should not be complacent about this and should seek advice from Private Finance if they are coming to the end of a fixed or discounted mortgage deal.'

 

20th May 2011

Halifax relaxes interest-only criteria

Halifax Intermediaries will no longer charge borrowers a premium for opting for an interest-only mortgage, while it will also double the maximum amount customers can borrow on an interest-only basis to £1m. 

Melanie Bien, director of Private Finance, says: 'It is great news that Halifax has finally seen sense on this. Interest-only may well be the right option for some borrowers who have a repayment plan in place so they should not be penalised on the rate, nor forced to take a much smaller mortgage. There is no 'one size fits all' when it comes to mortgages.'

If you are interested in chatting through your mortgage or remortgage options with an independent mortgage broker, please contact Private Finance on 0800 980 8777. 

 

15th May 2011

Inflation jump threatens interest rates

Inflation rose to 4.5 per cent in April after falling to 4 per cent in March, down from 4.4 per cent the previous month. It means the consumer prices index (CPI) is at its highest level since September 2008.

In his letter to the Chancellor explaining why inflation was more than 1 percentage point above its 2 per cent target, Mervyn King, governor of the Bank of England, blamed the increase in VAT to 20 per cent in January, higher energy prices and increases in import prices. He said that inflation is 'likely to rise further over the next few months' as petrol prices and utility bills rise later this year before falling back to target through 2012 and into 2013.

Melanie Bien, director of Private Finance, says: 'There is no real surprise that inflation continues to rise; the Bank of England has warned before that this could be a possibility. Swap rates - the rate banks pay to borrow from each other - rose on the publication of the inflation figures but fell back later in the day. It still looks as though the first rate rise won't come before the end of the summer because of the risks of further damaging the fragile economic recovery.

'However, borrowers who are concerned about rising interest rates might want to take another look at fixed rates. Pricing on new fixed rates has been falling in the past few days as Swap rates have fallen. There are also more switch and fix deals available, whereby the borrower can start out with a tracker and move to a fix at anytime without penalty to protect themselves from rate rises.'

If you are interested in chatting through your mortgage or remortgage options with an independent mortgage broker, please contact Private Finance on 0800 980 8777. 

 

10th May 2011

Property price falls mask regional variations

Figures from Nationwide, the Land Registry and Halifax reveal further falls in average national house prices, underlining the unsettled state of the housing market. Although spring is traditionally a boom time for the market, with fewer transactions compared to what we would normally experience at this time of year, modest increases and decreases in prices are to be expected.

While Nationwide records a slight price drop of 0.2 per cent in April, leaving prices 1.3 per cent lower than a year ago, quarterly figures – usually regarded as being less volatile – actually show a modest rise of 0.6 per cent. Halifax said house prices fell by 1.4 per cent in April.

Meanwhile, Land Registry figures for March show a 1.1 per cent decline and an annual fall of 2.3 per cent. But these mask significant regional differences. London experienced a 0.8 per cent growth in annual prices in March, while the North East saw a 9.3 per cent drop. Even London saw changes from borough to borough, with Islington seeing a 7.7 per cent increase, while Bexley fell by 2.3 per cent over the year.

Across the country, Rutland experienced the highest annual price change in March with a 6.9 per cent increase, while Blaenau Gwent saw the greatest annual fall of 19.9 per cent.

Melanie Bien, director of Private Finance, says: 'This conflicting situation is unlikely to change through much of this year and into 2012. Low levels of confidence and the increased likelihood of an interest rate rise are deterring some buyers from taking the plunge. While a strong uplift in prices looks highly unlikely, so too does a significant plunge. The top end of the market looks much healthier than further down the scale, with mortgage finance easier to come by and plenty of funding options for wealthy buyers.' 

 

7th May 2011

Interest rates held at 0.5 per cent

The Bank of England's Monetary Policy Committee (MPC) today announced that interest rates will stay at 0.5 per cent for another month. This will mean interest rates will have been held at this level for 26 consecutive months.

Melanie Bien, director of Private Finance, says: 'Although there is rising speculation that the MPC will raise  interest rates sooner rather than later in an effort to keep soaring inflation in check, the economic recovery is still too fragile for this to happen just yet. Weak first quarter growth has delayed the inevitable rate rise a little while longer.'

 

15th April 2011

Modest rise in mortgage approvals

The number of mortgages approved for house purchases in March rose to an eight-month high as activity increased in the housing market. Some 31,660 new mortgages were issued, according to the British Bankers' Association.

This is a slight increase on February's 30,178 approvals. But before we get carried away, it is still a 9.9 per cent year on year drop.

Melanie Bien, director of Private Finance, says:'There is plenty of uncertainty regarding the economy and interest rates. Many homeowners are choosing to pay down debt rather than take on bigger mortgages. However, March's figures do show an improvement on recent months, showing that the market is heading in the right direction at a time of year when you would expect the housing market to get busier. But it will be a long, slow recovery.'

 

10th April 2011

Mortgage fees: part of the bigger picture

The 'best buy' mortgage tables are usually the first port of call for borrowers looking for a new deal. But while these can be useful in showing the cheapest mortgage rates available, they very rarely take into account the fees that are charged.

New research from website moneysupermarket.com shows that mortgage fees have risen by 15 per cent in the past 18 months. This means that if you are only considering the rate when choosing a deal, you could find that you are stung with a massive fee, which makes the mortgage more expensive than another deal with a higher rate but lower fee.

Melanie Bien, director of independent mortgage broker Private Finance, says:'The only way of making a true comparison is to work out the total cost – rate plus fee – when comparing deals. Private Finance is happy to do the sums for you: contact us for more details.'

 

7th April 2011

Interest rates held at 0.5 per cent

The Bank of England's Monetary Policy Committee (MPC) today announced that interest rates will stay at 0.5 per cent for another month. This will mean interest rates will have been held at this level for 25 consecutive months.

Melanie Bien, director of Private Finance, says:'Although there is rising speculation that the MPC will raise interest rates sooner rather than later in an effort to keep soaring inflation in check, the economic recovery is still too fragile for this to happen just yet.'

 

26th March 2011

Nationwide reveals modest house-price rise

House prices rose by 0.5 per cent in March, according to latest figures from building society Nationwide. The quarterly figures showed an increase of 0.6 per cent on the previous quarter, thought to be a more reliable measure of the performance of the housing market.

Melanie Bien, director of independent mortgage broker Private Finance, says: 'While an increase is positive for homeowners, it is important not to get carried away. A national average price has only limited value, while this is also unlikely to be the start of a consistent increase in prices. Sentiment is extremely weak as would-be buyers worry about impending job losses, the rising cost of living and the impact of higher interest rates. There are very few transactions taking place as buyers and sellers sit on their hands and 'wait and see', rather than taking the plunge.

'However, there are plenty of opportunities available for those who are willing and ready to move. However, it is vital that you seek the advice of an independent mortgage broker first so that you know exactly how much you can afford and find the most competitive deal for your circumstances.'

 

24th March 2011

Private Finance features on BBC Radio Four Money Box Live

Melanie Bien, director of Private Finance, appeared on a panel of experts on BBC Radio 4 Money Box Live to discuss mortgages and housing with listeners.

The show can be listened to here:http://www.bbc.co.uk/programmes/b00zm868

 

20th March 2011

Inflation hits 4.4 per cent as pressure on interest rates intensifies

UK inflation rose to 4.4 per cent in February - more than double the government's 2 per cent target. This was an increase from 4 per cent in January, caused by a rise in domestic heating costs and clothing.

The retail prices index, which includes mortgage interest payments, rose to 5.5 per cent, up from 5.1 per cent in January.

Melanie Bien, director of independent mortgage broker Private Finance, says:'This increase in inflation puts further pressure on the Bank of England to raise interest rates. The financial markets immediately priced in a higher chance of an increase in interest rates sooner rather than later, after pushing back the forecast amid concerns about the global economy on the back of the Japanese crisis.

'However, borrowers should not panic. Homeowners on variable-rate deals should take a look at their own circumstances to determine whether they could cope with the increase in mortgage payments. If not, they may want to consider a fixed-rate mortgage and should seek advice.

'There is some good news in that a number of lenders, including Nationwide and Halifax, have reduced their fixed rates in the past week so those looking for security will pay less for it.'

 

15th March 2011

Bridging finance: when speed is of the essence

With so few properties on the market, anyone serious about buying doesn’t have time to lose. There is plenty of competition for the most desirable properties so the buyer who hesitates, misses out.

Private Finance is finding that an increasing number of clients come to us because the speed of their property purchase is a bit issue. They need to get a mortgage application approved – and quickly. The alternative to using a broker is to apply direct to a high-street bank, which tends to be a much slower process, particularly if service levels are an issue.

Bridging finance is becoming increasingly popular as a fast way of securing a property before the buyer has been able to sell their own home. More specialist lenders are moving into this market, which means bridging rates – which have been notoriously high in the past - are falling.

Melanie Bien, director of independent mortgage broker Private Finance, says:'There is growing demand for bridging finance. Notoriously expensive in the past, more specialist lenders coming into this market is pushing down the cost. Wealthy borrowers can arrange bridging finance via the private banks which works out cheaper still, as many will lend at normal residential rates to the right sort of client.'

 

10th March 2011

Interest rates held at 0.5 per cent

The Bank of England's Monetary Policy Committee (MPC) has announced that interest rates will stay at 0.5 per cent during March. This means interest rates have been held at this level for two years.

Melanie Bien, director of Private Finance, says: 'Although there was increased speculation that the Monetary Policy Committee might raise interest rates this month in an effort to keep soaring inflation in check, common sense prevailed and it wasn't to be. Private Finance believes that with the economy so weak, the Bank of England is unlikely to raise interest rates before May at the earliest.

'Even then, we expect rates to rise slowly. Inflation may be well above the government’s 2 per cent target but there are still too many risks associated with increasing interest rates to try and bring this down. If rates rose sharply, many homeowners could struggle to pay their mortgages and risk losing their homes.

'That said, there is no room for complacency, particularly if you would struggle to pay your mortgage if interest rates rose. While no-one knows for sure when they will rise, they will do so at some point. We have seen an increase in the number of clients looking to remortgage from their lender's standard variable rate, with the majority looking for the security of a five-year fix.

'However, lenders are increasing their fixed rates so if you are interested in one, it makes sense to consider this sooner rather than later. Other lenders are likely to follow suit as Swap rates - the money market rates lenders pay to borrow money - have jumped substantially since the start of the year.'

 

1st March 2011

Good news for landlords as rents continue to rise

Huge demand for rental property is pushing up the cost of renting a home, according to the Royal Institution of Chartered Surveyors (RICS). In the three months to January, 40 per cent more surveyors reported that rents rose rather than fell.

As would-be buyers struggle to get a mortgage, an increasing number are being forced to rent for longer. Those with modest deposits are finding it particularly difficult as lenders continue to favour those with 40 per cent of the purchase price to put down, rewarding them with the widest choice of deals at the cheapest rates.

Melanie Bien, director of independent mortgage broker Private Finance, says:'Demand for rental property is strong and is expected to continue to grow in coming months, outstripping supply. This presents an opportunity for landlords in terms of maximising the rental income on existing properties and expanding their portfolios, as long as they can raise the necessary finance.

'With Kensington raising its loan-to-value on buy-to-let deals to 85 per cent, Paragon returning to the market and other lenders showing an interest, things are looking up for landlords.'

 

27th February 2011

Three MPC members vote for rate rise

The minutes of the February meeting of the Monetary Policy Committee (MPC) reveal that three of the nine members voted for an increase in Base Rate from 0.5 per cent. Two members - Spencer Dale and Martin Weale - voted for a quarter-point increase, while Andrew Sentance voted for a half-point hike. Yet the Committee concluded that: 'A rise at this juncture could damage household and consumer confidence, which remains fragile.'

Melanie Bien, director of Private Finance,says: 'The likelihood of an interest rate rise edges ever closer with a further member voting in favour at the latest meeting. Yet the majority still feel that there is not a strong enough case for a rate rise.

'However, there is now huge pressure on the Bank of England to raise interest rates. But even when they do, this is expected to happen slowly, with rates reaching 1 per cent by the end of this year and 2 per cent by the end of 2012. 'There is no need for borrowers to panic, particularly those on very cheap variable rates. But it is worth speaking to an independent mortgage broker so that you understand the options available to you.'

 

20th February 2011

Mortgage lending on the rise

Gross mortgage lending was 5 per cent higher in January at £9.2bnthan it was a year earlier. However, there are fears that lending will still be constrained this year.

Melanie Bien, director of Private Finance, says:'The year-on-year increase in lending is encouraging but it is important not to get carried away. Weaker lending figures last January were thought to be down to households bringing their property purchases forward to take advantage of Stamp Duty concessions which expired at the end of the previous year.

'Lending is likely to remain constrained this year as the mortgage famine continues and lenders repay the money used to bail them out. On top of this, demand is likely to be muted as would-be buyers sit on their hands and wait until the economic and interest-rate outlook is more settled before committing to a purchase.

'However, those who are in the market for a mortgage will find there are plenty of competitively-priced options available. It is worth seeking independent advice before taking the plunge.'

 

15th February 2011

Inflation at 4 per cent puts pressure on interest rates

UK inflation rose to 4 per cent in January - double the government's 2 per cent target. This was an increase from 3.7 per cent the previous month, caused by soaring petrol prices and the hike in VAT to 20 per cent.

Bank of England Governor, Mervyn King, was forced to write another letter of explanation to the Chancellor. He blamed external factors and said there were 'real differences of view' within the Monetary Policy Committee as to the risk these presented.

Melanie Bien, director of independent mortgage broker Private Finance, says:'This increase in inflation puts further pressure on the Bank of England to increase interest rates. The financial markets are pricing in a quarter-point increase in rates in May and then another one or two quarter-point rises by the end of the year.

'However, borrowers should not panic, as the markets could be wrong. Homeowners on variable-rate deals should take a look at their own circumstances to determine whether they could cope with the increase in mortgage payments. If not, they may want to consider a fixed-rate mortgage.'

 

10th February 2011

Interest rates held at 0.5 per cent

The Bank of England's Monetary Policy Committee (MPC) has announced that interest rates will stay at 0.5 per cent during February. This is the 23rd consecutive month where interest rates have been held at 0.5 per cent.

Melanie Bien, director of Private Finance, says: 'Although there was increased speculation that the Monetary Policy Committee might raise interest rates this month in an effort to keep soaring inflation in check, it wasn't to be the case. We still believe that with the economic recovery so weak, it is likely to be some months until the Bank will risk raising rates, and not until the second half of this year. Even then, we expect rates to rise slowly. Inflation may be well above the government’s 2 per cent target but there are still too many risks associated with increasing interest rates to try and bring this down. If rates rose sharply, many homeowners could struggle to pay their mortgages and risk losing their homes.

'That said, there is no room for complacency, particularly if you would struggle to pay your mortgage if interest rates rose. While no-one knows for sure when they will rise, they will do so at some point. We have seen an increase in the number of clients looking to remortgage from their lender's standard variable rate, with the majority looking for the security of a five-year fix.

'However, lenders are starting to increase their fixed rates so if you are interested in one, it makes sense to consider this sooner rather than later. Other lenders are likely to follow suit as Swap rates - the money market rates lenders pay to borrow money - have jumped substantially since the start of the year.'

 

5th February 2011

Buy-to-let options improve with 85 per cent LTV launched

Kensington has launched a range of buy-to-let loans up to 85 per cent loan-to-value (LTV), with rates starting from 5.24 per cent. Landlords who have been forced to put down deposits of 25 to 30 per cent on new rental properties will welcome the opportunity to maximise their cash flow with a higher LTV.

The lender has also reduced its rental cover from 125 to 120 per cent. First-time landlords will be able to apply for funding, not just professional landlords. There will also be an option of flat product fee or a percentage of the mortgage amount.

Borrowers wanting a two-year fix at 75 per cent LTV can either pay a rate of5.24 per cent with a 2.5 per cent fee or 5.74 per cent with a£1,499 fee.

Melanie Bien, director of Private Finance, says: 'With a growing number of people renting while they wait and see what happens with the economy, or simply because they can't access mortgage finance, there is increased demand for rental property. But there has been a paucity of decent mortgage deals available for landlords. This new range from Kensington goes some way to redressing that balance.'

 

2nd February 2011

Private Finance features on BBC Radio Four Money Box Live

Melanie Bien, director at Private Finance, appeared on a panel of experts on BBC Radio 4 Money Box Live to discuss mortgages and housing with listeners.

The show can be listened to here: http://www.bbc.co.uk/iplayer/console/b00y2sj3/Money_Box_Live_02_02_2011

 

21st January 2011

Shock fall in growth delays rate rise

To the surprise of the markets, gross domestic product (GDP) figures for the fourth quarter fell by 0.5 per cent. This was considerably less than the 0.5 per cent in growth that was forecast, and far lower than the 0.7 per cent expansion seen in the third quarter. The bad weather was blamed for poor retail sales.

While the drop in growth is alarming and suggests the economy is in far worse shape than anticipated, it also means that the likelihood of an imminent interest-rate rise looks ever less likely. Bank of England governor Mervyn King warned that inflation could reach 5 per cent - far higher than the Bank's 2 per cent target - but also sent a strong signal that changes to interest rates were not on the agenda.

Although the latest minutes from the Monetary Policy Committee show that two members voted for a rate rise at the last meeting, money market rates fell dramatically on the release of the GDP figures. This suggests that the markets have pushed back their forecasts for a rate rise.

Melanie Bien, director of Private Finance, says: 'In the past couple of weeks, lenders have been raising their fixed rates on the back of the higher cost of funding and there has been a rush by borrowers to remortgage. However, the GDP figures will have an interesting impact on pricing. If Swap rates continue to fall, there is little justification for lenders to carry on raising mortgage rates.

'However, borrowers should not be complacent and assume rates simply won't rise because they will at some pont. But it is important to look to your own circumstances, speak to an independent mortgage broker and see what is available. There aresome excellent deals for new purchases and remortgaging, particularly for those with sizeable equity in their homes.'

 

17th January 2011

Should you fix your mortgage?

Soaring inflation in December - to 3.7 per cent from 3.3 per cent in November - is fuelling calls for an immediate increase in interest rates. The Bank of England, which sets interest rates, is charged with keeping inflation at 2 per cent. The argument goes that with January's rise in VAT still not reflected in the inflation figures, the consumer prices index is expected to climb well above 4 per cent and potentially stay there for many months - unless the Bank raises rates from 0.5 per cent.

Swap rates - the rate lenders pay to borrow from each other - soared on the news, and this is being reflected in the cost of fixed-rate mortgages, which is rising. Several lenders have already increased their fixed rates and others are expected to follow suit. So should you opt for a fix?

Melanie Bien, director of Private Finance, says: 'It's important that borrowers don't panic. While lenders are raising their fixed rates at the moment, the fragile economic recovery is likely to weigh heavily on the minds of the rate-setters who still appear keen to delay an increase in base rate, at least until the second half of the year.

'Much depends on your own circumstances. Nobody knows when rates will rise but we do know that they will at some point. If you would struggle to pay your mortgage if rates were to rise, then a fixed rate makes sense. If you can secure a good rate now, that makes even more sense. You can book a rate up to six months before you actually take it out, depending on the lender. This may enable you to enjoy a cheap variable rate for a while longer, before moving onto the fix, giving you peace of mind.

'Alternatively, there are some very competitively-priced trackers available, some with options to switch to a fixed rate without penalty. The downside of this strategy is that fixes will be more expensive if you wait until interest rates are rising.

'Five-year fixes are proving particularly popular. Anything at less than 5 per cent is, historically, a great rate. Part of the problem is that we have become so used to interest rates at record lows of 0.5 per cent that this has become the new 'norm'. But people have short memories and average interest rates tend to be higher. Holding out for fixed rates to fall further is likely to result in disappointment'.

 

13th January 2011

Interest rates held at 0.5 per cent

The Bank of England's Monetary Policy Committee (MPC) has announced that interest rates will stay at 0.5 per cent during January. This is the 22nd consecutive month where interest rates have been held at 0.5 per cent.

Melanie Bien, director of Private Finance, says: 'Although there was some speculation that the Monetary Policy Committee might raise interest rates this month in an effort to keep soaring inflation in check, it wasn't the case. We still believe that with the economic recovery so weak, it is likely to be some months until the Bank will risk raising rates, and not until the second half of this year. Even then, we expect rates to rise slowly. Inflation may be well above the government’s 2 per cent target, at 3.3 per cent, but there are still too many risks associated with increasing interest rates to try and bring this down. If rates rose sharply, many homeowners could struggle to pay their mortgages and risk losing their homes.

'That said, there is no room for complacency, particularly if you would struggle to pay your mortgage if interest rates rose. While no-one knows for sure when they will rise, they will do so at some point. We have seen an increase in the number of clients looking to remortgage from their lender's standard variable rate, with the majority looking for the security of a five-year fix.

'However, lenders are starting to increase their rates. RBS re-priced last week, Skipton Building Society pulled a range of fixes without notice this week, and Halifax has also re-priced. Other lenders are likely to follow suit as Swap rates - the money market rates lenders pay to borrow money - have jumped substantially since the start of the year.'

 

24th December 2010

Remortgaging on the rise

Remortgaging rose to £4.4 billion in November, according to the Bank of England, up from £4bn in October.

The threat of an interest rate rise this year, combined with ultra-low remortgage rates, has persuaded many borrowers who have been sitting on their lender's standard variable rate (SVR) to finally take the plunge and secure a new fixed rate or base-rate tracker.

Uncertainty surrounding the economy and job prospects are other reasons why an increasing number of homeowners are remortgaging sooner rather than later. Remortgaging is also attractive to those who are worried about falling property prices, particularly borrowers who already have high loan-to-values and little equity in their homes.

Melanie Bien, director of Private Finance, says: 'The argument for remortgaging is growing all the time. For those borrowers who are on their lender's SVR it is certainly worth considering whether now is a good time to remortgage.

'There are some excellent remortgage deals available, particularly for those with sizeable equity in their homes. However, it is worth speaking to an independent mortgage broker such as Private Finance just to see what is available to you and to find the right product for your circumstances.'

 

19th December 2010

Surprise rise in inflation but no impact on interest rates

Inflation rose to 3.3 per cent in November, on the back of rising food, clothing and furniture prices. The news came as a surprise as inflation was predicted to fall back from 3.2 per cent in October.Consumer price inflation remains well above the Government's 2 per cent target.

Melanie Bien,director ofPrivate Finance, says: 'While inflation is rather higher than the Bank of England would like, there will be no real concern.Mervyn King, governor of the Bank of England, has said that inflation would rise further before falling back to its 2 per cent target and that this could take a couple of years. Many people expect interest rates to start rising, slowly, in the second part of next year and that forecast hasn't changed on the back of these inflation figures.

'There could still be a need for further quantitative easing next year to help the economic recovery and these inflation figures don't change that.'

 

12th December 2010

Opportunities for buyers as house prices slide

Sellers were forced to reduce asking prices by 3 per cent in the last month, according to website Rightmove.

This follows the 0.3 per cent fall in house prices in November, according to Nationwide, which comes after a 0.7 per cent drop in October.

Uncertainty surrounding the economy and job prospects means more buyers are sitting on their hands, rather than committing to a property purchase. Nationwide says that sellers seem to be sitting on their hands and waiting until prices pick up again before marketing their homes.

Melanie Bien, director of Private Finance, says: 'With transactions at decade-low levels, there isn't a great deal happening in the housing market, which is also typical for this time of year. The bad weather doesn't help as it makes it more difficult for buyers to get out there and view properties. However, if you are serious about buying or selling it is possible as long as you are realistic on pricing and can obtain the necessary mortgage finance.

'There are still some excellent mortgage deals available, particularly for those with large deposits or sizable equity in their homes. However, it is worth speaking to an independent mortgage broker such as Private Finance just to see what is available to you and to find the right product for your circumstances.'

 

9th December 2010

Interest rates held at 0.5 per cent

The Bank of England's Monetary Policy Committee (MPC) has announced that interest rates will stay at 0.5 per cent during December. This is the 21st consecutive month where interest rates have been held at 0.5 per cent.

Melanie Bien, director of Private Finance, says: 'With the economic recovery still weak, it is likely to be some months until the Bank will risk raising rates, and not until well into next year. Inflation may be well above the government’s 2 per cent target, at 3.1 per cent, but there are still too many risks associated with increasing interest rates to try and bring this down. If rates rose sharply, a double-dip recession could be a real risk. Many homeowners could struggle to pay their mortgages and lose their homes.

'There are some excellent mortgage rates available for those requiring large loans, the pick of which is a two-year tracker at 1.49 per cent above Bank Base Rate, giving a pay rate of just 1.99 per cent to those with a 40 per cent deposit and £999 fee, which is available through Private Finance. Whether you want a tracker or the security of a fixed rate, it's worth talking to a broker about the options available to you.'

 

24th November 2010

Buyers pay a premium for market towns

Home buyers are prepared to pay an extra £30,000, on average, to live in a market town, according to a new report from Lloyds TSB. Prices are 14 per cent higher in market towns than in their county equivalent, says the research.

Beaconsfield is the most expensive English market town, with an average property costing £736,585. Winchcombe in Gloucestershire is the next most expensive, albeit at a rather more modest £360,451, followed by Cranbrook in Kent at £353,726.

Melanie Bien, director of Private Finance, says: 'This survey illustrates that buyers will pay a significant premium to live in a desirable location. Traditional market towns are full of history and culture, as well as being aesthetically pleasing and while buyers will have to pay more to live there, such properties hold their value better than newer towns so in the longer run tend to be a good investment.

'However, for those who are already stretching themselves to get a mortgage, the premium on a property in a market town may be beyond them. For them, a neighbouring town which is not quite as attractive may be a more affordable option.'

 

20th November 2010

Mortgage lending hits decade low but cracking rates still available

Mortgage lending in October was £12.4bn, down 9 per cent on October last year, according to the Council of Mortgage Lenders. The figure is unchanged from September.

Melanie Bien, director of Private Finance, says: 'This time last year there was a rush in purchases at the lower end of the market due to the government's stamp duty holiday, so we expect year-on-year comparisons in November and December to be similarly weak. However, while the number of mortgages taken out has fallen, borrowers continue to enjoy low mortgage rates and the cheapest remortgage rates ever seen, particularly for those with large deposits or significant equity in their homes.

'If you are considering a property purchase or refinance, it is worth seeking independent mortgage advice, rather than assuming it is going to be an impossible task. You may be pleasantly surprised.'

 

14th November 2010

Rents continue to rise

Frustrated buyers are pushing up rents as they are forced to stay in temporary accommodation for longer. The difficulties in getting a mortgage are proving a bonus for landlords who are seeing rents rise on the back of demand. There are even tales of gazundering in some areas where tenants fight over particularly desirable properties.

The average rent rose for the ninth consecutive month to £691 in October, according to LSL Property Services. This is a 0.4 per cent rise on September's average rent, and 4.5 per cent higher than October last year.

However, landlords still face a struggle for buy-to-let finance. Although there are more lenders in this market, and rates have fallen on buy-to-let deals, they are still significantly more expenise than residential mortgages. There are also bigger deposits to consider - at least 25 or 30 per cent - and expensive fees, as high as 3.5 per cent of the mortgage amount.

Melanie Bien, director at Private Finance, comments: 'If a landlord can access funding, then there are great opportunities in terms of yield and income. It is a sad fact that many people can't get on the housing ladder because of the difficulty in getting mortgage finance which means they have to rent, but this mortgage famine makes it more difficult for landlords to obtain funding.'

 

10th November 2010

Fears of rise in fixed rates as Bank unveils inflation report

Money market rates - the rate banks pay to borrow - rose on the back of the publication of the Quarterly Inflation Report as Bank of England governor Mervyn King warned thatinflation would stay above its 2 per cent target for two years. This raises the possibility that the pricing of fixed-rate mortgages could rise sooner rather than later.

However, Mr King stressed that the economic outlook is still uncertain. Even though inflation is 3.1 per cent, well above the Government's 2 per cent target, and is expected to be so for some time,raising interest rates at this time would be extremely risky because government spending cuts have yet to be felt.

Mr King believes the economic recovery will continue but its strength will depend on the world economy. Growth is likely to be subdued and slow. The latest gross domestic product (GDP) figures show growth of 0.8 per cent in the third quarter of this year, twice as high as the Cityhad forecast.

The report also commented on the split within the Monetary Policy Committee with regard to interest rates and whether further quantitative easing (QE) is necessary. The last meeting saw a three-way split in the vote: seven members wanted no change in rates and no further QE, one wanted a rate rise and one wanted further QE.

While Mr Kinggave no clear indication of the future of interest rates, nor whether more money would be injected into the economy via QE, Swap rates rose on the publication of the report.

Melanie Bien, director of Private Finance, says: 'This rise in money market rates following the report could be a short-term blip.Swaps have been particularly low in recent weeks, enabling lenders to offer the cheapest five-year fixes ever and still make a decent profit. There are some excellent fixed and tracker rates available for those remortgaging so anyone who wants to take the plunge should speak to Private Finance for assistance.'

 

4th November 2010

Interest rates held at 0.5 per cent

The Bank of England's Monetary Policy Committee (MPC) has announced that interest rates will stay at 0.5 per cent during November. This is the 20th consecutive month where interest rates have been held at 0.5 per cent. It also voted not to extend quantitative easing (QE), following the surprise 0.8 per cent growth in GDP in the third-quarter, which has eased the pressure on the MPC to pump more money into the economy.

Melanie Bien, director of Private Finance, says: 'With the economic recovery still weak, it is likely to be some months until the Bank will risk raising rates, and not until well into next year. Inflation may be well above the government’s 2 per cent target, at 3.1 per cent, but there are still too many risks associated with increasing interest rates to try and bring this down. If rates rose sharply, a double-dip recession is a real risk. Many homeowners could struggle to pay their mortgages and lose their homes.

'There are some excellent mortgage rates available for those requiring large loans, the pick of which is a two-year tracker at 1.49 per cent above Bank Base Rate, giving a pay rate ofjust 1.99per cent to those with a 40 per cent deposit and £999 fee, which is available through Private Finance. Whether you want a tracker or the security of a fixed rate, it's worth talking to a broker about the options available to you.'

 

30th October 2010

Why 'cash buyers' should consider a mortgage

More buyers than ever are claiming they don’t need a mortgage because they have the cash to buy a property. But while they believe that the absence of a mortgage will make them more attractive to vendors, particularly at the top-end of the market where good quality property is scarce and speed is of the essence, it is not always the best option. Even the wealthiest borrowers may want to consider gearing up to around 50 per cent of the property purchase price.

This enables them to keep gearing at sensible levels, retain a sizeable amount of cash, and take advantage of historically low mortgage rates. Savvy wealthy buyers would rather use the bank’s money to buy a property than their own, which they could put to better use elsewhere.

Melanie Bien, director at Private Finance, comments: 'Although cash suggests a quicker transaction, this is not necessarily the case. Using a broker, who knows which lenders can move quickly, can recommend the right funding and process the application from start to finish, does not have to take any longer. With the client’s permission, the broker can also let the agent know that the client is good for the money, giving the client an advantage over the buyer who is claiming, without verification from any professional, that he has the cash.

'For others, keeping some cash back and not ploughing it all into a property makes even more sense. Foreign nationals who have their money overseas, for example, face a currency risk when converting it into Sterling to bring into the UK. If they intend to return to their country of origin at some point, they may wish to keep their cash out of the country for tax and other purposes.'

 

25th October 2010

Lenders cut remortgage fixes and trackers

The number of homeowners remortgaging may be at its lowest level in a decade, according to the Council of Mortgage Lenders, but that could be about to change. Even those on low standard variable rates (SVRs) could be better off remortgaging than staying put as lenders launch a range of attractive fixed and tracker rates.

For borrowers looking for the security of a fixed rate, one lender is offering a five-year fixed rate at just 3.75 per cent with £699 fee. Borrowers need 50 per cent equity in their homes to qualify. Those preferring a variable rate can take advantage of a semi-exclusive from Private Finance priced at 1.49 per cent over Bank Base Rate for two years, giving a pay rate of 1.99 per cent. There is a £999 fee and 40 per cent equity is required. There is no maximum loan size.

Melanie Bien, director of Private Finance, says: 'With the launch of some extremely low fixed and tracker rates in the past couple of weeks, which are close to the cheapest SVRs, remortgaging will mean cheaper monthly mortgage payments for many borrowers so it's finally worth taking the plunge.

'With uncertainty in the housing market, if prices fall, homeowners will want to remortgage sooner rather than later before their loan-to-value rises, making it harder to remortgage at a later date. And future austerity measures mean that homeowners' financial situations are likely to get worse, not better, so fixing now will bring security and help with budgeting.'

 

20th October 2010

Spending Review puts pressure on private rental sector

The Chancellor of the Exchequer has publishedthe Treasury's Consumer Spending Review. Significant cutbacks were detailed as the Government tries to cut the deficit by £83bn.

Melanie Bien, director of Private Finance, says: 'The planned cuts to social housing will place huge pressure on the private rented sector. With new tenants to be offered rents at 80 per cent of the market rent to allow the building of 150,000 new affordable homes over four years, the private rental sector will have a huge role to play for many who may only have considered social housing previously.

'But with lending in the buy-to-let mortgage market severely restricted, it will be difficult for the private rental sector to fully step into the breach. A surge in demand will be difficult to satisfy when investors are struggling to get buy-to-let mortgages on competitive terms. Buy-to-let lenders are few and far between, even with the return of Paragon to the market recently. Criteria remains tight, sizable deposits are necessary and fees are high. More lending is essential to meet the likely increased demand.

'Already, rents are rising significantly. More pressure from an increased number of tenants will push them higher - good news for existing landlords perhaps but hardly a sustainable situation in the longer term.

'And will the building of 150,000 new affordable homes be frustrated by the new localism in planning rules? Plans to put local people in charge are all very well but this could be self-defeating.'

 

14th October 2010

Drop in new mortgages but funding options still available

The number of home loans approved for new purchases fell by 8 per cent in August, according to the Council of Mortgage Lenders. Some 51,600 mortgages were approved, down on the previous month but 3 per cent higher than during thesame period last year.

Only a quarter of the loans advanced in August were for remortgages, as the majority of borrowers took advantage of low interest rates and stayed on their lender's cheap standard variable rate, rather then remortgaging to a fixed or variable rate. This is the lowest proportion of remortgages for ten years.

Melanie Bien, director at Private Finance, comments: ‘August is a slow month for the mortgage market as people concentrate on holidays rather than moving home. The lack of mortgage finance also continues to be felt, with those who don't have large deposits and good credit histories struggling to get funding. This is why it is so important to speak to an independent mortgage broker such as Private Finance, who will be able to advise as to the right options for your circumstances.

'We have access to the pick of the rates offered by the private banks and specialise in arranging loans of more than £500,000. If you are looking for this level of finance, it is really worth talking to us.

'There is plenty of uncertainty around, with the October Spending Review [due on 20 October] praying on people's minds. Once that is out of the way, and we know how bad things are going to get, would-be buyers may be prepared to finally make a decision about moving this side of Christmas.'

 

7th October 2010

Interest rates held at 0.5 per cent

The Bank of England's Monetary Policy Committee (MPC) has announced that interest rates will stay at 0.5 per cent during October. This is the 19th consecutive month where interest rates have been held at 0.5 per cent.

Melanie Bien, director of Private Finance, says: 'With the economic recovery still weak, it is likely to be some months until the Bank will risk raising rates, and not until well into next year. Inflation may be well above the government’s 2 per cent target, at 3.1 per cent, but there are still too many risks associated with increasing interest rates to try and bring this down. If rates rose sharply, a double-dip recession is a real risk. Many homeowners could struggle to pay their mortgages and lose their homes.

‘It will be interesting to see the minutes of the meeting when they are published, to see whether Andrew Sentence remains the sole member calling for a rate rise.

'There are some excellent mortgage rates available for those requiring large loans, the pick of which is a two-year tracker at 1.69 per cent above Bank Base Rate, giving a pay rate of 2.19 per cent to those with a 40 per cent deposit and £999 fee, which is available through Private Finance. Whether you want a tracker or the security of a fixed rate, it's worth talking to a broker about the options available to you.'

 

20th September 2010

More choice for landlords as Paragon returns

There is good news for landlords, as Paragon, the respected buy-to-let lender, returns to the market. Paragon was the third largest buy-to-let provider, issuing one in ten mortgages to landlords at the height of the property boom. But it froze lending nearly three years ago when the securitisation market - where it raised its funding - effectively closed for business. Now it has secured a £200bn revolving credit facility and is offering mortgages up to a maximum loan-to-value of 75 per cent.

Meanwhile, rents are also rising, with the LSL monthly index of buy-to-let rents showed that rents have risen to levels not seen since the start of the economic slowdown. The southeast saw rents rise by 2.8 per cent in August, while London saw a 2 per cent rise. With property prices falling in some areas and the future of values looking muted at best, sound returns on rental income will be extremely welcome.

Melanie Bien, director of Private Finance, says: 'It is excellent news that Paragon is returning to the market. With Lloyds Banking Group tightening its criteria recently, so it will only allow three properties per landlord, or a maximum of £2m of lending (borrowers previously could take out nine mortgages with a total value of £3m across the brands), another option in an extremely restricted market, is welcome.

'However, larger portfolio landlords, and those with properties with an average value in excess of £2m, are likely to still find that the private banks are the best option. They are more flexible and willing to offer tailored products to suit the individual. For example, we have just arranged funding via one of the private banks for a Russian client on a £13m investment property at 3 per cent over Bank Base Rate.'

 

14th September 2010

Long-term desire to own a home is stronger than ever

New research from the Council of Mortgage Lenders shows we are not yet ready to become a country of renters. More people than ever want to become homeowners in the long term, even though it is harder to get a mortgage and despite the economic uncertainty. Some 85 per cent of those surveyed said they would like to own a home a decade from now.

Melanie Bien, director at Private Finance, comments: ‘Even though the number of homeowners continues to fall, it is clear from this survey that this is not due to a change in outlook. It is more likely to be down to the fact that it is harder to get a mortgage than it was three years ago, and it's particularly harder for first-time buyers who don't have sizable deposits.

'Lenders require at least a 10 per cent deposit in the majority of cases, so unless they have help from their parents, first-time buyers are having to save for longer and put their home ownership dream on hold. However, crucially this survey underlines what most of us know - that people still want to become homeowners rather than renters. It might just take them longer to achieve this than in the past.

'Borrowers who are keen to take out a mortgage - either for themselves or to help their child onto the housing ladder - should seek advice from an independent mortgage broker to ensure they get the right product for their circumstances.'

 

9th September 2010

Interest rates held at 0.5 per cent

The Bank of England's Monetary Policy Committee (MPC) has announced that interest rates will stay at 0.5 per cent during September. This is the 18th consecutive month where interest rates have been held at 0.5 per cent.

Melanie Bien, director of Private Finance, says: 'With the economic recovery still weak, it is likely to be some months until the Bank will risk raising rates, and not until well into next year at the earliest. Inflation may be well above the government’s 2 per cent target, at 3.1 per cent, but it is falling. If rates rose sharply, a double-dip recession is a real risk. Many homeowners could struggle to pay their mortgages and lose their homes, something the coalition government will want to avoid at all costs.

‘Although MPC member Andrew Sentence has been calling for a rate rise, he is likely to remain the lone voice for some time. He is concerned about the threat of inflation, worried that a sharp increase in rates will be needed to bring it back into line.

‘This is a view shared by the Policy Exchange, a think tank, which forecasts that interest rates may need to rise to 8 per cent within two years. While this has grabbed headlines and, admittedly there is only one direction for interest rates to rise, the general consensus remains that we are in a low interest-rate cycle. Private Finance believes rates will rise slowly to around 2 per cent by 2012, some distance off 8 per cent.

'There are some excellent mortgage rates available for those requiring large loans, the pick of which is a two-year tracker at 1.69 per cent above Bank Base Rate, giving a pay rate of 2.19 per centto those with a 40 per cent deposit and £999 fee, which is availablethrough Private Finance. Whether you want a tracker or the security of a fixed rate, it's worth talking to a broker about the options available to you.'

 

25th August 2010

Large family homes increase in value by £91 per day

Detached family homes have risen in value by 13 per cent over the past year, according to Halifax. This compares with a 8 per cent rise across all types of housing. The average price rose from £266,060 in the second quarter of 2009 to £299,295 in the second quarter of this year.

Melanie Bien, director of Private Finance, says: 'Those who are moving up the housing ladder and buying a sizable family home tend to be in the fortunate position of benefiting from a decade or so of home ownership. While the majority are not exactly cash buyers, they often have significant savings to inject into the purchase so are less reliant on mortgage finance. They qualify for the cheapest mortgage rates and are more attractive to lenders than first-time buyers with little or no deposit.

'There is plenty of demand for detached family homes with lots of space as a result, which helps push up prices, and these properties tend to hold their value better in a downturn.

'Even if you require a relatively modest loan-to-value on your mortgage, it is important to seek independent financial advice. A broker withgood private bank contacts will be able to steer you in the right direction and ensure you have the best chance of obtaining mortgage finance on competitive and potentially bespoke terms.'

 

27th August 2010

Borrowers warned over loyalty mortgage rates

Barclays is the latest high-street bank to offer preferential mortage rates to its current account customers. From 1 September, the bank will reduce fixed, tracker and offset rates by up to 0.54 percentage points for customers who have a current account with the lender and have paid in at least £800 in each of the three months before making a mortgage application.

Barclays follows Halifax, HSBC, NatWest and Abbey in offering cheaper mortgage rates to current account customers.

Melanie Bien, director at Private Finance, comments: ‘A discount of up to 0.54 percentage points is not to be sniffed at and means customers can access some pretty competitive rates, with a two-year tracker starting at 2.79 per cent, for example. But while a discount will be welcome, it's important that customers still compare what their bank is offering with what is available elsewhere. You should not assume that loyalty means you will automatically receive the best rate on the market, nor necessarily the right mortgage for your circumstances.

'This growing trend underlines the value lenders are putting on cross-selling. They would love customers to return to the days when they had several products with the same bank.

'Borrowers should always check with their existing bank as a matter of course what it is offering when taking out a new mortgage or remortgaging. Armed with that knowledge, they should then research what else is on the market and seek independent mortgage advice to ensure they aren't paying over the odds for what is likely to be theirbiggest outgoing.'

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