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What Will The Svr Increases (Ni Houses Prices?)


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#16 tinbin

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Posted 03 April 2012 - 02:12 PM

MORTGAGE RISE TO HIT MILLIONS

Mortgages are set to soar as banks push up rates

MILLIONS of homeowners are facing “shocking” mortgage rises as banks ramp up their lending rates.

Hard-pressed families will be punished in the coming weeks despite base interest rates being at a record low for three years.

Yesterday the Co-operative Bank, which prides itself on its ethical lending policies, pushed up its standard variable rate by 0.5 per cent to 4.74 per cent.

That forces a typical payment up £15 a month, or £180 a year. But as other banks rush to join in, worst hit borrowers could see bills soar by up to £840 a year.

The higher payments, which start on May 1, means the Co-op joins Clydesdale and Yorkshire banks, RBS-Natwest, Halifax and Bank of Ireland in increasing its terms.

Experts say homeowners are facing a “mortgage time-bomb”. Yet savers, who out- number borrowers seven to one, are seeing no growth in their rates for investing.

William Hunter, of Hunter Wealth Management, said: “Lenders are upping their rates for borrowers but are far less active when it comes to upping their rates for savers. Savers, as ever, are on a hiding to nothing.”

Consumer champion Marc Gander said: “It’s shocking...a nice thank you gesture from the banks to all those taxpayers who bailed them out.” Estate agency founder Peter Hughes called the latest rate hike “another hammer blow for homeowners” that would only serve to hold back the property market.

He added: “Once again, it feels like lenders are looking after their own backs. Worst of all, other lenders are likely to follow. There is comfort for them in numbers.”

The average Co-operative Bank borrower has a balance of £48,000 to pay over 11.5 years. Their monthly bill will go up from £440 to £455.

But some borrowers will have to find an extra £840 a year if, based on calculations for a typical interest only loan and property, their bill shoots up from £605 to £675.

Michael Ossei, personal finance expert at website uSwitch.com, said: “This news is another blow to homeowners who could see their monthly costs shoot up at a time when their finances are already stretched to the max. Many of those on tracker mortgages have been enjoying drastically lower mortgage payments over the last few years as a result of the low base rate.

“However, this will bring them back down to earth with a bang. And because these increases are nothing to do with the base rate, which still shows no signs of budging, the blow won’t even be softened by a corresponding increase to savings rates.”

Millions of homeowners with a standard variable rate mortgage are already paying 4.16 per cent – the highest rate since March 2009.

Chris Taylor, chief executive of insurer MarketGuard, said: “SVR mortgages are a time-bomb waiting to happen.”

Marc Gander, founder of the Consumer Action Group, said: “Banks have never had it so good.

“They are doing fabulously well. It amazes me that they can’t share some of the burden the rest of us are under.

“If they are saying they have to pass on rising costs, why can’t they pass some of the good times on as well as the bad? These rises come at a time when people need them least of all.”

Clydesdale and Yorkshire banks are increasing their SVRs from 4.59 per cent to 4.95 per cent. RBS- NatWest is ramping up rates on its Offset and One accounts by 0.25 per cent, taking them to four per cent.

Halifax raises its SVR from 3.5 to 3.99 per cent. The Bank of Ireland is increasing its SVR from 2.99 to 4.49 per cent in two stages.

The Co-op Bank said it was facing higher costs to fund mortgages, as well as “changing conditions in the mortgage market”.

http://www.express.c...sts/view/312241

Edited by tinbin, 03 April 2012 - 02:12 PM.


#17 tinbin

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Posted 05 April 2012 - 10:10 AM

This is an article based from March last year but it is really worth a read. It is not specifically about SVR rates nor Northern Ireland but is very relevant and in keeping with the 'timebomb' theme I thought it would be a useful read in this topic.

One year further down the line there has been nothing but more evidence to support that the Housing Market really is a time bomb waiting to go off.

The time-bomb ticking under Britain's house prices

Around 90% of all mortgages held in the UK come with a variable rather than a fixed rate of interest. That's up from 60% in 2007. You can understand why this might be. The best five-year fixed-rate mortgages on the market cost 4.5%. But the best variable rate mortgages come in at as little as 2%. On a 20-year repayment mortgage of £150,000, that makes a difference of £200 a month. So, it makes sense that most people choose the cheaper looking option. You might hope, however, that those who choose such risk over certainty do so knowingly, having run through the risks they will face if the UK base rate rises from its 340-year low of 0.5% to something that is more of a reflection of our inflation rate.

But you would hope in vain if a survey from Shelter is to be believed: it says one in four mortgage holders has no idea what the UK base rate is.

Either way, the idea that 90% of mortgage holders will be hit by rate rises matters.
Why? Because while there is some evidence that there might be some kind of UK recovery under way (JP Morgan is claiming to see a mini boom in UK manufacturing), the housing market remains a miserable husk of its former self ... every leading indicator suggests that the falls have only just begun.

First, look at affordability ratios. These are disregarded by bulls as being irrelevant in the days of dual-earning households and ultra-low rates. (Sound familiar to anyone on this forum??) ... However, it is dangerous to dismiss historical norms as irrelevant. The long-term average house price to salary ratio is something in the region of three and a half to four times. Today, depending on whom you listen to, it is around five and a half to six times.

That's the kind of disparity that can only be resolved by one of two things:
rising real incomes ...or falling real house prices.

Resolution isn't coming from the former – the retail price index is running at 5.1%, but wage settlements were a mere 2.8% in the three months to January. That leaves the latter.

Anyone in any real doubt that this will happen (and there are still bulls out there) need only look at all the numbers that house prices tend to track.

Next up is consumer confidence – something house prices have always followed very carefully. This is looking pretty ropey both statistically (the GfK Consumer Confidence is at its lowest since March 2009) and anecdotally.

In the name of research, I spent much of the last week standing on cold street corners asking passers-by about their debt: every single person I spoke to was either out of debt and never touching it again or desperately trying to get rid of what they had. On Monday, it took me the entire morning just to find someone who actually still used their overdraft facility. No confidence there.

Finally, note the disappearance of first-time buyers. There are 90% fewer of them than there were at the height of the bubble and their average age is now 37.

All this suggests that something will soon push the market over the edge.
That something could be the first interest rate rise. According to Legal & General Investment Management, a rise in the base rate and hence in variable mortgage rates will mean that huge numbers of consumers will see "a meaningful impact to their cash flow".

Shelter goes further. The Bank of England hasn't raised rates for 25 months, but when it does, says the charity, it could push those assuming that low rates are forever into a "spiral of debt and repossession".

That really wouldn't help the bull case for house prices much.

It is also why Mervyn King is doing all he can to resist a rate rise.

http://www.moneyweek...se-prices-11011

#18 2buyornot2buy

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Posted 05 April 2012 - 10:26 AM

I honest fee that the sooner rates are raised, zombie households get taken out, the unviable BTLs are repossessed and we can move on the better it will be for all concerned.

#19 Shotoflight

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Posted 13 April 2012 - 07:47 PM

Uk


Mortgage demand tumbles as lenders' funding costs rise


Mortgage approvals fall to their lowest level since December 2010 as lenders tighten criteria again.

http://www.telegraph...costs-rise.html

Mortgage approvals for home purchases fell sharply to 43,450 in March, their lowest level since December 2010, according to the latest Mortgage Monitor from e. surv chartered surveyors,

It blamed the fall on increasing funding costs which has forced banks to reduce lending to borrowers with small deposits.


First time buyers were the hardest hit as banks reduced the availability of high loan-to-value mortgages in response to increasing funding costs and tightening credit conditions.

Tighter criteria on high-loan-value mortgages meant lending to borrowers with a deposit of 15pc or under accounted for only 10pc all loans in March – well down on the three month average of 13pc – and falling from 12pc in February.

Richard Sexton, director of e. surv, said, “Up until now high-street mortgage lenders have been able to absorb steadily increasing costs, rather than passing them onto the consumer.

"The tactic boosted activity during last autumn and early part of this year, albeit artificially, and veiled a multitude of underlying weaknesses in the market. Now that the banks can no longer afford to take on extra costs, those weaknesses are beginning to come to bear once again.”

Edited by Shotoflight, 13 April 2012 - 07:48 PM.


#20 Shotoflight

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Posted 14 April 2012 - 04:12 PM

More of the same. Hurry or you'll miss the boat, mortgage hunters.

Mortgage rates edge upwards

Fixed and variable rates have been increased by several lenders, so mortgage-hunters should look to grab a deal

http://www.guardian....es-edge-upwards

Anyone looking for a mortgage, or whose deal will end in the next few months, should act sooner rather than later to secure one of the current rates in case they rise further," says Clare Francis at Moneysupermarket.com.

#21 tinbin

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Posted 16 April 2012 - 02:33 PM

THE GREAT MORTGAGE PANIC

HOMEOWNERS are rushing for fixed-rate mortgages as concern grows that lenders are forcing up interest rates.

The number of borrowers choosing the static deals increased to 78.7 per cent in March from 73.3 per cent in February – the biggest hike in the last 12 months and the second high- est since the summer of 2009.

Lenders have faced accusations of profiteering by raising their standard variable rates (SVRs) while the Bank of England has kept the base rate at the record low of just 0.5 per cent for over three years.

Millions of customers with the Halifax, the RBS-NatWest group, the Bank of Ireland and Bristol & West plus many others are now facing more expensive monthly payments.

When the Halifax, Britain’s biggest mortgage lender, increased its SVR from 3.5 per cent to 3.99 per cent, the average payment went up by £735 a year.

This suggests many are expecting further rate rises and are eager to lock into attractive deals

The race to obtain fixed deals shows how worried borrowers are that more rate rises are on the way.

Brian Murphy, head of lending at Mortgage Advice Bureau, which produced the latest figures, said: “Consumers are increasingly switching to fixed-rate mortgages, and they now account for more than three out of every four transactions. This suggests many are expecting further rate rises and are eager to lock into attractive deals as soon as possible.”

http://www.express.c...-mortgage-panic


Rates rise to deter borrowers without large deposits

Mortgage rates continued their slow but steady rise this week as banks and building societies, struggling to process existing applications, took action to deter new borrowers. On Thursday, Nationwide increased its fixed and tracker rates at 85 per cent loan to value (LTV) by 0.2 percentage points. A fee-free two-year fixed-rate mortgage now charges 5.09 per cent. The rate on a three-year tracker has gone up to 4.29 per cent above the Bank of England base rate, or 4.79 per cent. Loans at 75 per cent and 80 per cent LTV have increased by 0.1% percentage points. Northern Rock and Santander have also upped rates on popular deals.

Source: The Times page 63 - 14.4.12. Also reported in Financial Times page M4.

#22 Shotoflight

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Posted 20 April 2012 - 12:42 PM

Mortgage rates rise for new deals

http://www.bbc.co.uk...siness-17782451

At least 10 lenders, including some of the UK's biggest, have announced rate rises in the past week for people taking out new deals.

Also, Bank of England figures show that the average two-year fixed rate deal, with a 25% deposit, has risen from 2.9% last September to 3.45% in March.


The moves are further evidence that obtaining a mortgage is likely to become more expensive and difficult.

The figure for the average two-year fixed rate deal in September was the lowest on record after rates for such deals had fallen from a recent peak of 6.35% in the middle of 2008.

"Lenders seem to have increased their rates in two stages this week, some at the beginning and the others catching up later in the week," said Aaron Strutt of mortgage brokers Trinity Financial.

They argue that the increase is due to the rise in the cost of raising mortgage funds on the wholesale financial markets.

Fewer deals

In March, the Bank of England reported that banks and other lenders were preparing to restrict their mortgage lending even more in the coming months. That was despite the lenders expecting to see a rise in demand from potential borrowers.

Among those making changes to parts of their mortgage ranges this week have been Abbey, HSBC, Halifax, Lloyds TSB, Santander, Britannia, and Cheltenham & Gloucester.

Their new deals, for fixed, tracker or discounted home loans, have typically been repriced with interest rates now between 0.1% and 0.4% higher than before. "When you take into consideration that some lenders have raised their rates at least twice in the past month, they all add up," said Aaron Strutt.

In some cases, deals have simply been withdrawn, leaving existing but more expensive ones on offer.

Market 'dampened'

At the start of April, the financial information service Moneyfacts noted that the past two months had seen a sudden drop in the total number of mortgage deals available to borrowers.

Even before that, lenders had started to rein in their riskier interest-only mortgage lending, with many lenders now demanding at least a 50% deposit from borrowers interested in this type of loan.

The National Association of Estate Agents (NAEA) said that development, along with the end of the stamp duty concession for first-time buyers last month, might lead to sales falling back again, after they had picked up in the run-up to the expiry of the concession.

"The recent move by some major lenders to severely limit the availability of interest-only mortgages is no doubt dampening the levels of supply in the market," said Wendy Evans-Scott of the NAEA.

In the past six weeks, several lenders have also announced increases to the cost of their standard variable rate mortgages for existing borrowers.

Edited by Shotoflight, 20 April 2012 - 12:42 PM.


#23 Shotoflight

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Posted 01 May 2012 - 07:08 AM

Mortgage rate misery for one million borrowers

More than a million home owners will see the cost of their mortgage payments increase from Tuesday.

http://www.telegraph...-borrowers.html

The majority of those affected are Halifax customers, who could typically find themselves paying nearly £200 extra a year, following a series of recent rate rise announcements from lenders.

The Co-operative Bank, Clydesdale Bank and Yorkshire Bank are also among those raising rates from Tuesday, blaming the weak economy and the increased cost of funding a mortgage.

Fears have been raised that people could struggle to switch to a better deal as lenders have already started tightening their borrowing criteria, triggering a fall in the proportion of mortgages being approved.

Halifax is raising its standard variable rate (SVR) from 3.5pc to 3.99pc, affecting 850,000 home owners. Borrowers revert to paying an SVR when their fixed rate deal ends.

The average balance of those affected is £67,500, meaning payments would increase by nearly £16.40 a month to £498.95 on a capital repayment mortgage with 15 years remaining. This equates to nearly £200 extra a year.

Someone with a higher balance of £100,000 would pay £24.30 extra a month, with monthly repayments going up to £739.19, the equivalent of nearly £300 more annually.

Greater restrictions are set to be placed on mortgage loans due to a clampdown by the Financial Services Authority (FSA) on irresponsible lending, to make sure borrowers can only take out deals they can afford.

The FSA's Mortgage Market Review (MMR) proposals will place new rules around mortgage advice and income will have to be verified in every application, with lenders placing greater emphasis on other regular outgoings.

The FSA does not plan to implement most of the proposals before the summer of 2013.

#24 tinbin

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Posted 01 May 2012 - 09:12 AM

Mortgage rate misery for one million borrowers

More than a million home owners will see the cost of their mortgage payments increase from Tuesday.

http://www.telegraph...-borrowers.html

The majority of those affected are Halifax customers, who could typically find themselves paying nearly £200 extra a year, following a series of recent rate rise announcements from lenders.

The Co-operative Bank, Clydesdale Bank and Yorkshire Bank are also among those raising rates from Tuesday, blaming the weak economy and the increased cost of funding a mortgage.

Fears have been raised that people could struggle to switch to a better deal as lenders have already started tightening their borrowing criteria, triggering a fall in the proportion of mortgages being approved.

Halifax is raising its standard variable rate (SVR) from 3.5pc to 3.99pc, affecting 850,000 home owners. Borrowers revert to paying an SVR when their fixed rate deal ends.

The average balance of those affected is £67,500, meaning payments would increase by nearly £16.40 a month to £498.95 on a capital repayment mortgage with 15 years remaining. This equates to nearly £200 extra a year.

Someone with a higher balance of £100,000 would pay £24.30 extra a month, with monthly repayments going up to £739.19, the equivalent of nearly £300 more annually.

Greater restrictions are set to be placed on mortgage loans due to a clampdown by the Financial Services Authority (FSA) on irresponsible lending, to make sure borrowers can only take out deals they can afford.

The FSA's Mortgage Market Review (MMR) proposals will place new rules around mortgage advice and income will have to be verified in every application, with lenders placing greater emphasis on other regular outgoings.

The FSA does not plan to implement most of the proposals before the summer of 2013.


Anyone who dismissed the conquences of Interest rates rising in the past need only to look at the extent of the media coverage of these 'relatively minor' interest rate rises and the negativity from the Joe Public about it.

I will repeat what someone said a while back on this forum ... the housing market really is a stack of cards waiting to come tumbling down. If 4% interest rates mean its game over for many folk then its pretty obvious what is going happen when rates return to normal 'pre-credit crunch' levels.

#25 tinbin

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Posted 01 May 2012 - 09:17 AM

Greater restrictions are set to be placed on mortgage loans due to a clampdown by the Financial Services Authority (FSA) on irresponsible lending, to make sure borrowers can only take out deals they can afford.

The FSA's Mortgage Market Review (MMR) proposals will place new rules around mortgage advice and income will have to be verified in every application, with lenders placing greater emphasis on other regular outgoings.

The FSA does not plan to implement most of the proposals before the summer of 2013.


Section taken from Shotoflights post above ... worth highlighting again as this is important information that might get missed by anyone scanning through the post.

Some think deposits are the main obstacle to obtaining a MTG. I agree that it is an issue but this is more relevant IMO

... its all about affordability. No proof ... no MTG, and its only going to get worse!

Edited by tinbin, 01 May 2012 - 09:18 AM.


#26 2buyornot2buy

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Posted 01 May 2012 - 09:56 AM

I agree 100% with Tinbin. I think that the VIs have trouble seeing the forest through the tree.

Yes larger deposits are required. I think a 20% deposit for a new build (which will lose value as soon as bought) is a good thing.

I think larger deposit requirements in general are a good thing.

But the bigger picture here is affordability. I've show BVI articles on mortgage interest rates being the lowest in 15 years. We are known SVRs at 4% are not "normal". Households are on life support in the form of cheap trackers and SVR.

The next step down will be cause by rising interest rates.
Dual income households stretched to the max in a falling market, with interest rates at the lowest levels in history is not a rosy picture.

Please just one VI tell me how they expect the market to stop falling let alone stay flat… Please.

#27 talksalot81

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Posted 01 May 2012 - 10:45 AM

I am not a VI and all the above is very much true but sellers remain dillusional. As long as base rates remain so ridiculously low, owners and sellers are not having their arms twisted. I know rates will go north eventually but there is no sign of it happening anytime soon and I don't know how we can convince the next big drop out of the market until it happens. Even if buyers cannot get mortgages, the masses will simply sit there and refuse to sell because it doesn't cost them anything to wait.

#28 tinbin

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Posted 01 May 2012 - 11:23 AM

I am not a VI and all the above is very much true but sellers remain dillusional. As long as base rates remain so ridiculously low, owners and sellers are not having their arms twisted. I know rates will go north eventually but there is no sign of it happening anytime soon and I don't know how we can convince the next big drop out of the market until it happens. Even if buyers cannot get mortgages, the masses will simply sit there and refuse to sell because it doesn't cost them anything to wait.


the masses think it doesnt cost them to wait ... it will end up costing them quite a bit in the end :huh:

#29 tinbin

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Posted 01 May 2012 - 11:26 AM

Lenders hike NewBuy rates less than 2 months after launch

Lenders have increased the rates on products they developed for the Government’s indemnity guarantee scheme less than two months after its launch.

Under the NewBuy scheme, which launched in March, lenders offer 95 per cent loan-to-value mortgages on new-build properties against a mortgage indemnity guarantee funded jointly by builders and the government up to 9 per cent of the property value.

At the scheme’s launch, NatWest, Barclays and Nationwide Building Society launched specific products for the scheme. But since then, all three have made changes to these products.

NatWest has increased the rate on its products by 0.5 per cent, meaning it now offers a two-year fixed at 4.79 per cent and five-year fixed at 5.49 per cent.

Nationwide has increased its three and five-year fixes by 0.2 per cent and 0.1 per cent respectively, meaning it now offers a 5.89 per cent three-year fixed and 6.09 per cent five-year fixed.

Barclays has replaced its 4.99 per cent two-year fixed rate and 5.89 per cent four-year fixed with a 6.09 per cent three-year fixed.

NatWest only distributes its NewBuy mortgages direct, Barclays will distribute both through intermediaries and direct while Nationwide only distributes through intermediaries.

Last month, Halifax launched a two-year fix at 5.99 per cent and another at 6.39 per cent which is fee-free.

Your Mortgage Decisions director Dominik Lipnicki says: “It is taking advantage of people who have small deposits. It means fewer people will be able to afford to take out the mortgage, when the point of the scheme was to ensure more could.”

http://www.moneymark...1050609.article

#30 tinbin

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Posted 01 May 2012 - 11:29 AM

more on the SVR hikes ....

SVR hikes set to cost borrowers £300m - Which?

The SVR hikes bought in by Halifax, Co-operative Bank and Yorkshire and Clydesdale banks today could cost borrowers £300m in extra mortgage repayments over the next year, research has found.

According to consumer watchdog Which?, around 70% of borrowers are concerned about an increase in interest rates, while 14% admitted they are already struggling with repayments.

From today, Halifax's SVR rises from 3.49 to 3.99%, affecting 850,000 borrowers. The Co-operative Bank has pushed its SVR up by 0.5% to 4.74%, impacting 54,000 borrowers.

Clydesdale and Yorkshire Bank have increased SVR by 0.36% to 4.95%, affecting 30,000 borrowers.

Other SVR hikes on the way include Bank of Ireland, which is to rise to 4.49% on 1 June, affecting 100,000 borrowers.

Meanwhile, RBS increased interest rates on its offset products by 0.25% on 1 March, while rates on its One Account product range will rise by 0.25% from 1 May. Changes are set to affect around 200,000 customers.

Three quarters of homeowners told Which? they would be affected if their repayments increased by £50 a month, while 41% said they would need to cut back on regular spending.

Around 20% would need to reduce savings and 11% would not have enough for essentials.

Which? said an increase of £100 a month would see 20% of mortgage-holders not having enough for daily essentials like food and 11% being unable to pay their mortgage.

http://www.mortgages...rrowers-gbp300m

Edited by tinbin, 01 May 2012 - 11:30 AM.





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