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You might hear on the 1st Thursday of each month that the Bank of England base rate is unchanged, so you think fine, my variable rate mortgage is ok for another month, well you might just be wrong.
Just because the Bank of England isnt increasing it’s rates it doesnt mean the lenders aren’t increasing theirs, in fact the rates which are sold to you have been increasing over the last few months.
Here at Direct Mortgage Centre we have decided to monitor these rates and each week will sample rates for customers buying a new home and re-mortgaging. We will look at rates available with different deposit sizes and publish these in a chart so you can see what is really happneing with interest rates.
To ensure fairness when we sample we use the same criteria each week although sometimes their may be slight differences in the available rates. These charts are intended as a guide to how mortgage interest rates are moving.
How does this affect you? When should you switch to a different mortgage? Fixed or Tracker? Why not give us a call FREE on 0800 566 8540 and talk through your options with one of our adviser.
A few years ago, self certified mortgages were abundant, almost every lender was happy to lend you money without the need to check your income. Some lenders used a system called ‘Fast Track’ this is where the lender didn’t check your income but could request proof at a later date.
Self Certified mortgages and Fast Track are now a distant memory, each mortgage must be backed up with proof of your income, in fact the government are pushing lenders in to ensuring that they check affordability on each and every mortgage.
This isn’t a bad thing, why would you apply for a mortgage that you couldn’t afford.
Anyway, back to the reason of this article, proving your income when applying for a mortgage today. What do you need to provide;
If you are employed with just the one job, then your last 3 pay slips is usually acceptable to the lender, some would like to see bank statements showing your salary credited to your account.
If you are self employed, no longer are most lenders willing to accept your last 2 or 3 years accounts, even those audited by yor accountant, be expected tp obtain your last 3 years SA302 from the Inland Revenue. An SA302 is a document that the Inland Revenue generates to confirm the figures you have declared on your Tax Return.
If you are an employed director of a limited company with a significant shareholding, usually more than 20%, the lenders will certainly classify you as Self Employed and will want to see confirmation of your basic salary, dividends, company accounts and some are now requesting that you provide your own SA302′s as well.
So if your thinking of applying for a mortgage, be prepared to provide extensive proof of your income and if your self employed or a company director why not call the Inland Revenue and request 3 years SA302 early.
I spoke with Halifax today discussing clients who are already with Halifax for their mortgage with rates that have expired. I was suprised to learn that over 80% of Halifax mortgage customers whose deal had come to an end are sitting on the Halifax’s variable rate which will usually be 3.50% or 3.99%.
Now 3.50% isn’t a bad rate, but for those customers with lots of equity there are much better rates around and you should seriously consider switching your mortgage,
Imagine this scenario –
You are currently sitting on Halifax variable rate at 3.50%, say your mortgage payment is £800 per month, we can look at other mortgages for oyu and possibly reduce that rate by say 0.50%. What if you reduced your rate but kept your monthly payments the same, how many years would you knock off your mortgage with potentially massive savings in interest over the term.
What about those of you who don’t want to go through the hassle of providing pay slips, proof of address, proof of identity etc, well we can offer a mortgage product switching service, where we can secure a fixed rate for you now whilst fixed rates are probably at the lowest they are likely to be.
Finally, thjose with little or no equity, which ubfortunatly some of you will have experienced. No problems there either, we can still find another fixed rate for you.
For anyone wanting to switch reates there are som emortgages with no fees at all, so we really can find something to match your preferences.
Think about this – your on the variable rate at the moment whilst rates are low and likely to stay low for the near future, possibly up to the end of 2013. When will you switch to a fixed rate? when rates start to increase, say the end of 2013? What do you think will happen to Fixed rates if gthe base rate i increasing? Yes, fixed rates will no doubt increase, so should you be securing a fixed rate now whilst they are low or wait till they start to increase? Some 5 year fixed rates are now below 4%.
If you want to discuss through the options open to you, please give us a call on 0800 566 8540 or email or why not use our Live Chat facility.
As always each of the options are subject to status and mortgages are secured against your home, which means you miust keep up repayments or your home could be at risk.
July 2011 saw a 10% fall in fixed rate mortgage applications compared to June as the threat of an imminent interest rate rise eased.
Fixed rate mortgages have steadily dropped each month this year from its peak in March when 80% of all mortgage applications were fixed rate deals.
However, fixed rate deals still made up 74% of all applications in July.
The number of mortgage applications also fell in July, down 8% on June numbers.
The average loan size on mortgage applications in July was £135,873 compared to £138,965 in June, a drop of 2.2%.
Re mortgage applications fell by over 18% in July this year with the total number of applications in the year to date still 34% higher than the corresponding period in 2010.
Brian Murphy, head of lending, independent mortgage broker Mortgage Advice Bureau:
“Surprisingly, fixed rate mortgage applications fell in July at the same time as average two and five year fixed rates dropped to all time low levels. This shift towards variable rate products is likely to be a response to expectation levels of an imminent interest rate rise easing.
“With a raft of economic indicators showing further slowing of the UK economy, and a recent poll of leading UK economists forecasting no bank base rate increase in 2011, and several predicting no change until 2012, variable rate mortgage take up has strengthened.
“Also, the view that low rates are here to stay for some time yet, will have been boosted by the US Federal Reserve announcing that, due to sluggish growth, it envisages holding its official federal funds interest rate for the next two years.
“However, even though the Bank of England could well keep the base rate at 0.5% until early 2012, what we’re unlikely to see is a seismic shift towards borrowers choosing variable rate products.
“With so much uncertainty in the UK economy, mortgage applicants are still keen to take any risk out of the equation, and are happy to pay the premiums on fixed rates for that security element. There will always be a nucleus of borrowers who want the comfort that fixing provides.
“What we may well see over the coming months are more applicants locking themselves into longer five-year fixed rate deals, enabling them to manage their monthly budgets more effectively.
“Any shift in numbers towards variable rate products are unlikely to be this group of safety first borrowers, and more likely to be the ‘sitting on the fence’ applicants who were undecided which way to go, and maybe now feel more comfortable choosing a variable product in light of the short and medium-term economic outlook.
“Not surprisingly, mortgage transaction volumes eased in July after hitting a high point in June, as families headed off on their summer holidays. In a normally functioning mortgage market, application numbers drop off during July and August, so the market performed as expected.
“A stronger indicator as to the health of the mortgage market will be applications in September and October, as historically we would expect to see numbers start to pick up.
“In terms of product availability, competition amongst lenders continues to pick up, however deals throughout July remained at similar levels to the previous month.
“Products numbers were around 8,700, although products typically available to intermediaries eased a little to 7,250, while those available directly via lenders increased towards 1,500.”
Northern Rock has reduced their mortgage rates by up to .90% and extended its £500 cash back incentive to include all Buy To Let products with percentage fees.
Northern Rock’s 2-Year Everyday fixed rates with a £995 product fee now start from 2.67% for both purchase and re mortgage customers with a 30% deposit – a reduction of 0.32%.
For those who wish to keep their costs as low as they can however 2-year Everyday fixed rates with no product fees, start from 3.19% at 70% LTV.
Northern Rock continues to be committed to helping those with smaller deposits (including first time buyers). They have reduced selected mortgage rates across its products at 80% LTV (20% deposit required), 85% LTV (15% deposit required) and 90% LTV (10% deposit required).
A 2-Year Everyday fixed rate mortgage at 90% LTV exclusively for purchase customers, is now available from just 5.25% with a £995 product fee. Customers will also get £500 cashback.
Mortgage possession claims have been reasonably stable in 2010 reveals the latest Mortgage and landlord possession statistics report.
This follows the downward trend since the beginning of 2008, increasing from 2003.
There were 19,329 mortgage possession claims issued in the last quarter of 2010 on a seasonally adjusted basis which was 2% lower than the previous year.
48% of first orders made in mortgage possession claims were suspended in the last quarter of 2010 compared to 46% in the same time in 2009. This has remained reasonably stable over the last few years after decreasing from 60% in 2003 to 46% in 2007.
On the 19th November 2008 the Mortgage Pre-Action Protocol for possession claims relating to mortgage or home purchase plan arrears came into effect. This introduction coincided with a sharp fall in the number of new mortgage repossession claims.
The number of actual repossessions occurring (as reported by the Council of Mortgage Lenders), expressed as a proportion of mortgage possession claims which led to an order being made in the county courts, was 67% in the year ending 30 September 2010, compared with 57% in the year ending 30 September 2009.