Economic factors

What next for mortgage rates?

Tuesday, February 2nd, 2010

Are mortgage rates about to rise or fall and should you take a fixed or tracker rate? We round-up the latest information.

What’s the latest?

Mortgage borrowers have spent almost a year enjoying rock bottom standard variable rates are growing concerned, as some building societies start to raise them.

While most SVR borrowers should be sheltered from a rate rise, smaller building societies are deciding to risk bad press by raising SVRs even without the base rate increasing.

This move is aimed at forcing borrowers enjoying low SVRs into remortgaging. The good news for the consumer is that lenders have also been busy reducing mortgage rates past few weeks, with fixed rate deals seeing the biggest benefits.

The outlook for fixed rates coming down further looks good, as the UK has begun its crawl out of the recession and shaved a substantial amount off the cost of borrowing fixed rate funding on the money markets for lenders.

It is hoped that the New Year rate cuts will deliver a little bit more competition into a mortgage market stuck in the doldrums last year. Banks and building societies seem a little bit more interested than they previously were in securing mortgage borrowers’ custom, but life is still tough out there for many borrowers.

Tracker rates are still substantially cheaper than fixed rates and you will still need a hefty deposit of at least 40% to ensure you get the cheapest rates available.

Tags: mis-sold mortgages, mortgage rates, tracker mortgages
Posted in Economic factors | No Comments »

Why did the sub prime mortgage lenders go bust?

Monday, February 1st, 2010

It is a sad truth that a lot of mortgage firms and lenders are going bust at the moment. At its peak the mortgage market had over twenty lenders willing to hand out mortgages to customers with bad credit, in today’s climate that figure no more than five. If you visited a mortgage broker to get your mortgage or needed a sub-prime mortgage the chances are you would have come across some specialist lenders.

Before the credit crunch a lot of mortgage lenders acted as subsidiaries to larger banks. For example you may have got your mortgage from one lender but that lender was a subsidiary of one of the larger banks. An example of this would have been Mortgages PLC who were owned by Merryl Lynch.

The way the lenders made their money was a financial system called securitisation. This is where investors buy groups of loans from a particular lender gambling that the loans are paid on time and they make a profit.

As the market became more competitive lenders began to take bigger risks when lending money to consumers with bad credit. Many of these consumers defaulted on their loans thus leaving the investors with large losses. This lead to them seeking alternative investments and the securitisation of mortgage loans is now almost extinct.

As a result a lot of these lenders have now been closed down. If you got your mortgage from a sub-prime mortgage lender because you had bad credit they will have almost definitely gone bust by now.

Many of these sub prime lenders paid very generous commissions to mortgage brokers for the introduction of the customer. Over the past 24 months the number of mortgage brokers have shrunk by at least half.

If you arranged your mortgage through a broker in the last six years, how can you be sure you got the correct advice and paid reasonable fees?

If you want to check if you were mis sold a mortgage call: 0800 612 7014.

Tags: mortgage audit claims, mortgage claims, sub prime mortgages
Posted in Economic factors | 4 Comments »

Can I still claim mortgage compensation?

Monday, February 1st, 2010

Many consumers aren’t aware that if they have been mis sold a mortgage by a company that is now in liquidation, they can still claim compensation.

The Financial Services Compensation Scheme (FSCS) – which was set up by the Government to compensate customers if a firm is unable to pay claims against it due to insolvency – urged consumers to consider their options.

Gravitas Law, a claims management specialist, have several consumers who have contacted the firm, about being charged in excess of £4000 by the now-insolvent mortgage broker Black and White Mortgages.

Bobby Kennedy, director at Gravitas Law, said the firm wanted to help customers who felt they had been overcharged. He added: “We will look into cases if we believe a client is at a financial disadvantage due to excessive charges.”

It is also important to check the financial stability of any claims management company and the level of expertise the firm has access to. The investigation of the mortgage mis-selling process is a complex and time consuming

Gravitas Law are able to audit the whole process for a fee of £199.00 + VAT, which they believe to be market leading.

For more information or to make a claim call: 0800 162 7014

Tags: broker in liquidation, Financial Services Compensation Scheme, mortgage compensation
Posted in Economic factors | 1 Comment »

The recession is over – or is it?

Thursday, January 28th, 2010

Economic growth in the final quarter of 2009 was recorded at 0.1%, despite experts predicting 0.4%.

These weak figures have undermined the government’s prediction that we would bounce back from the worst recession since 1948.

Despite the figures suggesting things are getting better most normal people are still struggling financially. There were a large number of people that took mortgages out 2/3 years ago and these discounted deals are coming to an end now.

At the time finance was freely available even if you had a bad credit rating. The financial landscape is very different today.

Mortgage brokers were advising clients to take 2 or 3 year deals, with the proviso that they could just remortgage to a better deal when it came to an end. In a large number of circumstances little attention was paid to affordability should property prices fall and rates go up.

This was despite treating customers fairly being the focus of the Financial Services Authority who regulated mortgages.

Over the past 3 years there has been a large increase in the number of complaints against mortgage brokers in relation to the mis-selling of mortgages. The Financial Services Authority enforcement unit has either fined or shut down a growing number of firms.

Mortgage mis-selling is a problem that is coming to the fore and many consumers could be due compensation.

Are you one of them?

Tags: economic growth, fsa, mis-sold mortgages, the recession
Posted in Economic factors | 3 Comments »