Uk
UK home buyers unlikely to see mortgage costs rise in short term
Home buyers in the UK are set to see mortgage rates remain at historic lows for some time yet despite original forecasts that they might rise by the end of this year. The Bank of England has indicated that the current 0.5% base rate is likely to be around for some time yet with a rise not looking likely until well into 2016 or even 2017. Rates have now been this low for 80 months. But there are concerns that home buyers will get too used to low interest rates and this could backfire in the future when interest rates do rise. According to James Jones, head of Consumer Affairs at Experian, buyers need to work out what they can afford, and plan ahead for unforeseen costs that may make repaying debts harder over the years ahead. A survey of people who had failed to secure a mortgage last year suggests that many are failing to do the basic research needed to get proper control of their finances. Some 13% did not know how much money they have left over at the end of the month and 18% did not know what monthly repayments they could afford. The research also found that 14% did not have a big enough deposit for the property they wanted and 12% were unable to secure the size of mortgage they needed. Another piece of research has found that almost three quarters of home owners with interest only mortgages are worried they may not be able to repay their loan. Interest only deals mean borrowers pay the interest on the loan during the life of the mortgage and then must repay the capital when the mortgage term ends. Just 31% of those interest only borrowers questioned said they have a separate investment policy in place, such as an endowment or an ISA, to pay the capital, according to the research by mortgage broker Ocean Finance. While 16% said they plan to switch to a repayment mortgage before their current loan ends, 31% said they expect to have to sell their home to settle the outstanding capital. And a fifth of home owners said they don’t have a plan in place to repay the capital. ‘Interest only has become a time bomb because so many people took out the products to cut the cost of their mortgage, with no view of how they would repay the capital element. Borrowers who have an interest only mortgage with no repayment plan need to take action,’ said Gareth Shilton, Ocean’s spokesperson. ‘It’s advisable to seek advice on whether they can overpay on their current interest only deal, switch to a repayment mortgage, or use an ISA or pension to settle the capital payment,’ he added. Interest only mortgages became popular in the 1990s as a way for consumers to afford homes at a time when property prices were soaring. Lenders often agreed interest only loans without confirming borrowers could repay the capital owing… Continue reading
Home buyers in UK unlikely to see mortgage costs rise in short term
Home buyers in the UK are set to see mortgage rates remain at historic lows for some time yet despite original forecasts that they might rise by the end of this year. The Bank of England has indicated that the current 0.5% base rate is likely to be around for some time yet with a rise not looking likely until well into 2016 or even 2017. Rates have now been this low for 80 months. But there are concerns that home buyers will get too used to low interest rates and this could backfire in the future when interest rates do rise. According to James Jones, head of Consumer Affairs at Experian, buyers need to work out what they can afford, and plan ahead for unforeseen costs that may make repaying debts harder over the years ahead. A survey of people who had failed to secure a mortgage last year suggests that many are failing to do the basic research needed to get proper control of their finances. Some 13% did not know how much money they have left over at the end of the month and 18% did not know what monthly repayments they could afford. The research also found that 14% did not have a big enough deposit for the property they wanted and 12% were unable to secure the size of mortgage they needed. Another piece of research has found that almost three quarters of home owners with interest only mortgages are worried they may not be able to repay their loan. Interest only deals mean borrowers pay the interest on the loan during the life of the mortgage and then must repay the capital when the mortgage term ends. Just 31% of those interest only borrowers questioned said they have a separate investment policy in place, such as an endowment or an ISA, to pay the capital, according to the research by mortgage broker Ocean Finance. While 16% said they plan to switch to a repayment mortgage before their current loan ends, 31% said they expect to have to sell their home to settle the outstanding capital. And a fifth of home owners said they don’t have a plan in place to repay the capital. ‘Interest only has become a time bomb because so many people took out the products to cut the cost of their mortgage, with no view of how they would repay the capital element. Borrowers who have an interest only mortgage with no repayment plan need to take action,’ said Gareth Shilton, Ocean’s spokesperson. ‘It’s advisable to seek advice on whether they can overpay on their current interest only deal, switch to a repayment mortgage, or use an ISA or pension to settle the capital payment,’ he added. Interest only mortgages became popular in the 1990s as a way for consumers to afford homes at a time when property prices were soaring. Lenders often agreed interest only loans without confirming borrowers could repay the capital owing… Continue reading
A good haggle helps home buyers pay less, new research shows
When it comes to buying a new home the majority of UK buyers are prepared to haggle and usually save money as a result, new research has found. Which? Mortgage Advisers asked people who had bought a property in the past five years what their initial offer was, whether they negotiated and what they eventually paid. The survey found that 73% of home buyers initially offered below the asking price for their property, and as many as 66% were successful in securing their property for less than the advertised price. Home buyers in Wales and the Midlands were the happiest to negotiate, with 79% and 78% respectively initially offering less than the asking price. In comparison, only 60% of home buyers in London initially offered less. Buyers in Wales, Birmingham and Manchester had the most success when negotiating, with 74% in Wales and 69% in Birmingham and Manchester securing their homes for less than the advertised price. Those that paid the asking price or more cited a number of reasons for doing so, but generally they were motivated by the stiff competition for properties. Indeed, some 25% who paid the asking price or above said that this was due to competition for their dream home, and 21% said that they were involved in a bidding war. ‘Don't be afraid to haggle, even if you've already set your heart on a property, as unless you're in a very competitive market, it will be expected. Having knowledge of the seller's position and the local market is a good idea and can often help secure the property for less,’ said David Blake from Which? Mortgage Advisers . ‘Today's property market has become incredibly fast paced and so for those requiring mortgages, seeking advice early will put you in a strong position to move quickly,’ he added. Continue reading
