Will the base interest rate be increased?
May 27, 2010
It was not so long ago that borrowers and homeowners would wait with bated breath on the day of the Monetary Policy Committee meeting each month to see whether the base rate would go up or down, and whether their repayments on their borrowing would be affected. However, for well over a year now the base rate has been at its all time low having reached a rock bottom rate of 0.5 percent in March of last year and having remained there since.
This may have resulted in some people becoming complacent, and whilst they may have been careful with their spending a year ago for fear that the base rate and their repayment might increase they may now have stopped being quite so careful with their money with the thought that the base rate will probably remain at its all time low for at least the remainder of this year.
However, homeowners and borrowers shouldn’t be too confident, as some officials believe that the only way to combat rising inflation levels would be to increase the base interest rate, which could then mean that mortgage and loan repayments increase for many borrowers. Over recent months a number of economists and officials have predicted that the base rate is likely to remain at its all time low over the course of this year, but a recent report has said that the base rate must increase.
The report came from the Organisation for Economic Co-operation and Development, which has stated that inflation has spiralled out of control over recent months and that the only way to keep a lid on inflation would be to increase the base interest rate.
The report claimed that the base rate would need to be increased at least once over the remainder of this year, and that by the end of next year the base rate would need to stand at around 3.5 percent. The level of inflation has been soaring above the target inflation rate of just 2 percent that is set by the government. It is thought that this could be a tough challenge for members of the powerful Monetary Policy Committee, as they will have to perform a real balancing act.
The OECD report stated: ‘The authorities face the challenge of preserving credibility, with headline inflation and some measures of inflation expectations exceeding the targeted rate in the context of extremely expansionary monetary and fiscal policies.’
Homeowners no longer need HIPs
May 20, 2010
Just two weeks into the electoral victory the new coalition government has scrapped the controversial Home Information Packs that were brought in by the Labour party back in 2007 and have been causing controversy ever since. Homeowners have been upset by the hundreds of pounds that they have had to shell out on these packs to sell their properties, so the news will be welcomed by those considering selling up in the near future.
Whilst the government has now scrapped the HIPs there is one element of the pack that will remain in place, and this is the EPC or Energy Performance Certificate, which will still need to be provided so that prospective buyers can see what the energy efficiency of the property is and what the potential for improvement might be.
The ConDem coalition has now confirmed that homeowners will now no longer have to provide the full HIP in order to sell their property. This move will save the average homeowner around £250 off the cost of selling their property. Grant Schapps, the new Housing Minister, said that the move showed just how committed the new government was when it came to getting down to business as quickly as possible.
He said that the decision to scrap the HIPs meant that homeowners could focus on getting their properties sold without having to find hundreds of pounds upfront to pay for the HIP.
The Housing Minister said: ‘Today the new Government is ensuring that home information packs are history. This is a great example of how we are determined to get straight down to work and cut pointless red tape which is strangling the market. By suspending home information packs today, it means that home sellers will be able to get on with marketing their home without having to shell out hundreds of pounds upfront. We are committed to greener housing so from now on all that will be required will be a simple energy performance certificate.’
What to look for when searching for a loan
May 14, 2010
Whilst most people can ill afford to get themselves into debt these days there are still those that will need to take out a loan for one reason or another, whether it is a personal loan to pay for one of a variety of purchases or whether it is a mortgage loan for the purchase of a home.
Getting a loan over the past couple of years has become increasingly difficult, and this is because lenders have become increasingly restrictive when it comes to lending money. However, there have been signs that things are easing in the financial markets, and this means that banks may be easing up a little on their restrictions, although things will not go back to the days of easy credit seen before the credit crisis.
Consumers that are looking for a loan should always ensure that the compare the different loans that are available, not only to get the best rate and deal possible but also to ensure that they get a loan that is suited to their needs and circumstances. There are a number of factors that you should look at when looking for a loan, and this includes:
Rate of interest on the loan: You should always compare the interest rates charged on different loans, and these can vary based on the type of loan that you choose and the lender that you go with. Remember, whilst the base rate may be at its lowest level in over three centuries banks are still doing their best to recoup losses through higher interest rates, so taking the time to compare rates could provide you with big savings.
Repayment periods available: You should make sure that you check what repayment periods are available with the loans that you are considering, as this will determine how much you will have to repay each month. Those on a tighter budget may need to opt for a longer repayment period even though this may mean paying more interest, whereas those that can clear the loan more quickly can save themselves interest by choosing a shorter repayment period.
The small print: Always check the small print with any loans that you are considering, as there could be very important details in there. This could include a variety of information from taking payment holidays if things get tight to any set up fees, penalty fees, and restrictions.
Affordable first time buyer mortgages launched by post office
May 14, 2010
Over recent years first time buyers have experienced many difficulties when it comes to getting onto the property ladder, and with everything from high property prices to mortgage restrictions and high deposit levels to hinder their chances of getting onto the property ladder many have had to give up on the dream of homeownership, at least for now.
However, the Post Office is hoping that it can offer some first time buyers a helping hand after launching a range of mortgages that are designed to suit the needs and pockets of first time buyers. At a time when many lenders are demanding huge deposits from first time buyers the Post Office has launched deals that require a relatively low deposit.
The mortgages, which are targeted towards first time buyers, are available with just a 10 percent deposit, and whilst this is far higher than the deposits required three or four years ago, which stood at just 5 percent or in some cases 0 percent, it is still much lower than the deposits of 15 percent and more that many other lenders are now demanding.
The mortgages offer fixed rates set at between 5.45 percent and 5.99 percent, and the fixed periods are for two, three, or five years. There is also a tracker mortgage available from the Post Office with an interest rate of 5.49 percent. There are some 10 percent mortgage deals now returning to the market for first time buyers, but the interest rates attached to these can be very high.
The Post Office stated: “Whilst there are existing 90% deals available, many remain out of reach for most borrowers because the rates are too high. We’re offering more affordable rates that will allow more borrowers the opportunity to take out a mortgage with a smaller deposit. This should particularly help first time buyers.”
Pressure off for homeowners as repossession levels fall
May 13, 2010
The release of recent figures has indicated that the pressure for homeowners in the UK may have eased off, with data showing that the number of repossessions in the UK fell by 7.5 percent in the first quarter of the year. Over the past couple of years home repossession levels have spiralled out of control as a result of the credit crunch and the recession.
In the final quarter of last year the number of repossessions was reported to be 10,600. However, in the first three months of 2010 this number fell to 9,800. In the first quarter of 2009 the figure was much higher, coming in at 13,200 as homeowners struggled to keep up with their mortgage repayments in the difficult financial climate.
The figures have been released by the Council of Mortgage Lenders, and although the figures are encouraging and show signs of improvement officials from the CML have warned that many homeowners are still vulnerable and could fall victim to repossession. They added that arrears levels were also down, but that this should not make people complacent.
The CML added that as long as there are no more economic problems it might be looking at reducing its prediction of 53,000 repossession over the course of this year, although any revisions will not be made until the summer. It is thought that the main driver behind the lower levels of repossession is the rock bottom base rate, which still stands at 0.5 percent.
The CML stated: “We hope and expect to be able to revise down our 53,000 forecast for repossessions in 2010, but we are acutely conscious of the beneficial influence that low interest rates and the package of support have played so far.”
Mixed news for first time buyers
May 7, 2010
Whilst first time buyers have experienced extreme difficulties over the past couple of years when it comes to being able to get onto the property ladder a number of changes have taken place over recent months that have eased the situation for many people within this group. Read more