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Posts Tagged ‘Mortgage Lenders’

Mortgage safety net for struggling homeowners

December 4th, 2008 by jamie | 0 Comments | Filed in Daily News, Money Management, Mortgages, Recession

Homeowners who fall behind with their mortgage repayments after losing their jobs or suffer a drop in income can take up to a two-year repayment holiday under a new Government backed scheme.

Announced in the Queen’s Speech, banks and building societies making up 70% of the mortgage sector have signed up to the scheme.

The Government and lenders still need to iron out the final detail but the outline of the plan is:

·      Mortgage payers who are made redundant or face a significant income loss will qualify

·      Loans up to £400,000 are covered by the scheme

·      Lenders will manage the scheme and make decisions based on common guidelines about granting repayment holidays

The scheme comes in to force in the New Year.

By then the details should be clearer, like exactly what a ‘significant loss of income’ amounts to and whether the self-employed are also covered.

The objective is to reignite confidence in the housing market and reduce the number of repossessions.

The Council of Mortgage Lenders, that represents the UK’s bank and building society lenders, speculated that repossessions could rise to 75,000 next year. The CML estimates that repossessions will end up at about 45,000 properties for 2008.

The CML has welcomed the government’s safety net scheme, and promises that ‘won’t pay’ borrowers will not be able to avoid their responsibilities.

“Instead, it will provide welcome reassurance to the vast majority of borrowers that the government and lenders are doing all they can to help keep people in their homes,” said a spokesman.

British house prices tumbled at a record 16.1% in November, according to figures released by the Halifax showing that prices fell 2.6% in November compared to October, and are now 16.1% lower than in November 2007.

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Students living in Riverside luxury

October 21st, 2008 by admin | 0 Comments | Filed in Daily News, Global Credit Crisis, Loans, Mortgages

Hill house, the luxury riverside development on the banks of the Thames at Thamesmead was sold out before it was completed at £250,000 for a 2 bedroom apartment and £400,000 for a penthouse suite. Today, the development lies largely abandoned, swarming with vermin and drug addicts.

Built by Persimmon 2 years ago, the development has become a pointed reminder of the ravages of the credit crunch. The once glistening balconies and marbles hallways are now run down as front doors have been barricaded by metal sheeting to stop squatters. The amazing thing about Hill House is that of the 84 separate units that were initially sold; an unbelievable 82 have been repossessed. Apartments that once sold for £250,000 are now changing hands for less than half that amount or £115,000. The penthouses are fetching barely $135k. Soaring mortgage rates and huge hikes in the cost of living have seen almost all the buyers pushed past their limits and hit by heart-breaking repossession orders. 
 
Taxi driver David Adaiat is one of the two original buyers hanging in there despite his home having lost more than HALF its value. He bought his third-floor river-view apartment for £269,995 at the height of the buying frenzy in June 2006 as a family home for his wife Esther, 38, and their teenage daughter Dami. 
 
Shattered David said: “I’ve just had the place valued after my mortgage deal came to an end. 
 
“They told me it’s now worth just £130,000. I nearly fell through the floor. It’s unbelievable. That’s so much lower than we paid. 
 
“This whole place has become like a ghost town.”

Most of the repossessed properties are standing empty with only a few souls brave enough to live among the cockroaches, rats and squatters.  The once pristine grounds are overgrown and the development itself is a complete mess since the maintenance fees are left unpaid. A far cry from their initially £250k price tag, now the units are being bought up by local housing associations and rented to grateful students for under £400 a month.  The students who live there can’t believe their luck. Thanks to the credit crunch, they have great pads…it’s just a pity the neighbours aren’t a bit more sociable!

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The Lender from hell…is it the UK Government?

October 21st, 2008 by admin | 0 Comments | Filed in Daily News, Debt, Global Credit Crisis, Loans

Few could believe the facts and figures that spewed forth from the housing charity “Shelter” last week. The government is easily the most aggressive lender on the high street when it comes to kicking people out of their homes. As well as that delightful titbit, Northern Rock also has some of the worst savings rates and the highest mortgage rates! Who said the government couldn’t run a bank? They remind me of the infamous East End landlord of the 60’s, Peter Rachman. Is the government guilty of Rachmanism?

Not according to them they aren’t. (Shocker!) But the figures speak for themselves. In the three months to the end of September 2008, Northern Rock repossessed 4201 homes. This figure is higher than many other mortgage lenders and a 20% rise on the previous quarter.

So, should we immediately tar and feather the government for their uncaring attitude at this time? Well, not really. You see, the reason that the Northern Rock had to be saved in the first place was because its loan book was already very shaky. They lent out thousands of mortgagse at 100% and 125% of the value of the property and now that prices have started to come down, it should be no surprise that the mortgage holders are getting into difficulty and defaulting in droves. It isn’t that the government is being really mean and nasty to these borrowers; it’s that Northern Rock, which had to be rescued, has a far higher percentage of these borrowers than most other banks….hence the need to be nationalised.

The situation may yet get worse as the Rocks 2 year fixed rate comes to an end on the 31st of October and members are moved onto the 7.34% variable rate from the fixed rate of 3.99%. That’s not only going to hurt them as well as taxpayers, but property prices will come under increased pressure from the likely defaults and repossessions that will arise from this. Assume the crash position.

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