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UK News: Secured Homeowner Loans, Personal Loans, Mortgages and Remortgages

Mortgage arrears and possession figures in H1 2008

8th August 2008

The latest data from the Council of Mortgage Lenders show no surprises in terms of the number of mortgage arrears and possessions cases in the first half of 2008. While both have increased from their low base as expected, the overwhelming majority of the UK's borrowers continue to pay their mortgages in full every month, and will continue to do so. The CML is maintaining its forecast of 45,000 total possessions and 170,000 mortgages in arrears of more than three months by the end of the year. These numbers remain extremely small when seen in the context of the 11.74 million mortgages in the UK. The CML numbers relate only to first mortgages, not to other consumer loans secured on people's homes. The possession rate - that is, the proportion of all mortgages on which possession occurred in the period - was 0.16% in the first half of the year, up from 0.11% in both the first and second halves of 2007. The possession rate now is similar to that of the late 1990s, but remains less than half the rate experienced in the early 1990s. By number, there were 18,900 cases where lenders took possession of property in the first half of the year. This compares with 13,400 in the second half of 2007, and 12,800 in the first half of 2007. On arrears, the total number of households with arrears of three months or more was 155,600 at the end of the first half of the year, up from 129,600 at the end of 2007 and 120,800 at the end of the first half of last year. The arrears rate stood at 1.33% of all mortgages, up from 1.10% at the end of 2007 and 1.02% at the end of the first half of last year.

Negative equity threat for 1.7m homeowners

30th July 2008

About 1.7 million people could be pushed into negative equity in the next year if house prices keep falling at their current rate, a report claims. The credit ratings agency Standard & Poor's (S&P) says house prices may fall by a further 17% in the coming year. That means 14% of all mortgage holders in the UK would find their homes were worth less than their mortgages. House prices have been falling amid a credit crunch that has seen lenders cut the number of mortgages they offer. "The downward trend in UK house prices now seems well established, and we expect prices to continue falling in the near term," said S&P.

Bank accounts 'not working well'

16th July 2008

Personal current bank accounts are not working well for consumers, the Office of Fair Trading (OFT) has said. The OFT said the �8bn industry was not clear enough, with many consumers not knowing their account's interest rate or what they paid in bank charges. The complexity of the market meant that consumers were less likely to switch banks, the watchdog said. But the banking industry body said the OFT's figures did not reflect the true costs banks faced in offering accounts. It said some 81% of banks' income came from charges to customers with insufficient funds in their accounts (�2.6bn) or interest payments (�4.1bn). The report found that more than three-quarters of customers did not know the interest rate of their current account, while many did not know how much they paid in bank charges. The complexity and lack of transparency of current accounts made it hard for customers to compare accounts from different banks, the OFT said.

Mortgage lenders plan to kick-start the mortgage market

15th July 2008

Mortgage lenders have drawn up a plan to help kick-start the mortgage market amid falling house prices and a squeeze on the availability of home loans. The Council of Mortgage Lenders (CML) want to free up UK banks and building societies to offer new home loans. It wants the Bank of England to guarantee a market in mortgage-backed securities and covered bonds. This would encourage investment in the market for these products, pushing funds back into mortgage lending. Confidence The CML said that the biggest issue in the mortgage market was the lack of available funding to support new mortgage lending. This has led to the number of mortgage deals on the market being squeezed and the cost of these loans rising. The lenders' body wants the Bank to essentially offer a form of secured lending. This would persuade investors to buy mortgage-backed securities - something that has dried up during the credit crunch. The scheme could be set up quickly and would act as a catalyst to restore market confidence, the CML said. Unlike the Bank of England's Special Liquidity Scheme - which allowed banks to swap �50bn of mortgages for government bonds - it would cover new mortgages and investors would still take the credit risk. "A year into the credit crunch, there is no merit at all in waiting until the autumn before taking steps that will help the housing market to remain more resilient," said CML director general Michael Coogan.

Lending for house purchase lifts but remortgaging drops

8th July 2008

Lending for house purchase increased slightly from April to May, according to the Council of Mortgage Lenders. Loans for house purchase increased by 4% in volume to 52,700, and by 2% in value to �7.9 billion; although both were 44% lower than May last year. However, there was a steep decline in remortgaging from April to May. There were 71,000 loans for remortgage, down 14% from April and 23% from May 2007. The value of remortgage lending declined by 13% in May to �9.6 billion, which represented 39% of all lending compared to 42% in April. The number of loans to first-time buyers rose by 4% from April to 19,200, but was 41% lower than May last year. Home movers took out 33,500 loans, up 4% from April, and down 46% from May last year. Gross lending declined to �24.5 billion, down 6% from April and 22% from May last year. This is the seventh consecutive month that gross lending has been lower than its position a year before. This data records activity related to completions. Recent mortgage approvals data from the Bank of England indicates that the number of loans for house purchase will fall further still in coming months. Affordability measures remained stable in May, but are still well below the peaks of last summer as those able to obtain mortgages are less stretched financially. First-time buyers typically borrowed 3.3 times their income, compared with 3.39 in July last year. Despite fixed rates becoming relatively more expensive, take up has revived. This suggests borrowers are looking for peace of mind over future payments in these uncertain times. Fixed-rate mortgages increased in popularity in May, accounting for 66% of all new loans, up from 59% in April. CML director general Michael Coogan commented: �The growing popularity of fixed-rate mortgages, despite the relatively high rates, suggests that many borrowers are prioritising certainty in their monthly payments. �Lending levels continue to be lower than last year and any recovery is still some way away, with little sign of the special liquidity scheme increasing the flow of funds to the industry or lowering the cost of funds as hoped. We look forward to an early, positive report from the Crosby review on how the market should address these issues with the support of the tripartite authorities �

Fixed-rate mortgages at 10-year high

24th June 2008

The average cost of a two-year fixed-rate mortgage has broken through the 7% barrier. Homeowners wanting to take out a two-year deal can now expect to pay an average of 7.02% - the highest level for more than a decade. The move follows last week's steep increase in swap rates, upon which fixed-rate mortgages are based. The news comes as Barclays' lending arm, the Woolwich, announced it was raising rates on its residential and buy-to-let mortgages by up to 0.6%. The average rate of a two-year fixed-rate mortgage has increased from 6.75% at the beginning of last week and from 6.61% at the start of the year, according to Moneyfacts.co.uk. The latest increase pushes the average cost of a two-year fix up to the same level as the average rate for a standard variable loan. Standard variable mortgages are traditionally seen as poor value, as they are typically around 2% higher than the Bank of England base rate, and are generally only used as a rate people revert to after a deal has ended before they remortgage to a new one. But with most lenders not charging a product fee to people who move to their standard variable rate, compared with arrangement fees of around �1,000 for best-buy fixed-rate deals, the loans are becoming increasingly competitive.

Bank mortgage lending falls 20%

24th June 2008

Mortgage lending for house purchase by the UK's main banks has fallen to its lowest level on record. The British Bankers Association (BBA) said that in May, the number of new mortgage approvals to home buyers fell to just 28,000. That was a 20% fall in just one month and 56% down from May last year. The BBA said the number of new approvals was the lowest since its records started in 1997 and warned that the market would stay subdued. "Measures of mortgage activity were lower in May as a result of tighter lending criteria and economic pressures on households," said David Dooks of the BBA. "Only remortgaging business is holding up, where people need or want to take advantage of deals with other lenders," he added.

Mortgage lending edges down in May

19th June 2008

Gross mortgage lending totalled an estimated �25.5 billion in May, down only 2% from �26.1 billion in April but 19% from the �31.5 billion high in May 2007, according to the CML. Monthly lending levels have continued well below their position last year but at good historic levels. The Bank of England�s approvals figures show that this pattern will continue in coming months, and that lending activity has strongly focused on the remortgage market. But a wide range of banks and building societies continue to offer a range of mortgages in the market place, despite the credit crunch and funding constraints.

HBOS forecasts 9% fall in UK house prices in 2008

19th June 2008

HBOS, the UK's biggest mortgage lender, has forecast that UK house prices are set to fall by 9% this year. The banking group, which owns the Halifax, had earlier predicted that the decline would be less severe. In a trading update, HBOS said the housing market remained "subdued" and the number of transactions this year would be down by 45% on 2007's level. Its comments came ahead the launch of its rights issue through which it is aiming to raise �4bn from shareholders.

Bank of England governor offers bleak view of UK economy

18th June 2008

The UK faces its "most difficult economic challenge for two decades", the Bank of England governor has said. Mervyn King was speaking at the Mansion House dinner and made it clear that inflation was set to rise, while growth and house prices were likely to fall. Mr King also warned that real take-home pay would stagnate, making life difficult for some families.

Record low in consumer confidence

9th June 2008

Consumer confidence is at a record low following rising costs and falling property values, according to new figures. A third of Britons say they have major concerns about the economy, the British Retail Consortium (BRC) said. The poll of more than 1,000 consumers found 60% thought job prospects were either bad or not as good compared with 50% last year. And more than half (57%) thought their personal finances would be bad or not as good over the coming 12 months compared with 46% six months ago, and three quarters believe that now is not a good time to spend. The BRC attributed the fall in confidence to increasing negativity about job prospects, personal finances and spending power. The Nielsen/BRC UK Consumer Confidence index now stands at 79 compared with 91 at the same time last year, the lowest score since the survey began in 2003. Mike Watkins, a spokesman for researchers Nielsen, said: "The fact that the score has plummeted a further 12 points is telling of how much consumers are being stretched. "Our survey reveals that 55% of people ranked inflation as their main concern during periods of economic downturn while 39% said high interest rates. Unfortunately they are being hit with both at present. This has caused significant unease among consumers." BRC director general Stephen Robertson said: "With one in five people saying they have no spare cash, the highest ever recorded by this survey, customers are telling us they are cutting back on spending on all sorts of non-essentials.

Demand for rented property at record level

9th June 2008

Demand for rental properties remains at record levels as people delay plans to buy their own place due to the downturn in the housing market, research has showed. The proportion of letting agents reporting demand for homes to rent outstripping supply remained at a historic high of 39% during the past three months. The imbalance between supply and demand is highest in Greater London and the South East, according to the Association of Residential Letting Agents (ARLA). But despite the high levels of demand, rents actually fell slightly during the three months to the end of May, with average rents for houses falling by 7%, while the level of income landlords can expect from flats dropped by 9%. The group attributed the fall to large numbers of new-build two-bedroom flats coming on to the rental market. Average rents for a house now range from �3,000 a month in London to �931 outside of the South East, while tenants can expect to pay an average of �2,000 for a flat in London and �585 outside of the South East. The survey's findings are contrary to recent reports that rents were booming on the back of the problems in the housing market. Mortgage lender Paragon recently said strong demand had pushed the average cost of renting a home in England and Wales through the �1,000 a month barrier for the first time. Ian Potter, head of operations at ARLA, said: "We are seeing corrections in individual locations throughout the country. The main cause of these is the developments of new blocks of two-bedroom flats coming on-stream. "In many places this has had a positive effect as it has allowed the rental market to provide stability in housing at a time of volatility in the sales market. It also demolishes the myth of soaring rent levels." But strong demand has led to a further fall in the average length of time a property is empty for between tenants, with this reducing from 24 days to 22 during the past three months. There has also been an increase in the average length of time tenants stay in a property for, with this rising from 16.1 months to 16.3 months.

Repairs could cost owners' homes

7th June 2008

A government scheme to bring social housing up to reasonable standards could leave some people homeless, warns one MP. Hundreds of people who bought former council flats in England are receiving bills for thousands of pounds for repairs they say they cannot afford. The work is being carried out as part of the Decent Homes initiative. The government says it recognizes the problem and has put a range of measures in place to deal with it.

Chelsea and Catholic Building Societies to Merge

7th June 2008

The boards of directors of Chelsea Building Society and the Catholic Building Society have agreed in principle that the two societies should merge. Under the proposal the Catholic would transfer its engagements to Chelsea on a date to be determined. Discussions between the two societies are continuing and further details of the proposed transaction will be announced in due course. It is likely that bonus payments will be made to members of the Catholic. In this event, the first qualifying date for such bonuses will be 31 May 2008. This means that only those shareholding and borrowing members who had a qualifying savings or mortgage account open with the Catholic on that date will be eligible to receive bonuses. Trevor Harrison, Chelsea's Chairman, said "We are looking forward to finalising the terms of the transaction with the Catholic and to welcoming the Catholic's members into the Chelsea family in due course." Clare Whittaker, Catholic's Chairman, said "We are delighted to have chosen Chelsea as our merger partner. The Catholic and Chelsea have much in common and share common values around mutuality and people".

UK house prices see annual fall

30th April 2008

House prices in the UK have recorded their first annual fall for 12 years, according to the Nationwide. Prices fell by 1.1% in April, the sixth monthly decline in a row, and were down 1% from the levels seen in April 2007, the building society said. Nationwide said the price falls reflected a weakening market which had been hit by "poor affordability and tighter financial market conditions". An average home now costs �178,555, which is �1,759 lower than April 2007. "April was another difficult month for the housing market," said Fionnuala Earley, Nationwide's chief economist. She said that there had been a "steep decline" in house buying in the last six months owing to falling demand from first-time buyers, higher mortgage rates and tighter lending criteria. The rise in unsold property on the market improved the bargaining power of buyers which pushed down prices. She said that this was likely to have a knock-on effect on the wider economy, with consumers becoming more cautious.

Slump in bank mortgages

23rd April 2008

The British Bankers' Association (BBA) said there were just 35,417 new mortgages approved for house purchases in March, 18% lower than in February. That was also 46% down on March last year and was the lowest monthly figure since September 1997. A BBA spokesman said that all forms of lending, not just mortgages, were being restricted by the lack of funds. "The consequences of low banking sector liquidity show up clearly in March data; reduced product ranges and tighter criteria resulted in slower mortgage lending and significantly fewer loan approvals," said David Dooks of the BBA. "Pressures on personal finances are also constraining demand, not only for mortgages, but also for personal loans and borrowing on cards."

CML warns that net mortgage lending in 2008 could halve

11th April 2008

CML chairman warns that net mortgage lending in 2008 could halve because potential borrowing still significantly exceeds the industry�s collective capacity to supply funds. Net mortgage lending in 2007 was �108 billion.

Bank of England cuts interest rates to 5.0%

10th April 2008

The Bank of England�s Monetary Policy Committee today voted to reduce the official Bank Rate by 0.25 percentage points to 5.0%. CPI inflation rose to 2.5% in February. The Committee expects inflation to rise further this year, reflecting the continuing impact of higher energy and food prices, as well as the recent depreciation of sterling on import costs. Such pressures are already evident in producer input costs and pricing intentions. Even if commodity prices remain at their current high levels, inflation should fall back. But to ensure that inflation meets the 2% target in the medium term, the Committee needs to balance two risks. On the upside, above-target inflation this year could raise inflation expectations so that, in the absence of some margin of spare capacity, inflation would remain above the target. On the downside, the disruption in financial markets could lead to a slowdown in the economy that was sufficiently sharp to pull inflation below the target. In the Committee�s judgement, the balance of these risks to the inflation outlook in the medium term justifies a cut in Bank Rate this month. Credit conditions have tightened and the availability of credit appears to be worsening.

More seek help for mortgage arrears

18th March 2008

Many more seek help with mortgage arrears, says Citizens Advice, due to problems paying their essential household bills, according to figures released by national charity Citizens Advice. New debt figures released today show that Citizens Advice Bureaux in England and Wales saw mortgage arrears problems shoot up by 35% in the first two months of 2008 compared with the same period in 2007. The new figures also reveal continuing increases in problems relating to basic essentials such as gas and electricity, water, telephone and council tax debts. A survey of almost three-quarters (73%) of all Citizens Advice Bureaux in England and Wales reported that they dealt with 215,000 new debt problems in the first two months of 2008 alone. The new figures reflect recent increases in the cost of living and suggest a growing number of people are having difficulty paying essential household bills. Debts relating to credit, store and charge cards still remain the largest category of debt. Unusually for the time of year, credit card debt problems were down by 9%, while problems with overdrafts were up almost 7% on the same period of the previous year.

Homeowners face a �1 billion

17th March 2008

Hundreds of thousands of home owners face a �1 billion "mortgage shock" this year, as their five-year deals come to an end. An estimated 340,000 took out fixed-rate deals in 2003 when the Bank of England had cut rates to their lowest level for almost half a century. However, these home owners, who have enjoyed extremely low mortgage payments, face a rude shock when they are forced take out another deal this year. In total, these borrowers face paying �1.02 billion more on, says Mortgage Monitor, a price comparison website. It estimates the average home owner, lucky enough to have secured a deal in 2003, will have to find an extra �250 a month to finance a new deal in today's difficult market.

Banks rush to withdraw mortgage deals

17th March 2008

Banks and building societies are frantically withdrawing many of their mortgage deals, as the credit crunch puts increasing strain on lenders. Scottish Widows gave mortgage brokers only 10 minutes' notice last week before it withdrew the bulk of its mortgage offers. Home owners have often filled in all their application forms and had the deal agreed by the lender, only to see it withdrawn at the last moment. This late withdrawing of offers is the latest example of how the credit crunch is hitting many of Britain's 11.8 million mortgage holders. The credit crisis has made it increasingly expensive for banks and building societies to raise money from other banks. In order to protect their profits they have to increase their rates to customers or withdraw best deals.

UK house prices slow in Feb 2008

6th March 2008

House prices are continuing to slow down, says the Halifax, the UK's biggest mortgage lender. According to its latest monthly survey, prices across the UK fell by 0.3% in February 2008, taking the annual rate of inflation down from 4.5% to 4.2%. That means the average UK home now costs �196,649, according to the lender's calculations. The Halifax said prices would be flat over the coming year if the economy and employment continued to grow. The UK property market has seen a "significant" decline in activity in the past year, said the Halifax. It pointed to falling sales and a 39% drop in mortgages approved for home buyers.

FSA sees credit squeeze on banks

27th Feb 2008

The Financial Services Authority (FSA) has warned banks that the crisis in the financial markets will force them to change the way they do business. Chief executive Hector Sants told the BBC that banks would no longer be able to raise as much money as before by selling their loans to other investors. This could permanently push up the cost of loans and mortgages and mean credit is harder to get for some customers. Mr Sants said banks would have to keep more of their loans on their own books.

Buy to let mortgages increase in 2007

26th Feb 2008

New survey data from the Council of Mortgage Lenders shows that buy-to-let lending totalled �24.1 billion in the second half of 2007, up from �21.2 billion in the first half of the year and �20.8 billion in the second half of 2006. Arrears remain lower than in the wider mortgage market. Tenant demand for private rented property remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high quality homes to rent. Buy-to-let has remained resilient in the face of the funding constraints that have affected the sector and the wider mortgage market.

Mortgage lending increases in January 2008

20th Feb 2008

Gross mortgage lending rose in January despite an unsettled housing market, according to the Council for Mortgage Lenders (CML). The CML said lending increased to an estimated �26.5bn in January, up 11% from �23.9bn in December, but still lower than most months in 2007. The CML said it expected lower lending volumes in the coming months, driven mainly by remortgaging. CML Director General Michael Coogan commented: �Gross lending held up well in January. However, there is considerable uncertainty in the housing market at the moment and we expect lending volumes to be lower in the coming months. �It is likely that demand will be stronger for remortgaging than for house purchase in the short term. Home-buyers might be more inclined to transact if their moving costs were reduced - and the government has the opportunity to address this by raising stamp duty thresholds and cutting the rates of stamp duty in next month's Budget.�

Cheque usage falls

14th Feb 2008

The decline in the popularity of cheques speeded up in 2007, according to banking industry data. The Association of Payment Clearing Services (Apacs) said the number of cheques used last year dropped by 9% to 1.6 billion. Apacs said that was the fastest rate of decline recorded since cheque use started falling in 1991. In 2007 more retailers stopped accepting them, with Tesco and Marks and Spencer about to phase them out. The decline of cheque use, and their eclipse by debit cards for many payments and cash withdrawals, is a well established trend.

Subprime lenders causing repossessions

13th Feb 2008

Sub-prime lenders are bringing more than half of UK repossession orders, despite accounting for just 6% of total mortgages, a BBC report has found. The sub-prime market caters for people with poor credit histories and has been under pressure because of an increase in interest rates and borrowing costs.

Home repossessions in 2007

8th Feb 2008

Home repossessions rose by 21% to 27,000 in 2007 said The Council of Mortgage Lenders, the highest figure since 1999. The figure for the UK is more than the 22,400 in 2006, but not as extreme as the CML had forecast. It is still a sharp rise on the 8,500 of 2003. And the CML warned that the number of repossessions was likely to rise again in 2008 as the credit crunch tightened. Meanwhile, the numbers of mortgages behind on payments rose by 8.6% compared to 2006, the organisation, which represents mortgage lenders, said.

Bank cuts interest rates by 0.25% to 5.25%

7th Feb 2008

Bank of England cut interest rates by 0.25% to 5.25%. Credit conditions for households and businesses are tightening and consumer spending growth has eased. The continuing disruption to global financial markets was also a factor. However, inflation remains a risk.

UK Consumer Confidence remains subdued in spite of rate cut

9th Jan 2008

Consumer Confidence ticks down one point. The Nationwide Consumer Confidence Index dropped one point to 85 in December � the lowest level since February 2007. In spite of the quarter point cut in rates in December, ongoing economic uncertainty and the impact of higher food and petrol prices seem to be continuing to affect consumers� confidence. Consumers� feelings about the current economic and employment situation, reflected in the Present Situation Index, deteriorated in December. The index fell three points from 91 to 88 due to more negative views about the economy. The Expectations Index (how consumers feel about the economic and employment situation and income in six month�s time) remained stable (83), but the underlying data shows a significant weakening in confidence in the economy and future income expectations. However, consumers still seem to feel optimistic about their jobs, both at the moment and in six months time and it is this which is supporting expectations in particular. The Spending Index (consumers� willingness to spend) picked up by a respectable five points in December, but at 68 remains well below the average for the year of 82.

Rate of annual house price growth slows in all UK regions

4th Jan 2008

Annual rate of house price growth slowed in every part of the UK in the final quarter of 2007, says the Nationwide Building Society, bringing the average rate in the UK down from 9.3% to 6.9%. Price growth in Northern Ireland slowed most rapidly with the rate of growth falling to 24.2% from 42.6% in the third quarter. The ripple effect in England is still evident as the North-South gap widens by �15,000 in 2007. London saw fastest rate of annual house price growth in England for the seventh consecutive quarter.

Credit Conditions Survey: Q4 of 2007

3rd Jan 2008

Bank of England�s Credit Conditions Survey for Q4 2007. Lenders reported that the availability of secured credit to homeowners reduced materially and a further reduction in secured credit is expected in Q1 2008. Lenders reported that household unsecured credit availability reduced a little and a further slight reduction in unsecured credit is expected in Q1 2008. Corporate credit availability reduced significantly and a further reduction is expected in Q1 2008. Demand for secured lending increased but lenders expect demand for secured credit to fall in Q1 2008.

Lenders tighten credit score criteria to reduce credit availability

3rd Jan 2008

Secured and unsecured lenders have been tightening credit score criteria and lowering maximum loan to value ratios. Bank of England says this reduction in credit availability reflects a reduction in lenders' appetite for risk. However, default rates on household secured lending and unsecured lending were little changed.

Mortgage Lending Nov 2007

27th Dec 2007

November's mortgage lending rose more slowly than in October and mortgage approvals were again low said the British Bankers' Assoc. Unsecured lending remained subdued and personal deposits showed only modest growth. Lending to companies was lower than the recent trend. BBA statistics director, David Dooks, said of the latest data: "Mortgage activity is notably lower than this time last year and, as we expected, lending has begun to slow down. Judging by the significantly lower number of mortgage approvals in October and November - partly resulting from lower demand, partly from tighter supply - the market is likely to continue slowing in the coming months." "Tighter household finances and uncertainty in the financial markets are driving consumer behaviour. Deposits are weak and unsecured borrowing remains subdued, despite a marginal rise in November".

Mortgage Lending Nov 2007

20th Dec 2007

Gross mortgage lending declined to an estimated �30.7 billion in November, down 8% from �33.5 billion in October and 8% from �33.2 billion in November 2006, according to the Council of Mortgage Lenders. This is the first time that monthly lending levels have dropped below the same month in the previous year since July 2005, and clearly demonstrates the market slowdown has started. CML director general Michael Coogan commented: �As we had forecast, lending in November dipped below its 2006 equivalent for the first time this year and we expect this trend to continue into 2008. However, while lending will be subdued in coming months we see this as primarily a result of lack of available funding rather than lack of consumer demand. �We welcome the recent initiative by the Bank of England with other central banks to inject liquidity. This support needs to continue, and be increased, in the coming months.�

RICS Survey on UK house prices

13th Dec 2007

Surveyors reported that house price growth remained negative for the fourth month in succession - but supply still remains tight, says RICS� UK housing market survey. The RICS house price balance almost halved in November. 40.6 percent more Chartered Surveyors reported a fall than a rise in house prices, down from 23.4 in October - The most negative since May 2005 when 49 percent more Chartered Surveyors reported a fall than a rise. However, the new instructions net balance still remains negative. 6 percent more Chartered Surveyors reported a fall than a rise in new instructions to sell property up from 17 percent in October.

Sub prime mortgage lending and secured loans

12th Dec 2007

Sub-prime mortgage lending undermines home ownership, says Citizens Advice report. A new report reveals how the dream of home ownership has turned sour for many people on low incomes who have taken out mortgages or secured loans with sub-prime lenders only to end up deep in debt and facing the prospect of homelessness. Set up to fail shows how dubious advice from brokers, irresponsible lending decisions and aggressive arrears management by sub-prime lenders are driving the current increase in mortgage arrears, court action and repossessions. It also shows how the regulation and safety nets currently in place are failing to protect vulnerable borrowers. Citizens Advice concludes that government policy encouraging more people on lower incomes to buy their own homes, while a laudable aim, can only work if the problems its report highlights are addressed. The charity makes a series of recommendations which it believes would make home ownership more sustainable for those for whom at present it remains a high risk undertaking. Last year (2006/07) Citizens Advice Bureaux dealt with over 57,000 problems about mortgage and secured loan arrears, an 11% increase on the previous year, and an NOP GFK survey for Citizens Advice suggested as many as 770,000 people had missed at least one mortgage or secured loan payment in the previous 12 months. At the same time, court action for repossession has risen steeply and is now at a similar level to that seen during the repossessions crisis of the 1990s. The new report is based on 1,200 case studies from 360 Citizens Advice Bureaux in England, Wales and Northern Ireland, a survey of CAB clients with mortgage or secured loan arrears, and interviews with CAB clients and advisers. A CAB analysis of mortgage possession cases listed in 23 county courts in January 2007 found that sub-prime lenders were responsible for a level of possession actions substantially above their market share - in some cases the equivalent of ten times more than mainstream lenders. Citizens Advice Chief Executive David Harker said: "The cavalier behaviour of some brokers and sub-prime lenders is seriously undermining home ownership and hitting the most vulnerable borrowers hardest. Our research suggests that many aspiring home owners have been mis-sold unsuitable and costly home loans that are doomed to fail from the start. Many sub-prime lenders are flouting the rules on responsible lending by granting loans when it�s clear the borrower will not be able to afford to repay it from the very outset, then getting tough immediately things go wrong. Far from providing housing security and a valuable asset, home ownership has proved a fast track to debt and homelessness for many vulnerable borrowers on low incomes." Many people who borrowed from sub-prime lenders start to struggle early on in the term of the mortgage, and CAB evidence shows that these lenders are often unwilling to negotiate affordable repayment arrangements with borrowers in difficulties, taking court action for relatively small amounts of arrears, significantly increasing the stress, risks and costs people face. The hardline approach by lenders threatening court action, and escalating the debt by routinely piling on default charges, drives many to try and solve the problem by re-mortgaging or borrowing more in the form of secured loans, without realising they are putting themselves at even greater risk of losing their home by doing this. Key report findings: Most people seeking CAB advice on mortgage and secured loan arrears are on low incomes and have borrowed from sub-prime lenders at higher rates of interest. More than a third had household incomes below the UK poverty line, one in five was reliant on means tested benefits, and nearly 70% had outstanding unsecured debts averaging �22,000. Often they relied on the recommendations made by a broker, ending up with inappropriate and unaffordable mortgages. Many buying their council homes had had particularly bad advice on the suitability of the loans they took out. Some brokers encouraged borrowers under the greatest financial pressure to exaggerate their income, or submitted false information without the borrower�s knowledge. Many lenders and brokers failed to carry out basic checks to ensure that borrowers would be able to meet the increased payments when discounted or fixed rates ended, and some had not even checked that payments could be afforded from the outset. Many borrowers who had taken out additional secured loans for home improvements or debt consolidation � sometimes for amounts as large as their main mortgage - did not understand the risks, or the consequences of default. Sub-prime lenders were often less willing than mainstream mortgage lenders to negotiate with borrowers in arrears and more likely to take court action for possession, making debt problems worse. Sub-prime lenders were responsible for a level of possession actions substantially above their market share. Courts do not always check if the lender has complied with regulation and may not apply existing legal safeguards and remedies available to borrowers. Some homeowners in arrears and in a financially and emotionally vulnerable situation had sold their houses for much less than they were worth in order to rent them back, with little security of tenure, from companies offering a new, unregulated form of �mortgage rescue�. Many lenders are not complying with the extensive Financial Services Authority (FSA) rules governing first charge mortgages. Office of Fair Trading (OFT) rules on second charge lending are out of date and not always enforced, while second loans over �25,000 are currently not regulated at all. Less than a quarter of home owners have mortgage payment protection insurance (MPPI) and those that do often find it does not pay out when needed. State support through the income support mortgage interest (ISMI) scheme is woefully inadequate to protect those in greatest need of help.

Bank cuts interest rates by 0.25% to 5.50%

6th Dec 2007

Bank of England has cut interest rates by 0.25% to 5.50% due to the slowing economy. The Bank said: "Forward-looking surveys of households and businesses suggest spending is moderating, broadly in line with the projections contained in the November Inflation Report. But conditions in financial markets have deteriorated and a tightening in the supply of credit to households and businesses is in train, posing downside risks to the outlook for both output and inflation further ahead. CPI inflation was 2.1% in October. Higher energy and food prices are expected to keep inflation above the target in the short term. Although upside risks to inflation remain, which the Committee will continue to monitor carefully, slowing demand growth should ease the pressures on supply capacity, bringing inflation back to target in the medium term economy."

Banks report mortgage slowdown

23rd Nov 2007

UK banks said that mortgage approvals for house purchase were significantly lower in October. Unsecured lending remained very subdued. October's data provide evidence of a rapidly slowing mortgage market and of consumers limiting their personal borrowing. Pressure on household finances, the cumulative impact of interest rate rises over the last year, the expanded application of home information packs and the consequential impact of the credit crunch may well all have a part to play in suppressing current demand and supply. "Personal deposits also remain below trend, as people continue to consider where they should hold their money in the light of the recent difficulties in the financial markets'

Mortgage approvals

29th October 2007

Mortgage approvals fell to a two-year low in September but unsecured lending accelerated, said the Bank of England. There is growing evidence that the housing market is cooling rapidly following rate increases over the last year and the worldwide credit crunch following the collapse of the US sub-prime mortgage market.

Halifax 25 yr mortgage fix

2nd August 2007

Halifax, the UK's largest mortgage lender, announced a new 25 Year Fixed Mortgage at a rate of 6.39 per cent. Halifax already offers a 10 Year Fixed Mortgage at a rate of 6.29 per cent, with a product arrangement fee of �499. The 25 Year Fixed Mortgage has a product arrangement fee of �599. The new 25 Year mortgage means homeowners can balance the security of a fixed interest rate with a range of flexible features built into the product.

Mortgage lending figures from the British Bankers Association

26th July 2007

Mortgage lending in June was the highest figure ever, reflecting strong re-mortgaging activity but lending growth is slackening, only 5% higher than a year earlier, according to the British Bankers Association. When compared to June 2006, house purchase approvals were down 11% by number and remortgaging approvals were down 1% by number. Underlying net mortgage lending (gross lending minus repayments and redemptions) rose by �5.4bn (revised from last week's release), lower than May's increase (�5.9bn) but in line with the recent average. The annual growth in net mortgage lending continued to stay around 14%.

CML survey on fixed rate mortgages

10th July 2007

Council of Mortgage Lenders said that the appetite for short-term fixed-rate mortgage deals is still strong among first-time buyers and home movers. The survey revealed that 89% of first-time buyers and 73% of home movers took out a fixed-rate loan - albeit mostly on a short-term basis - in May, up from 88% and 72% respectively in April. The CML's regulated mortgage survey also found worsening affordability continues to impact all home-buyers as well as existing borrowers. Today's data does not take into account either of the 0.25% rate rises in May and July - so it is inevitable that affordability pressures will become even more pronounced in the coming months. Today's survey revealed that first-time buyer income multiples reached their highest-ever level in May at 3.37 times the average first-time buyer income, up from 3.33 times in April. And, mortgage interest payments continued to rise, reaching 19.1%, up from 18.7% in April - their highest level since 1992. Home movers also face increased affordability constraints. In May the average home mover income multiple reached a record 3.03 times, up from 3.01 times in the previous month. And, the proportion of income used to pay mortgage interest also jumped to 16.6% from 16.3% in April. With a new prime minister committed to improving access to affordable housing, the survey revealed that more and more first-time buyers and home movers pay stamp duty. In May, a record 60% of first-time buyers were liable to pay the tax, up from 52% in May 2006. The number of home movers that paid stamp duty also reached a new record at 86%, up from 82% in May last year. It should be high on the government's new housing agenda to reduce the tax burden on buyers to offset the impact of increased mortgage costs.

Bank rate increase

5th July 2007

Bank of England raises interest rates by 0.25% to 5.75% saying balance of risks to medium term inflation lie to the upside. UK credit and broad money continue to grow rapidly and output growth remains firm. Although pay pressures remain muted, the margin of spare capacity in businesses appears limited and most indicators of pricing pressure remain elevated.

BOE keeps rates at 5.5%

7th June 2007

Bank of England's MPC held interest rates at 5.5% but rates are expected to go up in July or August. Inflation at 2.8% remains above the target rate of 2.0% and it is considered only a matter of time before the UK follows the European Central Bank, which this week raised interest rates to 4.0%. The UK economy remains healthy but there are signs that previous rate increases are slowing down the housing market and consumers' desire to take on debt.

Base Rate Increase

10th May 2007

The Bank of England raised interest rates by 0.25% to 5.5% - the fourth increase in a year. Inflation had increased in March to 3.1% requiring the Bank's governer to write a letter of explanation to the government. This rate increase was therefore expected but it is not clear whether this marks the peak of the current interest rate cycle.

Consumer Credit Act

6th April 2007

Consumer Credit Act: establishment of an alternative dispute resolution service for consumer credit complaints to be provided by the existing Financial Ombudsman Scheme;

Bank of England April 2007

5th April 2007

Bank of England leaves interest rates unchanged at 5.25%

Dormant Bank Accounts

5th April 2007

Banks are making a determined effort to encourage customers to reactivate old accounts ahead of plans by the government to use money in accounts that have not had any transactions for 15 years for community purposes.

Subprime mortgage lending

3rd April 2007

Sub-prime lending in the US is very different to the UK, says the Council for Mortgage Lenders. In the UK only 6% of loans are sub-prime and only 15% of sub-prime mortgage are discounted compared to 80% in the US where future mortgage rates can be adjusted upwards substantially.

RICS say house prices slow

12th March 2007

RICS said new instructions to sell property have gone 9 months without a rise and stocks of unsold property have fallen to the lowest level since July 2004. UK house prices slowed in Feb as affordability worsened. House prices are rising at their slowest rate since last May. 19% more chartered surveyors reported a fall than a rise in new buyer enquiries. Interest rate rises have started to worry would-be buyers and so market conditions remain tight.

Underlying demand for housing starts to weaken

28th Feb 2007

Interest rate hikes are beginning to take their toll on house buyers, says Nationwide. Despite house price growth of 10.2% for the year to Feb 2007, Nationwide says underlying demand is weakening with buyer interest and mortgage demand waning. Yet supply constraints and buy-to-let interest will support house prices in the short term.

Banks braced for refund claims

17th Feb 2007

Banks are bracing themselves for a flood of complaints from customers who want to reclaim billions of pounds of fees that they have incurred through unauthorised overdrafts. Last year, the OFT found credit card penalties unfair and also said that the same principle applied to bank overdrafts. Banks typically charge £30 a day when account holders fall into an unauthorised overdraft.

OFT refers Payment Protection Insurance market to the Competition Commission for enquiry

7th Feb 2007

The OFT has asked the Competition Commission to conduct an extensive market analysis of the Payment Protection Insurance market, taking up to 2 years. The government will then receive recommendations for possibly radical action.

Bank of England in surprise rate increase

11th Jan 2007

The Bank of England raised interest rates to 5.25%, wrongfooting all but one of 50 economists polled by Reuters. It is not the first time the central bank has sent shockwaves across trading floors. Six months ago the Monetary Policy Committee's decision to tighten policy for the first time in two years also came as a surprise

Nationwide House prices

30th Nov 2006

House prices jumped by 1.4% in November pushing the annual growth rate to 9.6%, according to the Nationwide Building Society

Bank of England raises interest rates

9th Nov 2006

Bank of England raises interest rates by 0.25% to 5.0%

UK debt 'double Europe average'

27th Sept 2006

People in the UK are borrowing on average almost twice that of citizens in other western European countries, a report has found. Unsecured UK lending, such as credit cards, was £216bn ($408bn; 319bn euros) in 2005 - more than a third of all new non-mortgage borrowing in Europe. The average British resident owes £3,175, business research firm Datamonitor said. Total UK personal debt, including mortgages, is about £1.2 trillion. The report, which looks at the market for borrowing via personal loans, hire purchase, credit cards and overdrafts in 16 European countries, said that the UK had an "insatiable appetite for credit". The average European owed just £1,558 in unsecured debt. Credit cards The figures reflect the explosion in borrowing that has taken place in the UK over the last decade. The debt advisory service the Consumer Credit Counselling Service (CCCS) said overuse of credit cards lay at the heart of many of the problems encountered by its clients. Borrowing power In terms of fresh lending, the French came an easy second to the UK last year, the report found. The Germans were second to the UK in terms of the total size of debt they had accumulated. Although the biggest economies dominate the lending market, it is in the smaller economies of Turkey and Greece that non-mortgage borrowing has been rising fastest. After recovering from an economic crisis in 2001, new lending in Turkey rose by 52% between then and 2005, with Greece seeing its unsecured borrowing rise by 29% over the same period of time. Both of those countries also top the league for the speed with which their consumers' outstanding balances have grown. The report points out that one reason for the position of Turkey is that the country has a very undeveloped mortgage market, so borrowing is dominated by unsecured lending, with credit cards being the most popular form. The opposite is true in Holland, where unsecured credit as a proportion of all lending is just 5%, and where people often expand their mortgages so they can afford to buy things. 'Saturation point' Paul Marsh, a financial services analyst at Datamonitor, said that the UK market was at saturation point. "The UK is an increasingly difficult place to do business, due to the highly indebted nature of the population," he said. "Yet in other European countries consumers are not as indebted and the markets are not as sophisticated."

UK Economic Growth in Second Quarter Revised Down

27th Sept 2006

The prospect of further rises in interest rates appeared less certain after data showed the economy grew less quickly in the second quarter than previously thought. Forecasts of higher unemployment from a Bank of England policymaker and tentative signs the housing market may be cooling added to these doubts, although data from the Confederation of British Industry showed robust retail sales. "The downward revision to GDP was the biggest surprise," said Geoffrey Dicks, chief UK economist at RBS Financial Markets. "On balance, today's data argues against the need for higher interest rates. The Bank of England raised rates for the first time in two years in August, saying the move was needed to bring inflation back to target. Final data showed the economy grew 0.7 percent in the April-June period, down from an originally estimated 0.8 percent. A key measure of inflation, the GDP deflator, was also revised down.

Credit card issuers raise interest rates

27th Sept 2006

Many credit card firms have increased their interest rates in the last three months to offset enforced cuts in their default fees, a report shows. Financial data firm Moneyfacts said 19 leading credit card issuers have put up their charges. Earlier this year, the Office of Fair Trading (OFT) told them to halve their typical default fees to £12. These are the charges users have to pay for failing to meet the minimum monthly payment on their credit card. The list of credit card companies that have increased some of their charges includes not only American Express and Barclaycard, but also most of the UK's biggest banks, such as the Halifax, HSBC, NatWest and Lloyds TSB, plus a host of other major card issuers. American Express has raised the rate on one card by 6%, while Barclaycard's Platinum card customers have seen the rate they have to pay for cash withdrawals go up by 6% to 27.9%. Last year the Association of Payment Clearing Services (APACS) predicted this might be the first year since the introduction of credit cards in the UK in the 1960s that their use would fall.

�53.8m of personal loans to fund university students

26th Sept 2006

New research from Sainsbury's Bank has found that around �53.8 million worth of personal loans could be taken out this year to help cover the cost of university. And the figures show the majority of personal loans will be taken out by parents who are keen to help cover their childrens’ university costs. Sainsbury's Bank has also warned that if you are taking out a personal loan to help cover the cost of university, it is important to shop around for the best deal. But despite this fact, just four out of ten people taking out a personal loan only receive one quote. Steven Baillie, Sainsbury's Bank loans manager, said: "As students go back to university, many will face a significant increase in their living expenses. As well as students taking on paid employment to help cover this cost, some of their parents are also taking out personal loans to help.”

Underlying net mortgage lending rose by a record amount in August, British Bankers' Association data shows.

20th Sept 2006

The surprise rate hike in August has not deterred house buyers. Net mortgage lending rose by 6.2 billion pounds, up from an 5.8 billion increase in July and well above the monthly average rise of 5.4 billion over the previous six months. The BBA said August's mortgage lending number beat the last record set in April 2004 when it increased by 6 billion pounds. "The draw-down of house purchase loans in particular has driven net mortgage lending higher of late and August's increase set a new monthly record," BBA Director of Statistics David Dooks said. The Bank of England's Kate Barker said on Tuesday the strength of the housing market had surprised policymakers this year and could boost consumer spending. The closely-watched Nationwide and Halifax surveys showed strong rises in house prices in August, in spite of the Bank's quarter-point rate hike to 4.75 percent. Economists expect the Bank to raise rates again this year to 5 percent.

17th September 2006

17th Sept 2006

Comparison websites have sold 13.6 million products in the past year. But a report published in September 2006, by Professor Merlin Stone of Bristol Business School, says numerous applications lead to checks that can lower the credit rating. This can happen regardless of whether the application is successful or is turned down. "Many people apply for products they will not be approved for and are left with applications on their credit scores," said Professor Stone. His report was commissioned by the Moneyexpert comparison site. Both this and a similar service Moneysupermarket.com offer help to potential customers so they can check their existing credit scores before they apply for a loan. Footprint Professor Stone argues that the problem lies with the fact that some comparison websites assume all potential customers are the same and have good credit histories. If someone eventually applies for a product such as a mortgage or credit card, the lender checks their credit history. This enquiry is logged and thus leaves a "footprint" on the files kept by credit scoring companies such as Experian and Equifax. Equifax's spokesman Neil Munro said: "These footprints are used by future lenders as an indication of your credit-worthiness. So if you have too many of these applications on your file in a short period of time, a lot of the ratings systems the lenders will use will probably downgrade your credit rating. According to Moneyexpert, about 3.5 million people had applications for financial products rejected in the past year after being channelled through comparison sites. This process can develop into a spiral, with failed applicants trying again and again to buy polices or products they have no hope of getting, but simply leaving themselves with a worse credit score each time.

Following success on credit card default charges - OFT turns attention to bank current accounts.

7th Sept 2006

In response to the OFT's statement of principles on the calculation of credit card default charges, credit card issuers have agreed to reduce their default charges - the majority by almost half. In April, the OFT stated that credit card default charges had been generally set at a significantly higher level than was considered fair and set a £12 threshold for OFT intervention unless there were exceptional business factors. Many card issuers have stated that they do not agree with the OFT's view of the law and that they believe that their default charges were fair but, in view of the reduction in charges across the market, the OFT is satisfied that no further intervention is warranted in this area at this time and that this change has brought about substantial benefits for consumers. The April statement also indicated that the OFT considers that the broad principles in relation to default charges are likely to be relevant to other standard agreements with consumers such as those for bank current accounts. The responses received from the banking industry have generally challenged this belief but the OFT remains of the view that the broad principles do read across to the retail banking area and has decided to undertake further work on the application of these principles to bank current accounts.

House price growth firm in August

31st August 2006

Nationwide Building Society said UK house prices are now 6.6% higher than a year ago. This is the fastest annual rate of growth since April 2005. The typical house in the UK now costs �167,721.

Bankruptcy cases on the increase

11th August 2006

The number of bankruptcy petitions issued by the courts has risen year-on-year, the Department for Constitutional Affairs (DCA) has said. In total, 15,796 people were the subject of a petition between April and June this year, an increase of nearly 10% on the same period last year. The number of bankruptcy petitions from creditors fell, but was outweighed by a 20% rise in debtor petitions. In short, more people are applying for bankruptcy than being forced into it. The DCA figures echo statistics issued by the government's Insolvency Service. A record 26,000 people became insolvent in England and Wales during the second quarter of 2006 - 66% more than in the same period last year, the service said. At the time, debt experts predicted that more than 100,000 people would become insolvent during the course of 2006. The insolvency statistics include people going bankrupt and those taking out Individual Voluntary Arrangements (IVAs) - an alternative to bankruptcy that allows debtors to come to an agreement with their creditors.

Strong mortgage lending but weak consumer credit

20th July 2006

For June 2006, The British Bankers Association said that mortgage lending continued to grow strongly but consumer credit was not nearly so robust. Net unsecured lending in 2006, so far, rose by less than half the increase seen in the same period of last year. Borrowing on credit cards remains particularly subdued. Net mortgage lending rose by an underlying £5.6bn. This was slightly lower than the £5.8bn rise in May but higher than the average of +£5.3bn over the previous six months. In the first half of 2006 mortgage lending was some 18% stronger than in the equivalent period of 2005. Unsecured personal lending fell by £0.1bn in June, compared with an average rise of £0.3bn in the previous six months. Loans & overdrafts rose by £0.2bn, whilst underlying credit card borrowing fell by £0.2bn and has now declined in four of the last six months.

UK house price growth falls sharply in the second quarter of 2006

6th July 2006

Nationwide Building Society said that the quarterly rate of house price growth in the UK fell back sharply from 2.2% in Q1 to 0.9% in Q2. However, the annual rate of house price growth was stable at 4.8%. England is lagging behind other parts of the UK where prices grew at 3.6% over the year. In contrast, Scottish and Northern Irish house prices are booming with annual growth of 10.7% and 24.9% respectively. Within England, the fastest annual rate of house price growth was in London where prices increased by 4.7%. The Northern region saw the slowest annual growth at only 1.0%.

1000% APR Loan Shark netted

10th May 2006

A loan shark who has preyed on some of the most vulnerable members of society has been sentenced at Birmingham Crown Court. Alan McNally operated the unlicensed money lending operation in the Northfield area of Birmingham after poaching his employer's clients whilst working at a finance company. Abusing his position of trust, he left the company and approached clients to offer illegal loans with interest rates of over 1000% APR. McNally paid personal visits to his victims' homes when they were unable to meet payments. Investigators from the DTI-funded Loan Shark Team swooped on McNally's home within weeks of receiving tip-offs to the Loan Shark Hotline 0121 693 1122. Alan McNally from Yardley Wood, Birmingham had about 75 clients which he lent money using £20,000 raised from remortgaging his home. The typical loan amount was for £100. Commenting after today's sentencing, Consumer Minister Ian McCartney said: "This should send out a clear message that there is no hiding place for loan sharks. We will take action against those people who think they are above the law. The Government is determined to get illegal lenders of the streets and out of our communities. Loan sharks are the lowest of the low. They prey on the most vulnerable people in our communities and we are determined to stop them operating and making money out of misery."

Bankers say mortgage lending is strong

24th April 2006

Strong mortgage lending but weak consumer credit in March, according to the British Bankers' Association. In March 2006, total sterling lending to the UK private sector showed a net underlying increase of �23.0bn (+2.0%) to �1,191bn. This was double both the previous month's underlying rise of �11.4bn and the average over the previous six months. Net mortgage lending rose by an underlying �5.4bn. This was higher than both the �4.7bn rise in February and the average of +�4.9bn over the previous six months. Unsecured personal lending fell by �0.4bn compared with an average rise of �0.5bn in the previous six months. Loans & overdrafts fell by more than �0.1bn, whilst credit card borrowing also declined by �0.2bn compared with an average increase of �0.2bn in the previous six months. David Dooks, BBA director of statistics, said: "The contrast between stronger mortgage lending and net repayments of unsecured borrowing suggests that individuals are optimistic about the housing market, though careful about card borrowing, overdrafts or taking on personal loans."

County Court Judgments surge

23rd March 2006

CCJs surged in 2005 according to the Registry Trust. Count Court Judgments (CCJs) rose by nearly 7% in 2005 to 573,000 in 2005, reversing the declining trend since 1991. Registry Trust Chairman, Malcolm Hurlston, said: This is a clear sign of the pressure on lenders from the rise in over-indebtedness. They are now flocking back to the courts to take effective action to help them recover their money�this is a clear demonstration of the importance of judgment information to responsible lending � few people get credit once they have a judgment against them."

Halifax Bank reports house price growth

9th January 2006

Halifax reported a 5.1% annual increase in UK house prices in 2005, the smallest increase for 10 years and significantly below the long-term annual average of 8%. The annual rate of house price inflation slowed in all regions in 2005 with the exception of London where prices rose by 6.7% compared with a 3.9% rise in 2004. House prices increased by less than 10% in all nine English regions for the first time since 1998. Halifax expects the housing market to be flat in 2006 with modest nominal house price growth and no change in real terms. UK house prices are forecast to rise by 3%, broadly in line with the predicted rise in retail price inflation. The annual rate of house price inflation is expected to increase during the first half of 2006, potentially reaching a peak of 7 - 8% mid year as modest price rises compare with slight falls in early 2005. The annual rate is subsequently expected to fall as prices rise at a significantly slower pace than in the second half of 2005. The recent pick-up in prices is entirely consistent with the improvement noted by all the main indicators of housing market activity over the past few months. The number of mortgage approvals to fund house purchase increased for the fifth successive month in November, according to the latest Bank of England figures. The most recent RICS survey reported the sixth successive monthly rise in new buyer enquiries for house purchases in November, marking the longest running period of increases since 2001.

Gross mortgage lending recovers

29th December 2005

Gross mortgage lending recovered strongly in November 2005 but consumer credit was very weak, said the British Bankers Association. David Dooks, BBA director of statistics, said: "Gross lending on mortgages reached a very high level in November confirming the recovery in the housing market after a relatively weaker early part of the year. Approvals, particularly for house purchase, continued to be strong with little evidence of the normal seasonal slowdown. By contrast consumer credit was very weak with little sign that the slight improvement in retail sales was feeding through to lending." Gross mortgage lending was £18.0bn in November. This was among the highest on record and 23% higher than November 2004. Seasonally adjusted net mortgage lending (gross lending minus repayments and redemptions) rose by £5.1bn, compared with £4.3bn in October and £4.1bn in November 2004. This was the strongest increase since July 2004 and compares with an average of £4.4bn over the previous six months. There were 192,927 mortgage approvals (for all purposes) in November, with a total value of £19.1bn. The number of approvals was virtually the same as October 2005 but 22% higher than November 2004. The average approval for house purchase rose to £130,800. Net lending on loans and overdrafts rose by £0.1bn (having risen by £0.5bn in October) well down on the average increase over the previous six months. Net lending on credit cards also rose by £0.1bn, in line with the average increase in the previous six months.

House prices increase

2nd December 2005

House prices increased by 1.2% in November and 4.5% over the last year, according to the Halifax House Price Index. Commenting, Martin Ellis, Chief Economist, said: "House prices increased by 1.2% in November. Overall, prices have increased by 4.7% over the past six months. The high level of employment and good earnings growth continues to underpin housing demand. The slowdown in UK economic growth over the past year and the historically high level of house prices relative to average earnings are, however, expected to curb the recent improvement in housing demand and prevent another sustained period of sharply rising property values.

Credit Cards to raise fees

21st November 2005

Annual fees on credit cards are set to make a comeback as issuers face shrinking margins from regulation, rate tarts and rising credit losses, according to PricewaterhouseCoopers' latest study of the UK consumer credit market, Precious Plastic 2006. Profit margins have been hit by an increase in bad debts and the study contains new research showing that individuals who enter into Individual Voluntary Arrangements (IVAs) owe an average of £60,000 to 11 creditors (credit cards and other unsecured borrowing). Rate tarts (those who move from issuer to issuer to finance their debts at no cost) are estimated to have cost the industry a further £600 million in lost revenue on balance transfers, despite the introduction by many card issuers of a 2% fee for such transfers. The provision of consumer credit is also in the regulatory spotlight with a number of separate inquiries focusing on most sources of revenue.

Loan approvals for home purchases rise

25th November 2005

Loan approvals for home purchases rose 23 percent on a year ago in October, data from the British Bankers' Association showed on Friday, in further evidence that housing market activity is gradually picking up. Mortgage approvals -- the number of loans agreed but not yet made -- rose to 72,328 from 70,105 in September. The figure, often viewed as a leading indicator of house prices, was the highest since June 2004 and up markedly from 59,011 a year earlier. "The data suggest the housing market is seeing reasonably healthy turnover at the moment. This is also borne out by the latest survey evidence consistently showing increased buyer interest," said Howard Archer, economist at Global Insight. "Clearly, August's interest rate cut has supported housing market activity, along with reduced fears that house prices could crash."

House prices rise

6th October 2005

Halifax says that house prices increased by 1.2% in September and by 1.8% in the third quarter. The annual rate of house price inflation, at 3.0%, is significantly lower than the 20.5% recorded in 2004 Quarter 3. The annual rate of house price inflation has slowed significantly in all the regions of Britain over the past 12 months and is now in single figures throughout the mainland. The biggest gains in house prices over the past year have been in the North West (9.1%) and Yorkshire & the Humber (8.0%). Four regions have experienced small falls during the last 12 months: East Midlands (-0.4%), East Anglia (-0.8%), South East (-1.1%) and South West (-1.5%).

August sees remortgaging boost to lending figures

20th September 2005

Gross mortgage lending rose by 9% to an estimated £27.5 billion in August, up from £25.2 billion in July, according to the Council of Mortgage Lenders. This was one of the highest figures on record, 4% higher than the £26.5 billion of August 2004, and the highest figure since July 2004. There was an increase in all types of lending, although the most pronounced increase was in remortgaging. Remortgaging went up by 15% to £11.7 billion in August from £10.2 billion in July, reaching its highest level since October 2003. This probably reflects borrowers taking advantage of lower interest rates and remortgaging into cheaper deals, especially as a large number of people will have been coming to the end of their previous deals. But as a proportion of total business remortgaging rose only slightly, from 41% in July to 43% in August. Lending for house purchase rose by 6% to £12.5 billion in August, up from £11.8 billion in July, but down slightly on the £12.8 billion recorded last August. Lending for house purchase accounted for 45% of lending, down from 47% in July and 48% last August. The number of loans for house purchase rose from 96,000 in July to an estimated 101,000 in August. However, this was still below the 110,000 in August last year. First-time buyers accounted for 30% of this total, very similar to the proportion throughout the past year (which has varied from 28%-32% on a monthly basis). Affordability maintained a similar picture to previous months. Typical first-time buyers borrowed around 87% of their property value, representing 3.22 times their income. Typical movers borrowed 68% of their property value, representing 2.95 times their income. However, the pricing of both fixed and variable-rate products continued to fall, with the average fixed rate in August at 5.23% and the average variable rate at 5.61%. The pricing differential between fixed and variable rates prompted a further increase in the popularity of fixed-rate business, which accounted for 54% of all loans in August, the highest proportion ever since monthly records began in 1998. Commenting on the figures, CML Director General Michael Coogan said: "The doom-mongers' prophecies look to have been wrong, as lending has continued to strengthen over the summer. Although the market remains far from spectacular in terms of transaction numbers and house prices, the prospects of a significant market correction are receding

Secured loans demand 'to ease off'

16th September 2005

Demand for secured loans is set to cool over the coming five years as the property market continues to slow down, research has claimed. Market analyst Datamonitor said the double digit growth in secured lending seen during the past few years was unlikely to be repeated in the near future. Instead it expects total advances of the loans, which are secured against people's homes, to increase at a rate of just 5.3% a year between now and the end of 2009 to reach £35.4 billion a year. This is well down on jumps of 50% a year recorded over the past five years, with total advances reaching £32.6 billion last year, well up on the previous year's figure of £28.1 billion. Author of the report Maya Imberg said: "As the UK 's housing market slows to a soft landing, the rapid growth rates the secured lending market has enjoyed over the last five years are set to cool."

Mortgage customers 'wasting thousands'

15th September 2005

Abbey says that Britons coming to the end of a mortgage deal are collectively wasting £20 million a month by failing to switch to a better rate. Around 50 per cent of homeowners have a fixed or tracker rate mortgage, but 35 per cent of these say they will not bother remortgaging when their current deal expires, according to high street bank Abbey. The group said this meant an estimated 280,000 people who have either recently come to the end or are about to come to the end of a deal plan to stay on their lender's standard variable rate, which their rate automatically reverts to, at a collective cost of £20 million each month. Mortgage rates have risen quite steeply during the past two years, increasing from an average of 4.21 per cent in September 2003 to 5.5 per cent now. If a borrower had taken out a two-year fixed rate in 2003 they would have paid an average of 4 per cent, but when this deal runs out they will revert to an average SVR of 6.5 per cent, increasing monthly mortgage repayments on a £100,000 loan by £148. Abbey found that the majority of homeowners did not know how competitive their mortgage was, with more than half of people either not knowing or having only a vague idea what rate they were paying

High interest store cards criticised.

14th September 2005

Customers are being overcharged by up to £1 million a year for credit through store cards and associated insurance. According to the Competition Commission, interest rates are also between ten and twenty per cent higher than necessary. As a result, cardholders have paid in the region of £80 to £100 million a year in term of excess prices. CC Deputy Chairman Christopher Clarke, who is chairing the inquiry, said: "We have provisionally concluded that there are features of the store card market that effectively insulate retailers and consumer credit providers from competitive pressures, notably from credit cards and store branded credit cards. "There is therefore little competitive pressure either on APRs or insurance. Retailers' primary concern is to avoid having an APR on their store card which is above those of other store cards. "At the same time, consumers' sensitivity to APR levels and other charges is low. Taken together, this results in store cardholders who take up credit, and associated insurance, paying more than they would in a fully competitive market." The CC identified some 70 retailers operating store card services. They were mostly department stores and clothing retailers, provided by six main store card issuers: Arg Card Services, Creation Financial Services, General Electric Consumer Finance UK (GECF), HSBC Group, Ikano Financial Services and Style Financial Services.

House prices fall

1st September 2005

Nationwide Building Society says that UK house prices fell by 0.2% in August reducing the annual rate of house price inflation to 2.3%, compared to 2.6% last month and 18.9% at this time last year. However, housing activity has been creeping up since the end of 2004. The current levels of monthly house purchase approvals, estimated at 97,000 in August, are now higher than at this time last year

Weak mortgage lending figures

30th August 2005

Bank of England says mortgage lending in July saw weakest rise since June 2002. Mortgage lending grew by �6.5bn compared to �7.1bn in June. Net consumer credit also increased less than expected with annual growth of 12.1% the weakest since June 2001.

Credit card companies will claw back money from rate tarts

17th August 2005

Credit card firms are increasingly clawing back money from customers known as "rate tarts", research has shown. According to the financial research company Moneyfacts, 29 credit cards now charge a one-off fee on any debts transferred from another card. Rate tarts move their debts between credit cards to take advantage of low-interest introductory offers.

Bank of England cuts interest rates

4th August 2005

Bank of England Reduces Interest Rates by 0.25 Percentage Points to 4.5%. The Bank of England's Monetary Policy Committee today voted to reduce the Bank's repo rate by 0.25 percentage points to 4.5%. In the first half of the year, output growth in the United Kingdom was subdued. Household spending and business investment growth have slowed. Although there are some signs of a pickup in consumer spending, downside risks remain in the near term. Looking further ahead, however, the rise in equity prices and the recent fall in the exchange rate should boost activity. CPI inflation was 2.0% in June. Higher oil prices may raise inflation further in the short term. But, in the Committee's view, the slackening in the pressure of demand on supply capacity should lead to some moderation in inflation. Against that background, the Committee judged that a decrease of 0.25 percentage points in the repo rate to 4.5% was necessary to keep CPI inflation on track to meet the 2% target in the medium term.

Individual insolvencies rise

4th August 2005

Individual insolvencies are rising strongly says the DTI. The Department of Trade and Industry said that there were 15,394 individual insolvencies in England and Wales in the second quarter of 2005 on a seasonally adjusted basis. This was an increase of 11.7% on the previous quarter and an increase of 36.8% on the same period a year ago. This was made up of 11,195 bankruptcies, an increase of 7.8% on the previous quarter and 27.5% on the corresponding quarter of last year, and 4,199 Individual Voluntary Arrangements (IVA's), an increase of 23.7% on the previous quarter and an increase of 69.6% on the corresponding quarter of the previous year.

Demand for consumer credit declines

29th July 2005

Demand for credit declines, says the Bank of England. The BofE said that the increase in total net lending to individuals in June (�8.8 billion) was less than in May and weaker than the previous six month average. Within the total, the increase in net lending secured on dwellings (�7.5 billion) was weaker than the increase in May but stronger than the previous six month average. The twelve-month growth rate fell from 11.1% in May to 10.8%. The number of loans approved for house purchase was in line with May, while those for remortgaging were higher and those for other purposes were lower. The increase in consumer credit (£1.3 billion) was weaker than May’s outturn. Within this, both net credit card lending and net other loans were weaker than in May and their respective previous six month averages.

28th July 2005

House prices increased by 0.2% in July, according to the Nationwide House prices bounced back in July reversing the fall in June. However, the overall picture remains one of a gently softening market. The annual rate of house price inflation fell to +2.6% in July, its lowest rate since May 1996. The price of a typical house is now £158,348.

27th July 2005

Mortgage arrears and possessions - numbers up, but still very small say the Council of Mortgage Lenders. The numbers of repossessions and cases of mortgage arrears both rose in the first half of this year, but both remain at extremely low levels by historical standards, according to new results published today by the CML. The number of properties taken into possession rose from 3,070 in the second half of last year (the lowest figure on record) to 4,640 in the first half of this year (similar to the half-yearly levels of 2002 and 2003). The number in the first half of last year was 3,160. Repossession occurred in 0.04% of all mortgages, compared to 0.03% last year. Put another way, the half-yearly repossession rate was around 1 in 2,500 mortgages, compared with around 1 in 250 when repossession rates peaked in the second half of 1991. The number of mortgages in arrears of 3-6 months was 57,220 - up from 53,960 in the second half of last year and 49,720 in the first half of 2004. This equates to 0.50% of all mortgages (compared with 0.47% and 0.43% in the second and first halves

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