It has been revealed that in the first half of 2010 there was a near 25% increase in the number of people seeking mortgage advice before deciding whether to dip their toe into the property market. Historically the mortgage market has been fairly straightforward and independent financial advisers have often been overlooked in favour of "straightforward" mortgage arrangements. However, the onset of the credit crunch, the recession, the property downturn and a lack of competition in the mortgage market has seen more and more people turn to professional advisers for help.
David Jones, the former Northern Rock finance director, has today been banned by the FSA from performing any function in relation to any regulatory activity in the UK. This comes after he was found guilty of misreporting mortgage arrears going back as far as 2007. It is believed that a number of repossessions were left out of the 2006 report and accounts which effectively gave the wrong impression and wrong data with regards to repossession numbers at Northern rock.
Since our article yesterday regarding a problem with mortgage payments at Yorkshire bank and Clydesdale bank, affecting 18,000 customers, it has been revealed that some customers have been offered compensation due to the fact they have been paying extra interest on higher than expected mortgage balances, due to the fact that recent payments have been less than they should have been. So where do customers stand with regards to compensation for this issue?
It has been revealed that Yorkshire Bank, which also owns the Clydesdale Bank, has been forced to issue a grovelling apology to 18,000 mortgage holders who have been under charged with regards to their mortgage payments. Due to a "software error" around 50% of those affected will be forced to increase their mortgage payments by £25 to make up the shortfall due to under payments in the past. However, it is also believed that upwards of 700 customers, with larger mortgages, could see their mortgage bills increase by around £200 a month.
June saw an increase of 15% in mortgage advances which rose to £13.1 billion, the highest level since December 2009. This traditional seasonal boost to the UK mortgage market is a welcome piece of good news for the industry which has been struggling to push ahead over the last few months. It will be interesting to see whether this short-term pickup in mortgage advances continues for the rest of the year as many experts believe the UK property market will struggle to remain in positive ground over the next six months.
Since the UK authorities stepped forward with a number of proposed changes for the UK mortgage market there has been much debate as to the overall impact this will have on the housing market. Some experts believe that up to one in five potential mortgage applications, and remortgage applications, could be effectively dead in the water leaving 2 million borrowers with no source for mortgage finance. Is this really true?
As the UK mortgage market readies itself for major changes in the future there is concern about those in the self-employed arena and the fact they may not be able to obtain mortgage funding in the future. The effective banning of self certified mortgages, whereby customers certify their own income, is a major blow to the self-employed and could indeed stop many people from entering the housing market in the future.
The Co-op has this week launched a mix-and-match mortgage which allows customers to fix parts of their outstanding balance at a predetermined rate and allow the balance to track the base rate. This tool on the surface appear to give customers the best of both worlds, the ability to mix and match the two alternatives, and with only one application fee it does seem to be something of a useful option.
A spokesman for the Newcastle building Society has today suggested that first-time buyers who are unable to raise funds from "the Bank of Mum and Dad" will be forced to rent or remain in their parent's homes 10 years longer than their middle-class counterparts. This situation could get much worse in the short term as the financial straitjacket afforded to mortgage agreements is set to tighten.
Additional costs in relation to various FSA proposals could cost the UK mortgage industry in excess of £20 million a year. These proposals include more in-depth checks in relation to the financial situation of customers and the banning of self certified mortgages and loans in excess of 25 years. The FSA is also looking to place the emphasis upon mortgage lenders to prove each customer is able to cover their mortgage payments which is a slight change to the situation at the moment.
