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.
In a move which could hit the self employment market the Financial Services Authority (FSA) has today announced plans to effectively outlaw self certified mortgages. In a move which is aimed at reducing the risk of mortgage defaults in the future, and a potential repeat of the credit crunch, mortgage providers will need to obtain more information regarding a customer's financial situation before any mortgage arrangement can be agreed. So what impact will this have on the mortgage market?
The Financial Services Authority (FSA) has today issued a statement proposing that future mortgage arrangements should only be entered into if the lender is convinced that the borrower will be able to afford the agreement in the long-term. Making lenders responsible for ensuring that borrowers are in a position to afford mortgage payments going forward may sound obvious, but is something of a significant shift from the current setup.
Yesterday's news that interest payments on mortgages are now at their lowest percentage of household income in 35 years is obviously good news and will take some pressure off stretched budgets in the UK. However, if your mortgage payments are now lower as a percentage of your household income than ever before, is it time to look at increasing your mortgage payments to take advantage of low interest rates?
The UK mortgage market would appear on the surface to be relatively strong at the moment with mortgage interest payments now at a 35 year low. The figures for April show that mortgage completions increased to 42,000 which equates to £6 billion in value. This is a 2% increase in mortgage completion numbers and a 3% increase in mortgage values, compared to the previous month. So is the mortgage arena set for further growth in the short term?