UK mortgage brokers
Increasing house prices and interest rates are causing UK mortgage brokers to get innovative.
Chief economist at Lloyd’s TSB Corporate Markets, Trevor Williams had this to say, Rate rises in recent months have obviously dampened consumer optimism and despite the bank rate holding at five percent this month (Nov 2006), consumers are expecting the gloom to continue well into 2007.
The old saying of life goes on and the growing number of young couples who have grown up in this high stakes market, seem to be squelching any downfall in the market. Williams continues, Perversely (this) does not seem to have quashed the insatiable drive that continues to buoy the housing market.
New options
With the threat of increasing rates–nearly 5.5% predicted in the first quarter of 2007–more and more home buyers are choosing a fixed-rate mortgage.
Michael Coogan, director general of the Council of Mortgage Lenders is encouraged by the fixed-rate loans. He believes buyers are choosing shrewd borrowing decisions. He goes on to say, It is encouraging that many borrowers are planning ahead financially and locking themselves into a period of certainty about their monthly mortgage repayments.
Alliance & Leicester, a leader in the mortgage game, has introduced two new mortgage packages. The first is a two year tracker that will be .31 percent below the loan base rate. After the two years, the loan will convert to .99 percent above the loan base rate. This loan carries a £599 product fee, plus a three percent penalty if the loan is paid off before the two years are up.
The second option is similar, in it offers a tracker at .14% below base rate for two years, but does not charge a product fee.
The two options make it easier for buyers to borrow up to 95% of the property’s value and makes it possible to overpay each month or get rest from a monthly payment when need arises.
The Open Market HomeBuy, initiated by the government has been revamped to better allow low-income, first time home buyers to gain independence. Brokered between the government and the mortgage lenders, the scheme will supplement the buyers portion of the loan with use of government money. Chancellor Gordon Brown said the changes will allow the potential home buyer to pay as little as 50% toward the purchase price.