Musings of a London Property Search Agent

The news that HSBC is to make available £1 billion pounds to help first-time buyers onto the property ladder was initially welcomed with derision by some of the more cynical members of our team.  At a time when tracker and standard variable rate mortgagors are paying 2% or less, the new HSBC loans will incur interest rates of 4.99% for those prepared to stump up a hefty £1,499 admin fee and 5.49%  for those who prefer a smaller fee.

However, given the amount of lending proposed and that the bank is prepared to lend up to 90% of the value of a property this should be helpful to first time buyers hungry for a property bargain this year.  It will also help first-time buyers vye with investors to prop up the bottom of the market.

As property search agents, most of our work is at the other end of the property ladder, however we occasionally help first-time buyers find their dream home and purchase astutely.  Our Clients have not had trouble finding a mortgage, but all have had size-able deposits.  They have also tried to borrow the maximum they could, assuming this years bonus or next years pay rise would pay for any increase in mortgage payments.  and frankly, I can understand that feeling.  i mean it’s just too tempting isn’t it, when an extra £20K can buy you an extra bedroom, a better street or maybe just an extra few square feet.  It’s worth it isn’t it?  After all, how many people do you know with £20,000  on their credit cards.  Lets face it – it’s not unknown.

So maybe these rates are actually a blessing in disguise for first time-buyers.  Many financial wizards are predicting a return to double digit interest rates next year and all of them are predicting significant rises, if not 10%+.  In this economic climate, although harsh, maybe these high interest rates for first-time buyers are a good thing – preparing them for what’s to come.  The good news is that where HSBC leads, others will surely follow if they haven’t already.  Perhaps the best advice would be for us all to fix now while we can, in preparation for the rocky road ahead.  But note that we are London Property Search Agents – not mortgage advisers!

Technorati Tags: first time buyer mortgages, First time buyers, Interest Rates, London Property Search Agent

Tags: first time buyer mortgages, First time buyers, Interest Rates, London Property Search Agent

Musings of a London Property Finder

The Bank of England has cut interest rates by 1.5 percentage points to 3%.  Such a sharp reduction is practically unprecedented but members of the Bank of England’s Monetary Policy Committee have hinted on several occasions that a severe reduction in interest rates was likely.  Some pundits have suggested that interest rates could fall to close to 0% by the end of 2009 in order to ease credit restrictions.

Those with tracker rate mortgages should see the benefits quickly and the government will continue to put pressure on lenders to pass on the cuts to consumers on other rates.  Generally central banks refrain from lowering interest rates significantly because it tends to push up inflation as people can afford more, credit becomes less expensive and there is less incentive to save.

Consumer Price Index (CPI) Inflation rose to 5.2% in September, rising sharply from 2.2% since the beginning of the year.  The rapid increase in inflation this year has largely been attributed to rising energy and food prices, however commodity prices have started to fall and oil prices are down by over 50% from their peak so inflation is expected to fall back sharply, as retail energy and food prices decline.

Given the difficult economic situation at present, a reduction in interest rates is expected to alleviate pressure on the consumer purse, but not to the extent of adding to inflation.  The rate was decreased to assist the Bank of England achieve the CPI inflation target of 2%, set by the government in the medium term.

The government is keen to reinvigorate the housing market as quickly and painlessly as possible.  Hopefully this move today will persuade investors and first time buyers to enter the market and get things moving again as yields increase and the margin between the cost of rent and a mortgage narrows.  Keep reading the musings of a London Property Finder to keep abreast of mortgage news

Technorati Tags: Bank of England, Current Interest Rates, Inflation, Inflation expectations, Interest Rates, Interest Rates Fall, London Property Finder, Monetary Policy Committee

Tags: Bank of England, Current Interest Rates, Inflation, Inflation expectations, Interest Rates, Interest Rates Fall, London Property Finder, Monetary Policy Committee

Musings of a London Property Finder

Mortgage approvals for house purchases have risen for the first time in over a year following a record low in August.  The summer in general and August in particular are always slow in the property world but figures released from the Bank of England today show that the balance of money paid off mortgages outweighed those taking them out for the first time since the 90s.

Mortgage approvals are still approximately a third of rates before the credit crunch and the volumes of houses purchased is down 50%.

This glimmer of good news is not expected to affect the expected downward trend in interest rates with some expecting rates to fall to 2.5% by this time next year.  Buy while the going is good says the London Property Finder.

Technorati Tags: credit crunch, house purchases, Interest Rates, Interest Rates Fall, London Property Finder, Morgage approvals

Tags: credit crunch, house purchases, Interest Rates, Interest Rates Fall, London Property Finder, Morgage approvals