What's 1% between friends ?

Figures from housing charity Shelter have found that 56% of borrowers would struggle to keep up with their mortgage payments if interest rates rose by 1%.

More worryingly, 11% said they would be unable to pay monthly payments altogether.

Campbell Robb, Shelter's chief executive, said: “These shocking findings show that over half of mortgage holders are living on a knife edge and could be tipped into a spiral of debt if their mortgage payments went up. "

Despite the Bank of England interest rate remaining low, current pressures on banks mean that mortgage rates are rising it is a concern that many people won't have plans in place to manage increased costs.
 
Meanwhile, Santander will lift its standard variable rate from 4.24% to 4.74% tomorrow. The move, which the bank blames on a range of factors including higher wholesale costs, will add £26 a month to the average cost of a £100,000 mortgage.  

It is no surprise therefore , that despite the Base Rate remaining currently static, the popularity of fixed rates has been steadily climbing in recent months as mortgage holders endeavour to secure their position financially whilst rates are low.
 

If you are concerned about maintaining your mortgage in the event of a rate change and would like to consider alternatives, please feel free to get in touch.

Mortgage lender fees rocket 70%

Mortgage lender set up fees have soared 70.3% in the last four years, according to recent research.

The average fee a lender charges for a mortgage was £899 in March 2009 when base rate fell to 0.5% but is now £1,514.

The average fee for a two-year fixed mortgage is now £1,595 and the average fee for a five-year fix is £1,014.

The highest fee is an eye-watering £3,990 charged for a five-year fixed rate product.

There can be no logical reason why fees should have increased so much. In the space of just August and September alone, they have increased by an average of £42.

Mortgage administration costs cannot possibly have increased 70%. Dealing with lenders on a daily basis as I do, I can certainly vouch that their service delivery standard hasn’t improved on the back of it – on the contrary in some situations , it has in fact worsened, so why are fees so high?

It is possible that lenders are keen to push fees because they are pure income and they get the money at the start of the mortgage.

But don’t forget, paying a large fee doesn’t necessarily guarantee a better rate – it all comes down to loan size. For example a percentage based fee can work well on the smaller mortgage sums against a set fee structure, but for a larger loan it is the other way round.

If you are unsure, talk to someone like myself who can guide you as what is the best thing to do.

This one goes out to all the ladies..

Life insurance premiums for women will rise by up to 15% before the end of the year with implementation of the EU Gender Directive due on 21 December 2012.

So if you want to do something about it, the time to do so is rapidly running out.

Although life cover has been traditionally cheaper for women because on average they live longer than men, premium costs are likely to increase as both men and women will soon have to pay the same basic premiums.

To avoid this impending price hike, all new policies must have a start date of no later than 20 December 2012.

And to qualify for gender specific premiums applications must be underwritten and accepted with the premium and any exclusions clearly defined, although the premium doesn’t need to have been paid until 20 December 2012.

However, one word of warning, some insurers may start to change to gender neutral pricing before then

 When 20 December 2012 has passed it won’t be possible to secure gender specific premiums in the future as start dates cannot be back dated. So come 21 December, it will be too late.

It is also important not to leave things to the last minute - give the insurance company time to do its work.

Almost all life insurance goes through an underwriting process, for some this is almost instant but for others it can involve getting a standard report from your doctor which can take up to four weeks.

Given that there is likely to be a last minute rush and that there is no flexibility on the cut-off date applying early could be prudent.

Santander to increase its Standard Variable Rate by 0.50%

Santander UK intends to increase its Standard Variable Rate from 4.24% to 4.74% from 3 October 2012.

There will also be an increase in the lender's SVR cap margin – the maximum amount above the Bank of England base rate that it can charge – from 3.75% to 4.99% from 24 September.

Santander said its competitors increased their SVRs by similar amounts earlier this year, reflecting the same market dynamics. In the past few months Halifax, Co-operative Bank, Bank of Ireland and Yorkshire and Clydesdale Bank have increased their SVRs.

Santander's analysis shows that its SVR mortgage holders will see an average increase of £26 per month for a £100,000 mortgage.

Santander now joins the list of lenders to hike its SVR, despite the fact the Bank of England base rate has remained unchanged since March 2009.

A Santander customer on its SVR rate with a £150,000 25-year repayment mortgage will see their payments increase by £42.54 a month; a significant amount for the many households who will be impacted by this.

Anyone affected by this or who is concerned their mortgage lender may join the SVR-hiking pack should consider remortgaging onto another deal if possible.

Speak to an independent mortgage broker like myself , if you are unsure of the best option as they will explain what is available to you and help to make the best decision for your situation.

As always thanks for your attention.

FSA to instruct banks to charge for current accounts

The Financial Services Authority (FSA) is to instruct banks to charge for current accounts, according to a report by consumer group Which?.

Research found charges for going overdrawn for two days per month without permission range from £120 to £900 a year, leading to confusion for consumers.

Customers who stay in credit also lose out through punitive charges levelled on withdrawing money abroad.

A senior executive at the FSA told Which? regulatory intervention may be needed to curb the problems arising from supposedly free banking.

Which? chief executive Peter Vicary-Smith said –

“Hidden charges completely shatters the myth that banking is free. The suggestion that banks should increase charges to avoid more scandals defies logic and is a slap in the face for consumers who are being hit hard by one of the worst financial crises in recent times. It's a disgrace that the very people who bailed out the banks are being asked to pay more for the most basic accounts, while the industry continues to be rocked by scandals like PPI mis-selling, LIBOR rate-rigging and IT failures. Banks must be far more transparent about their fees and charges so that people can clearly see what they already pay."

Many European retail banks currently level a monthly charge instead of relying on cross-selling or high hidden charges for income.

Peter McNamara, former head of personal banking at Lloyds, told the Today programme if UK banks wished to operate a similar system they would need to charge between £4 to £5 per month but felt the idea of  suddenly enforcing or regulating some charges on accounts is an extraordinarily unattractive one.

John Howard, former chairman of the consumer panel at the FSA, said he was in favour of monthly charges for a number of reasons.

Customers do not know "what the real cost of providing that basic banking service is", he said. "Banks have to be honest with us about what it really costs to provide that bank account. Consumers are immensely angry with the banks about everything that's happened, and the typical reaction is why should we pay banks even more. But there are real concerns that the regulator is trying to address, that free banking is creating distortions in the marketplace.”

The current system may have created the climate that led to the mass mis-selling of payment protection insurance (PPI), because effectively it encouraged banks to cross sell products, and unfortunately we are all too aware of what the by-product of that environment was.

An app or £13k ?

We have an electronic pass system at our Basingstoke office which means you have to swipe to get into the building beyond reception.If I change suits during the week I might forget to put my pass in the new jacket pocket and so have to ask for a temporary pass. 

Of course when I go back to the original suit later on a couple of occasions I have had the pleasure of finding a ten pound note in the pocket, or at least a pile of change.

Even though this money was mine all along it always feel as if I have just 'found' it for the first time. It's like I'm suddenly ten pounds richer.

One of the reasons that many people give for not buying life insurance is that it is too expensive, or that they cannot afford it.

And yet a 30 year old non-smoking lady can get £200,000 of life cover over 25 years for that same £10 a month.

The same ten pounds that you might find crumpled at the bottom of your pocket, could provide a lump sum equal to a small fortune.

How long would it take to build up £200,000 by saving ten pounds a month?

Over 1600 years.

Yet you could pay one premium of £10 into a life insurance policy and it could pay out £200,000 to your family immediately if you died in an accident.

Life insurance is actually amazing value for money and it has never been cheaper.

Look at it another way. Most of us now use smart phones and are used to buying apps. For an average of 69p, apps feel like great value because most of us have 69p fiddling small change in our pockets at the end of most days.

For 69p a month our lady could buy £13,800 worth of life cover.

So , is life cover expensive?

Consumer rage or criteria rage?

Tighter mortgage criteria has led to an increased number of consumer complaints about mortgage products, according to a report by the Council of Mortgage Lenders (CML).

The trade body, using data from the Financial Ombudsman Service's (FOS) annual review, said that a 'significant proportion' of complaints were caused by providers changing their lending criteria due to difficult market conditions.

FOS reported that 9537 complaints were received about mortgage lenders, up 4% on last year's figures.

There was an increase in complaints from customers who were unhappy with their lender's range of mortgages, with consumers also disappointed with the explanations provided by lenders when applications were turned down.

The FOS received an increased number of complaints about the reduction of upper age limits on some products, with older borrowers also frustrated by an increased requirement to provide details of their income in retirement.

Complaints from buy-to-let investors also grew, with customers unhappy with higher product rates and administrative charges.

 The number of issues raised to the ombudsman regarding new loans also increased, with more borrowers complaining about being unable to get a mortgage with the loan-to-value ratio requested.

Elsewhere, complaints received from people trying to switch mortgages between properties fell but the ombudsman highlighted the need for lenders to provide more information to customers having their homes repossessed.

A Jubilee tale

Buckingham Palace is estimated to be worth £1bn, up 9000% since the Queen took the throne when it was estimated to have been worth £11m.

Were it ever to be sold, that would equate to c.£70m in stamp duty.

Windsor Castle’s estimated value was £2m when the Queen began her reign in 1952 and it is now estimated to be worth 9350% more at £189m – so that would be a mere £13.2m in stamp duty.

Don’t think they would be fans of the ‘mansion tax’ somehow.

Compared to non-royal residences, the average UK house price in 1952 was valued at £1,891 and is now up 8605% to £162,722.

During the Queen’s reign the average UK house price has increased from £1,891 to £162,722.

Bye bye New Buy?

There is rising concern that the Government’s flagship NewBuy scheme has hit trouble, just two months after its launch.

The scheme, which launched on March 12, allows first-time buyers and home movers to purchase a new-build house worth up to £500,000 with a 95% mortgage, with taxpayers and developers underwriting the loan.

But the scheme has been dogged by controversy, with mortgage lenders offering NewBuy mortgages at high rates that have come under increasing fire from house builders.

The three lenders in the scheme when it launched have all hiked their rates: NatWest, which offered the best initial rates, at 4.29% for a two-year fix and 4.99% for a five-year fix, has hiked them up to a current 4.79% and 5.49% respectively.

Barclays and Woolwich have also raised their initial rates, with the latter now offering a three-year fix at 6.09%. Lloyds Banking Group, which entered the scheme after launch to become the fourth NewBuy lender, offers rates of around 6%.

Mike Farley, chief executive of Persimmon Homes, says the scheme will not work unless the lenders drop their rates. He said: “There’s nothing wrong with the concept, but to make it work we need a lower rate or people will drop out.

“The rates are so high, people won’t be able to afford the repayments, and that will put the brakes on.”

Pete Redfern, chief executive of Taylor Wimpey, said it is ‘very difficult’ to know if the scheme will work or not, and he said lenders would have to find the right rates. He said: “Individual lenders are nervous that if their rates are too low, they will take market share and that will distort their mortgage book.

“It is not the end of the story, but it is unfortunate and I hope it doesn’t knock the train off its rails.”

Santander has yet to launch into NewBuy but says it will do so, and smaller lenders may enter the arena, with hopes among developers that more competition will encourage better pricing.

Aldermore, the new bank launched two years ago, says it intends to launch a NewBuy deal but wants to see how the larger lenders are doing first.

Estate agents have been among the most vocal critics of the scheme, pointing out that buyers of new homes pay a high premium, and that while NewBuy is designed to offer some protection to lenders should they need to repossess a property, the indemnity will not stop purchasers falling into negative equity.

History in the making..

Next week will see history made in the mortgage market.

From next Tuesday the Co-operative Bank and Britannia Building Society will no longer offer mortgages on an interest-only basis.

Customers will now only be able to take out mortgages on a capital and repayment basis.

The lender says it expects the changes being proposed in the Mortgage Market Review will result in all customers who apply for a mortgage being assessed on the basis that they can afford a capital and repayment loan, which is why it has made the decision to only lend to customers on a capital and repayment basis moving forwards.

Existing interest-only mortgage customers are able to switch to any open product for the same amount of borrowing on an interest-only basis when they come to the end of their deal.

In addition they will also be able to take their interest-only mortgage with them should they move home.

The above changes will also apply for mortgages offered through Platform, the dedicated intermediary lender for The Co-operative Bank.

In the case of Platform, the majority of its lending is focused on buy-to-let and volumes of mainstream and almost prime interest-only applications are low. It also believes demand for interest-only loans will continue to fall.

As a result, the lender says the cost of changes that it would want to make in order to comply with future regulations and meet its high standards as a responsible lender cannot be justified. It has therefore also taken the decision to withdraw interest-only lending for new residential lending and additional borrowing on residential interest only loans.

Platform will continue to offer interest-only as a payment option for buy-to-let, as the rent on the property is typically used to make monthly repayments and the value of the property is used as the repayment vehicle for the mortgage.

Well it had to happen eventually – the question is of course , whether others will follow suit this time as well....only time will tell.

As always thanks for your attention.

Mark (mark@themortgagemonkey.co.uk)

Borrowers shouldnt wait before considering a fixed rate option

Average rates across two- and five-year fixed products have crept up, and borrowers on their lender’s Standard Variable Rate should be wary of future rises and look to fix sooner rather than later.

The warning comes after a number of lenders announced hikes to their SVR (Standard Variable Rate) rates which come into force on May 1.

Analysis has found that the average rate for two-year fixes hit a low last October, falling to 3.82%, but has now risen to 4.15%.

This means a difference of £27.31 per month or £327.72 over the year for repayments based on a £150,000 mortgage.

Similarly, five-year fixed rates hit a low in January this year with an average rate of 4.57% but this has crept up to 4.72%, adding an extra £12.81 per month or £153.72 over the course of a year.

For two-year trackers, the average rate was at its lowest in August 2011 at 3.37% but now stands at 3.63%, hitting consumers with an extra £20.91 per month payment or £250.92 over the year.

The number of SVR rises announced by lenders recently , come into effect in May.

About one million customers will be affected by these increases announced by providers including Halifax, Co-operative Bank, Bank of Ireland and RBS/NatWest.

Overall, the average increase to SVRs is 0.62% which will add an extra £52.58 to a £150,000 mortgage or £630.96 over the year.

Mortgage rates are nudging upwards, there is no doubt about that so anyone looking for a mortgage or whose mortgage deal will end in the next few months should act sooner rather than later to secure one of the current rates in case they rise further.

Any borrowers paying their lender’s SVR should also reassess their mortgage arrangements. One of the consequences of the low base rate has been the fact that SVRs have been similar to the rates on new mortgage deals and in some cases the SVR has been even lower.

Consequently as a result, an increasing number of people have opted to stick with their existing lender and move on to the SVR when their fixed or introductory tracker or discounted period ended, as opposed to remortgaging elsewhere.

However, as around one million borrowers are about to find out, many SVRs can rise even if base rate doesn’t.

Estate agent under fire for 'strong arm' mortgage tactics - Introducer Today

Estate agent under fire for 'strong arm' mortgage tactics - Introducer Today

Out of the mouths of babes - has an 11 year old solved Europe's debt crisis?

An 11-year-old boy has been highly commended for his imaginative entry to a competition to find a credible plan for a euro exit.

Jurre Hermans was among 452 candidates who submitted entries to win the £250,000 Wolfson Economics Prize.

Although his idea was not among the five shortlisted, Jurre received special mention from the judging panel and will receive an €100 gift voucher, the Telegraph reported.

Jurre's plan suggests the Greek people could exchange their euros for new drachma at the bank, which the Greek government would then redistribute to creditors so they could get "a slice of the pizza".

"The Bank gives all these euro's to the Greek Government. All these euros together form a pancake or a pizza. Now the Greek government can start to pay back all their debts, everyone who has a debt gets a slice of the pizza.

"You see that all these euro's in the pizza's go the companies and banks who have given loans in greece," Jurre's entry stated.

Jurre's plan also addressed a potential capital flight from Greece: "The Greek people do not want to exchange their Euros for Drachmes because they know that this Drachme will lose its value dramatically," he said.

"They try to keep or hide their euro's. They know that if they wait a while they will get more Drachmes.

"So if a Greek man tries to keep his Euros (or bring his euros to a bank in an other country like Holland or Germany) and it is discovered, he gets a penalty just as high or double as the whole amount in euros he tried to hide!!! In this way I ensure that all Greeks bring their euros to a greek bank and so the greek government can pay back all the debts."

Once interest only , always interest only ?

Borrowers on standard variable rate interest-only mortgages need to think about remortgaging fast as nine lenders have now cut their maximum loan to value.

Anyone with an interest only mortgage that is currently on a lenders’ own variable rate (Standard Variable Rate) needs to think very seriously about protecting their position following the recent sudden surge in lenders reducing the Loan to Value on interest-only mortgages to just 50%.

Staying as they are is effectively making themselves ‘un-mortgagable’.

Lenders cite this as “prudent” borrowing but anyone who currently has an interest-only mortgage at a higher LTV than 50% needs to consider their limited options quickly.

The latest changes to interest-only mortgages have seen Abbey, Leeds and Coventry cut LTVs from 75% to 50%, Nationwide cut from 66% to 50%, Newbury cut from 75% to 70%, Skipton from 75% to 60%, Manchester cut from 70% to 60%, Teachers Building Society cut from 70% to 50% and HSBC cut from 80% to 75%.

Problems may well arise if there is a need to borrow additional money for home improvements, such as building extra bedrooms etc because this will be deemed a new loan.

Clients in this situation will only be able to borrow around 50% of the house value, which in most cases will be less than the original mortgage.

The end result is that many people who chose an interest-only mortgage because it was cheaper and are at their maximum monthly outgoings will find themselves unable to move should they need to - they are in fact under a form of house arrest.

40% of estate agents think that a third of their properties are over priced

An astonishing poll of estate agents claims that 40% believe that property on their books is over-priced.

The claim has emerged in a poll of over 200 agents conducted by review site MeetMyAgent.

The poll was conducted between March 20 and 24 and claims to show that 38% of agents believe that more than 30% of their stock is over-priced.

 Almost all the agents quizzed – 93% – say that at least one tenth of the property on their books would benefit from a price reduction, and almost three-quarters (72%) of agents say that the main reason for sellers not lowering their prices is that they are happy to wait for the offer they want.

Three-quarters of agents are seeing more viewings than this time a year ago. However, pricing is a real sticking point, with 43% of agents saying that the gulf between what buyers will pay and what sellers will accept is the main reason for sales not being secured.

Low stock levels are a concern for 85% of agents, with the poll showing that 35% say their stock levels are 30% down on normal levels for this time of year.

Ashley Alexander, director of MeetMyAgent, said: “Although, encouragingly, there are plenty of buyers viewing properties, very few are actually committing to a purchase.

“The economic climate is doubtless playing a role in this, but so too is the fact that buyers still feel sellers are asking too much for their properties.

Tougher regulation of price comparison sites is called for

Comparison sites are failing to provide consumers with the best deal and should be strictly regulated, Which? has said.

The Financial Services Authority warned comparison sites they must hold the correct permissions for their activities in June last year.

A Which? investigation has now established that most of the 11 most popular sites were using pre-selected answers and assumptions in their online forms for insurance products.

"This may make quotes appear cheaper, but can also lead to basic ‘one size fits all' policies that could be unsuitable for individual needs or even prove invalid in the event of a claim," the report said.

We want to see tougher regulation and monitoring of the non-advice price comparison sites to make sure they treat customers fairly and transparently as the advice portion of the market are expected to.

However what price comparison sites often neglect to make the consumer aware of is that its use prevents recourse to the Financial Ombudsman Service on the part of the consumer in the event of something going wrong.

If a financial product is purchased from a price comparison site , the consumer automatically sacrifices any right of recourse via the Financial Ombudsman Service because the purchase is deemed to have no advice process, ‘deemed an execution only transaction’, and execution only transactions have no right of recourse to the Financial Ombudsman Service.

Most employee packages fail to deliver

Too many employers are not offering income protection to their employees and their families according to research .

Nearly 3 out of 4 respondents (74%) indicated that Income Protection insurance was of greater importance to their workforce than Life Assurance cover.

Yet the majority of employers only offer life cover as standard, with Income Protection coverage a very long way behind.

Whilst income Protection has always been of value, this is now ever more important as new legislation creates further barriers to the long term sick claiming state benefits.

It's clear from the research that employers accept that Income Protection cover is the most relevant employee benefit for their workforce.

Despite this fact, less than half of companies (47%) offer this benefit currently.

Conversely, life assurance was found to be a benefit on offer via a much larger number of employers (82%), even though employees are some three times more likely to be off work with a long-term illness than die.

This is a strange mismatch, and one that employer's really should seek to address.

Even where an Income Protection policy has been put in place by an employer, it often only covers senior employees.

It is generally accepted by the industry that only 1 in 10 private sector employees are actually covered by an Income Protection policy.

There is a lack of understanding among both employers and employees in terms of what Income Protection actually involves, and the important benefits it can offer.

In our view it is a vital component of a benefits package for the 21st century, and is one of the most important benefits an employer can offer.

We believe that employers may be failing their employees by not offering it – which is why we always encourage and assist our clients in arranging it separately.

Here lies the body of the interest only mortgage

Interest-only mortgages have taken another step towards extinction with Nationwide and now Coventry Building Society demanding that new borrowers have 50pc equity in their home if they want to avoid making capital repayments.

Both, which previously lent on an interest-only basis to borrowers with 25pc equity or deposit, sited the need to "manage application levels" following similar moves from competitors. The change applies to residential customers and takes effect on March 21.

Existing Nationwide borrowers will be unaffected if they want to stay with their current deal. They can also switch to another mortgage or move home without falling foul of the new restrictions, unless they want to increase their borrowings. Anyone who wanted to borrow more would have to take out a repayment mortgage or ensure that their equity remained above 50pc of the total amount borrowed.

The change also applies to Nationwide's other building society brands, such as the Derbyshire, Cheshire and Dunfermline. However, buy-to-let lending through its The Mortgage Works arm is not affected.

Last month Santander did the same, while Lloyds Banking Group, which also includes Halifax has also toughened its criteria by specifying which assets it would accept as "repayment vehicles" to pay off the loan at the end of the term.

We certainly feel that other lenders currently offering interest-only loans at 25pc equity, such as HSBC and Woolwich, could be next to restrict this type of lending.

Last week the financial regulator also expressed concern about interest-only home loans, warning of a ‘ticking time bomb’ for those approaching retirement with interest only mortgages who are unable to repay them.

It is a shame for borrowers that Nationwide has introduced these restrictions but no real surprise. It's like a pack of cards; one lender folds and the others inevitably follow. Since Santander tightened its interest-only policy, borrowers requiring such deals have flocked to Nationwide and it is having to tighten its criteria in order to cope.

Interest-only borrowing is not necessarily reckless borrowing as long as there is a repayment strategy in place. However, we are getting closer and closer to seeing it disappear altogether, making mortgage prisoners of those who have an interest-only mortgage unless they can switch to repayment.

The changes are likely to force a rethink of how to repay the mortgage simply because of the level of equity in the home rather than the existence of a prudent repayment strategy.

7% stamp duty on £2m properties

The Chancellor George Osborne will today raise Stamp Duty on the country's highest priced properties as part of a tax raid on the wealthy.

The top-end property market is booming at present, with a huge surge in the amount of homes sold so far this year compared to 2011.

New figures have revealed sales of homes valued at £5m or more in London have jumped by 98% this year, to £723m.

 According to the Financial Times, which cited officials involved in the Budget, Osborne will today try to capture some of that market, with a new 7% Stamp Duty on sales of property worth more than £2m.

The move, which would appease those who are angry at the expected decision to cut the 50p tax rate to 45p, takes the Stamp Duty up significantly from its current level.

The highest Stamp Duty rate is 5% on sales above £1m. Combined with a crackdown on Stamp Duty avoidance the plan could raise hundreds of millions of pounds a year.

Elsewhere today, corporation tax is expected to fall by 2p , while the government is also tipped to raise the minimum allowance to help give a boost to the least wealthy.

Half of mortgage borrowers have not reviewed their mortgage in over three years

Just under half of borrowers, 49%, have not reviewed their mortgage since base was cut to 0.5% three years ago, according to recent research.

Despite base rate being a record-low since March 2009, 42% of fixed rate borrowers are still paying a rate of 5% or higher, with the average rate for fixed rate borrowers being 4.63%.

The average rate paid by tracker mortgage holders stands at 3.17%.

Around 56% of borrowers do not have any idea of what rate they pay on their mortgage.

If the recent decision by Halifax, RBS, Bank of Ireland, Clydesdale and Yorkshire Building Society to increase their SVR is an indication of the direction of the market then we will see more increases to the rates that consumers are paying on their mortgages – making it more important than ever for people to shop around for a better deal.

If you havent reviewed your mortgage in some time and would like some impartial advice on this, please feel free to get in touch.

Thanks for your attention.

Mark (mark@themortgagemonkey.co.uk)

NewBuy

The government has formally launched NewBuy, its mortgage indemnity scheme that will offer borrowers 95% loan to value mortgages with taxpayers and builders as co-guarantors.

The scheme is only available on newly-built flats and houses up to a maximum value of £500,000 in England only.

Properties must also not be linked with any other scheme such as shared equity or shared ownership.

Three lenders, Barclays, NatWest and Nationwide, have launched NewBuy products with Santander also saying it will participate in the scheme.

Under the scheme the builder pays 3.5% of the sale price into an account held by the lending bank for seven years.

The government will provide additional guarantees of 5.5% which will only be called upon in the event of a major property crash.

Prime Minister, David Cameron said: “Strong families and stable communities are built from good homes. That’s why I want us to build more homes and I want more people to have the chance to own their home.”

Housing minister, Grant Shapps added: “This government inherited a housing market in disarray, with millions of hard working people blocked from taking their first step on the housing ladder - their desire to buy a home no longer a dream, but a distant fantasy. We want to help everyone achieve their aspirations and feel the pride of home ownership. So I'm delighted that from today the NewBuy Guarantee will give thousands of prospective buyers the chance to buy a home with a fraction of the deposit normally required.”

NewBuy is currently backed by the Council of Mortgage Lenders and the Home Builders’ Federation and seven construction firms.

Paul Smee, director general of the CML, said: “We are delighted that three lenders are today launching mortgages under NewBuy, and that more are set to follow. These mortgages will help creditworthy borrowers who simply haven't yet managed to build up a large enough deposit to gain access to finance to buy a newly built home.

“NewBuy is good news for home-buyers, and potentially good news for jobs and the wider economy too.”

Women called to action

Women across the generations are significantly undervaluing the level of protection that they need compared to men, taking out "worryingly low levels" of life cover to protect their families, one life provider has warned.

Its figures showed that men typically protect themselves with around 50% more life cover than women, with the gender gap becoming significantly wider the older people become.

While men aged in their 30s take out 26% more life cover than women, this gap widens to 94% for those in their 60s.

Women are warned to act now to cover themselves, with the cost of protection for women set to rise substantially in December when the EU gender directive comes into the force.

HM Treasury has estimated that life insurance premiums will increase by 10% to 15% a year once the directive is enforced.

However, some insurance providers have predicted that life insurance rates could rise by as much as 20% for women.

It’s a worrying situation, especially so when you consider factors like the increase in single parent families and increasing numbers of women working mean more families are now dependent on a woman’s salary as the main earner in the household.

We urge women to make 2012 the year in which they act to protect their families’ financial security.

If you want to take action, feel free to get in touch.

As always thanks for your attention.

Mark (mark@themortgagemonkey.co.uk)

Calling all Halifax Mortgage Customers

Nearly 850,000 customers will see their mortgage rate rise from 3.5% to 3.99% on 1 May 2012 when Halifax hikes its Standard Variable Rate.

This is now the second rate rise announcement by Halifax inside the last seven days as in addition, it has already been reported that thousands of other Halifax mortgage customers would also see their mortgage payments rise as well as it also said that it is raising the cap on its Standard Variable Rate (SVR) .

Halifax, part of Lloyds Banking Group, has written to forty thousand customers indicating that it is raising the cap on its SVR to 3.75pc above Bank of England Base Rate or 4.25pc.

The cap applies only to customers who have an Early Repayment Charge on their mortgage.

However these borrowers are now being given three months to change their mortgage to another lender or repay it without charge.

The bank previously said that rise should not be read as an indication that the SVR was about to rise, but this now appears not to be so.

Halifax said the change acknowledged that the cost of funding a mortgage in today’s market remained significantly higher than the longer term average.

The increased rate reflected the fact that raising money through retail savings and in the wholesale markets was currently very expensive by historical standards.

If you are an existing Halifax customer and would like to consider alternatives from the open market , please feel free to get in touch as I would be delighted to help.

It won't happen to me.........

Recent data released by one of the biggest insurance providers in the UK has revealed the rather alarming statistic that half the life insurance claims received were made for those under 55 years old.

It noted that the average age of claimant was 56 and that it paid out almost £42m in benefits to bereaved families.

This data serves as a timely reminder for adults of all ages to look after their financial responsibilities throughout the whole of their lives.

The figures show that nearly one in five claims paid out (18%) were for policyholders aged just 44 or under, with a further third (32%) aged between 45 and 54 years old.

In total during 2011 the insurer paid out £41,863,503 in life cover claims with the average claim being £84,744.

There has been plenty of debate in recent years about Britain's aging population, with new figures showing that almost one in four Britons will be 65 or over in 2051.

However, these claims figures are a stark reminder about the very real need for individuals to look after themselves and their families financial livelihood throughout their whole lives.

Tragically, it would appear that in an age where there are regular calls for people to provide for their pension, there are many thousands of people who do not live to an age to see the benefit.

First step towards a rate rise ?

Hundreds of thousands of customers could see their mortgage payments rise after Britain’s biggest mortgage lender said that it is raising the cap on its Standard Variable Rate (SVR) – the first step towards a rate rise.

Halifax, part of Lloyds Banking Group, has written to forty thousand customers indicating that it is raising the cap on its SVR to 3.75pc above Bank of England Base Rate or 4.25pc. These forty thousand customers are the only ones who have this guarantee.

However, hundreds of thousands of other customers will also suffer if the bank raises its SVR by quarter of a per cent, as this is the rate most mortgages revert to when they come to the end of their initial period. This rate is currently 3.5pc, equivalent to the current cap of 3pc above Bank Rate.

The cap applies only to customers who have an Early Repayment Charge on their mortgage. These borrowers are now being given three months to change their mortgage to another lender or repay it without charge. The bank said that rise should not be read as an indication that the SVR was about to rise.

However, a spokesman said that the change to the cap had been driven by “increases in the cost of funding” despite the fact that Bank Rate has not changed from a rock bottom 0.5pc for three years.

If the bank does increase its SVR by 0.25pc, the move could add over £500 a year to the cost of a £200,000 mortgage – an increase that many families can ill afford. Last time the bank raised the cap on its SVR, it raised the rate to equal the cap three months later.

Halifax's move paves the way for other mortgage companies to raise the SVRs that have enabled millions of people to survive the recession because of their low mortgage payments.

The sands of the interest only clock are about to run out

We are all familiar by now with the pension time bomb.

However, we are less familiar with another time bomb that has also been ticking away over the past 20 years or so and which is now going off in people's faces up and down the land.

I am talking about the waves of interest-only mortgages taken out in the late ‘80s and early ‘90s that are now approaching term; nearly one in three loans written at the time.

The problem, which will affect hundreds of thousands of people over the next few years, is that these interest-only mortgages are approaching term with significant shortfalls.

There has been a sharp rise in the number of people with a shortfall in their mortgage over the past two years.

In many cases the shortfall has been upwards of £50,000 and in some cases it has been well over £100,000.

It is not hard to see the roots of the problem. People took out interest-only loans as they were drawn in by the reduced monthly payments.

However, often they either failed to put an appropriate repayment vehicle in place, invested in vehicles that did not make the grade or simply saved too little to cover the debt. Others banked on an inheritance or pension tax-free cash windfall that never materialized.

It did not help that, in many cases, lenders offering these loans were not exactly vigilant in ensuring suitable repayment vehicles were in place - quite the opposite in fact.

Once again, this crisis has come down to the short-termism that has been endemic to financial services - people creating products without paying attention to how things will look further down the line. But that's another story and a very long one at that.

Many lenders are frantically mailing their interest-only customers reminding them that their mortgage is approaching completion and have they got the funds to repay it.

There is real anxiety in the higher echelons of the banking industry that the interest-only timebomb could hole them under the waterline just as they are getting back on track.

So then, what are the options for people facing a shortfall?

One is to pay the loan off with funds from elsewhere, although in most cases we find that people with shortfalls do not have any other savings.

Option two is to downsize, although unsurprisingly many people find that idea abhorrent, having lived in their family homes for so many years.

The only other option, which is often the most palatable to people, is to release equity or switch to an interest-only lifetime mortgage, actively lending into retirement years. That way you at least get to keep your home.

Fortunately, many people who purchased a property 20-plus years ago will have equity in their home due to the long-term rise in property prices.

It is worth noting that one question that a lot of people ask their banks is whether they can simply extend the mortgage for a few more years.

However, according to the CML, the number of people switching over to interest-only mortgages without specifying a repayment plan fell from 251,000 in 2007 to 51,000 in 2011.

This figure reflects the more stringent application of the FSA's approach to affordability and credible repayment plans, making it much more difficult to extend on the same monthly terms. The last thing people need in today's retirement climate is a higher mortgage bill.

Besides which, the banks are under pressure to maintain capital adequacy and commit to new lending, forcing their hand to stick to the original terms in existing contracts.

The most important thing is that people take action and seek to resolve the issue and as soon as they can.

Debt, these days, is just as much an issue for the older generation as it is the new.

If you perhaps have a friend or relative in this situation and think that  they may well benefit from sitting round a table with someone to talk about it , as a qualified Equity Release Specialist I would be more than happy to help.

As always , thanks for  your attention.