Moneyadviceforu

In light of the expected slowdown in the housing market a number of lenders in the UK have reduced the amount of money that they are prepared to lend to potential property purchasers looking for a mortgage.

According to a recent report around eleven mortgage lenders have cut their lending levels as a result of prediction of a continuing slowdown in the property market.

The report claims that the lenders have cut their loan to value maximums on a range of mortgage products since December.

A number of studies, reports, and analyses have all pointed towards a current and continuing slowdown in the housing market, with falling house prices expected as well as reduced demand in some areas, in addition to some reports of fewer properties coming onto the market because of the costly and controversial Home Information Packs amongst other factors.

The report goes on to state that a number of lenders have now stopped offer 100% mortgages, where consumers can borrow the full value of the property without having to put down a deposit – something that many first time buyer relied on in the past because they had no equity from a previous property to put towards a deposit on a property purchase.

Some lenders have apparently stopped 100% mortgages to anyone that cannot provide a guarantor.

A variety of other mainstream lenders have reduced the amount that they will lend, cutting maximum borrowing levels from 95% of the property value to 90% of the property value on a variety of mortgage products.

One industry official said that the turn of events was understandable given the long period of 95% LTVs offered as a norm by most lenders, and considering that some lenders had been offering up to 130% LTV.

He added that the move came as no surprise taking into account the subdued housing market, the bleak outlook for the imminent future of the housing market, and the state of consumer debt within the UK.

Economists and analysts have predicted that house prices will either stagnate over the course of this year or will drop, although most do not expect the drop to be a highly significant one.

European Union consumers are set to benefit from lower penalty fees and interest rates under the EU consumer credit directive, which is expected to be approved by MEPs this week.

The new law aims to open the €800 billion (£600 billion) consumer credit market to cross-border competition.

Lenders will have to provide standardised information about annual percentage rates, for example, so that borrowers will find it simple to switch from a lender in their home country to one in any of the EU’s 26 member states.

Currently, cross-border agreements account for less than 1% of the market, however this figure could rise substantially under the new rules, because interest rates in the eurozone start as low as 6.3%, in Finland.

The EU directive will be applied to loans from €200 up to €75,000 and will not apply to mortgages, equity releases, charge cards or overdrafts.

BEUC, the consumer group that covers pan-European issues, has called the measures too narrow and is particularly concerned that provisions on early repayment are too vague and could therefore leave borrowers with no early repayment option.

According to the latest figures, outstanding consumer credit per person ranges from over €3,000 in the UK and Republic of Ireland to less than €100 in Slovenia.

The number of households defaulting on their mortgage payments is expected to rise over the next three months, the Bank of England has warned.

Its gloomy assessment comes as it says the global credit crunch is likely to worsen into 2008, as banks become less willing to lend out funds.

The Bank’s comments came as it said homes and firms found it harder to borrow funds towards the end of 2007.

Its findings may raise hopes of a further cut in interest rates.

The Bank’s comments came in its latest quarterly Credit Conditions Survey, which covers the last three months of 2007.

It said banks were now less willing to lend because of the higher cost and reduced availability of credit.

The perilous state of the housing market has proved an unexpected boon to Rightmove the property website.

According to the company, desperate estate agents have been turning to the website to help them to complete sales.

Rightmove said in a trading statement yesterday that profit before tax was likely to be at the upper end of the forecast range, £29.3 million to £32.3 million, as much as 82 per cent up on last year’s pretax profit of £17.7 million.

About 90 per cent of British estate agents now subscribe to the website, which charges £325 per office to host adverts.

Despite nearly running out of estate agents, the company said it was confident it would be able to increase prices. This year has already seen prices raised 30 per cent, from £250.

In a sign that housebuilders are increasingly anxious about selling on new homes, there was a 39 per cent increase in the number of new-build developments signing up to the site. The 20 biggest housebuilders all now use Rightmove.

A spokesman for the company said: “The housing market isn’t doing very well, so people tend to think that Rightmove won’t be doing very well. But because agents are having to work harder to sell properties, they are putting their discretionary spending where they get the best returns.”

He added that Rightmove would be insulated from any downturn until the point that estate agents start shutting offices. Rightmove accounts for about 10 per cent of property advertising spending, with the majority going to the local press.

The update came as Bellway, one of Britain’s biggest builders, suggested it was weathering the storm better than its rivals as sales remained steady over the past six months. Persimmon, Redrow and Bovis Homes have all reported declines this year.

A Council of Mortgage Lenders survey this week showed that the number of new mortgages taken out fell to a seven-month low in November.

THE METHODIST Church in Britain is launching a new credit card, but it will not be used to make purchases.
 
The ‘Buy Less Live More’ credit card is being distributed to act as a reminder to people to think twice before making a purchase.

The card is designed to be placed in a wallet or purse in front of other credit cards as part of a campaign to get people to curb their spending.

The Lent initiative has been welcomed by the Rev Michaela Youngson, Methodist Secretary for Pastoral Care and Spirituality. She said: “When we take time to think about the things we buy and why we buy them, it can help us to reconsider our priorities. I may well want to buy something, but does that mean that I need it?

But Buy Less: Live More isn’t about depriving yourself of those things you want; it’s about looking at life in a new way, trying different things and taking a few risks.

So as well as reducing your carbon footprint by getting off the consumer treadmill, you can live life in all its fullness.”

During Lent people who sign up will receive a daily email with 2 challenges or ideas for buying less and living more.
 

With Santa and his helpers busy preparing for his annual sleigh ride, online car insurance specialist elephant.co.uk is hoping he doesn’t call for a quote.

His high mileage and high speed driving coupled with his fondness of an alcoholic tipple or two at Christmas would make him a high risk and his premium astronomical.

elephant.co.uk MD, Brian Martin said: “Santa’s mileage is huge, as the crow flies it’s about 64,000 miles around the world, but one of our elephant.co.uk policyholders comes close driving a whopping 60,000 miles. Of course, he does this over a year not in one night like Santa.

“However, Santa has a few hundred years on our oldest policyholder who’s 87 years old, and with a long driving history and no theft or accident claims, I imagine he has a few years no-claims bonus under his belt.”

To get around the world in one night, Santa would need to travel at an average speed of 2,700 mph - and that’s without any stops! Surely a speeding fine is inevitable sooner or later? At that speed, a ban would also be unavoidable. Santa might argue in court that his vehicle is essential to his job and a ban would bring heartache to millions of children all over the world.

Brian continued: “The fastest car we insure is the Lamborghini Murcielago but our underwriters would have a hard time working out an insurance group for Santa’s sleigh. They’re used to rating vehicles by the horsepower of their engines, but where does a sleigh with twelve reindeer power fit in?”

Santa’s tendency to enjoy an alcoholic tipple during his high-speed journey around the world would be another risk to consider when insuring his sleigh. Just think how many kids leave Santa a mince pie and a glass of brandy before they go to bed on Christmas Eve, and never wanting to disappoint, he never leaves any.

An area which was one of the first to model itself as a “safety town” is the most dangerous in the country for accidents, it was revealed.

Slough in Berkshire, which is ringed by traffic lights and speed cameras, topped a most-accident table compiled by Endsleigh Insurance Services.

The Berkshire town had an accident rate 35.7% above the national average in 2007, Endsleigh said.

Slough’s safety promotions go back to the 1960s when it introduced lights timed to be on green so long as drivers stuck to the speed limit. In recent years, the number of lights encircling the town and its industrial estate have grown.

After Slough, Ilford in east London had the most accidents (35.5% above the national average), with Birmingham third (32.9% above).

The most accident-free town or city was Belfast (47.0% below the national average), with Swansea (29.9% below) in second place and Aberdeen (20.6% below) third.

Hull was the place with the most vehicle thefts in 2007, being 143.9% above the national average. Second was Nottingham (82.9% above the national average), with Leeds third (77.8% above).

Endsleigh said that overall, it had seen a 13% fall in motor theft claims across the UK in the last three years.

Swindon had 42.9% fewer cases of theft than the national average, with Norwich (42.3% below the average) and Dundee (38.9% below) also comparatively crime-free areas.

Slough was 35.7% above the national accident average, with Ilford in east London second (35.5% above) and Birmingham third (32.9% above).

A man accused of faking his own death in an insurance scam was ordered by a court yesterday to remain in custody on charges of fraud and acquiring a passport under a false name.John Darwin, 57 - who turned up at a London police station on December 1, years after being declared dead from a 2002 canoe accident - was ordered by Hartlepool Magistrates’ Court to be held in jail until Friday, when he will appear again via video link.

Dressed in a maroon sweat shirt and red track trousers, Darwin, a former prison officer, appeared dishevelled and confused. He spoke twice during the four-minute hearing, responding “That’s correct” when the court read him his full name and saying his date of birth.

Darwin did not enter a plea on the two charges he faces: Dishonestly obtaining an insurance claim of £25,000 (now worth approximately $50,000, BD18,900) in May 2003 by falsely claiming he had been killed, and obtaining a passport under a false name in October 2003.

Darwin’s wife, Anne, 55, was arrested on suspicion of fraud after her flight from Atlanta, Georgia, touched down at Manchester’s airport on Sunday. She had been living in Panama in recent months, but left the Central American country Wednesday.

On Sunday, Mrs Darwin was transferred to Cleveland, 400km north of London, where the Hartlepool court is located.

For a few hours yesterday morning, the Darwins were in same Hartlepool compound. Mrs Darwin was being questioned by detectives about how her husband allegedly hid himself for five years, whether the couple maintained contact after his reported death, and how they apparently came to be photographed together in Panama.

Millions of Britons are trapped in a cycle of debt, using their credit cards to fund Christmas purchases before they have even repaid last year’s spending, a survey claimed today.

Around one in 10 consumers - the equivalent of 4.4 million people - admit they are still repaying debt they ran up last December.

At the same time, 9% of people said it took them five months to clear their festive credit card bill, according to financial website

Chief executive, Sean Gardner, said: “Borrowing money is fine as long as you have a repayment plan.

“Unfortunately it appears millions of us do not. And with lenders getting tough, that is not a good position to be in. If you’ve not cleared the debts of Christmas past it is time to face up to the future.”

The figures are supported by ones from the Association of Business Recovery Professionals which found that one in 10 people will go further into debt in order to cover the cost of Christmas.

People planning to use credit for their festive expenses will borrow an average of £660 each, most of which will be put on credit cards, although some will be funded via overdrafts.

More than a quarter of these people plan to borrow money from friends and family members, while one in five will take out an additional loan.

Nick O’Reilly, vice-president of the association, said: “We are seeing record levels of insolvency in the UK and this is undoubtedly the result of people over-extending themselves.

“While it is tempting to spend more than you can afford, people should remember that the debt can last for years, not just for Christmas.”

A U.K. house-price drop of 10 percent next year may be no “bad thing” because it would help poorer Britons afford a home, Morgan Stanley economist David Miles said.“There’s a gain for people about to trade up or first-time buyers, and that offsets the loss when house prices are falling,” Miles, who advised the Treasury on the British property market, said in London yesterday. “

On balance, it’s almost certainly redistributive to people who are younger and less well off.”

Miles said investors’ bets show they forecast house prices will decline by as much as a tenth in 2008, ending a decade-long boom in which values tripled.

The Bank of England cut the benchmark interest rate last week to preempt the outlook for slower growth after the collapse of the U.S. subprime mortgage market pushed up borrowing costs worldwide.

“For the majority of parts of the U.K., house prices are falling mildly on average,” Miles told a seminar organized by the National Institute of Economic and Social Research, a research group whose clients include the Treasury and the central bank. “That is not a bad thing.”

Britons are living with their parents for longer than they used to as gains in house prices make it less affordable for them to buy their own place, a government report said in April.

Mortgage interest payments for first-time buyers, as a percentage of income, rose to 20.6 percent in October, the highest since 1971, data from the Council for Mortgage Lenders showed yesterday.