Welcome to our first 2012 NewsletterAnd how time has flown in the last 12 months in what hasbeen another eventful but rather worrying year for thefinancial world.

A resilient property and investment market struggled tosurvive against a backdrop of an unsteady world economyand a political scene dominated by the threat to the Euroand global protests against the banking fraternity. Let’shope 2012 brings more cheer and uplift.

A Happy and prosperous New Year to all our clients!

January 2012

Looking ahead to 2012Housing Market - No change?

The Nationwide Building Society reported houseprices ‘edging’ up by just over 1% in 2011 which,when faced with rising unemployment, afaltering UK economy, shrinking numbers of FirstTime Buyers and mortgage lenders makingmortgage lending increasingly difficult just goesto show how tough and robust the housingmarket has been.

Once again however, it has been a tale of adivided country with London recording anincrease of 5.5% whilst the North, N.Ireland andScotland recorded falling values. Essex and theSouth East enjoyed modest rises of just over 3%.

The National Association of Estate Agentspredict a ‘gradual’ recovery for the UKproperty market in 2012. NAEA ChiefExecutive Peter Bolton King commented ‘Idon’t believe we will see a significant fall inhouse prices but equally it is unlikely we willsee any great upturn-property transactionswill remain at a similar level to 2011’ Thegood news however is that pressure forhousing in London and the South East willcontinue to be high which should help themarket in this area continue to be resilient.

One of the key factors for 2012 will be thebanks and mortgage lending which hasremained challenging through 2011, and with

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BEREPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT

Interest Rate PredictionsAs I am sure you are aware, bank base rate has been at0.5% since March 2009; and whilst I am regularly askedabout what will happen to interest rates, as we all know,it's very difficult to predict the future.

I’d thought I would share with you some predictionswhich came out of the ‘great and the good’ within thefinancial world in February 2010 as to what the Bank ofEngland base rate would be now i.e. at the beginning of2012. Needless to say, no one predicted the rate wouldstill be at 0.5%:

Neville RichardsonCEO of Co-operative Financial Services

WHEN WILL RATES START RISING?By the end of 2010.

WHERE WILL BASE RATE BE BY THE END OF2011?  - 2%.

Peter HargreavesChief Executive of investment specialistsHargreaves Lansdown

WHEN WILL RATES START RISING?During 2011.WHERE WILL BASE RATE BE BY THE END OF

2011? - No higher than 2%.

Andrew ClareProfessor at Cass Business School, LondonWHEN WILL RATES START RISING? - August 2010WHERE WILL BASE RATE BE BY THE END OF 2011?2.5 to 3%.

Ros AltmannA governor of the London School of Economics

WHEN WILL RATES START RISING? - During2010WHERE WILL BASE RATE BE BY THE END OF

2011? - 3%

Justin Urqhart Stewart Founder of Seven Investment Management

WHEN WILL RATES START RISING? -

During 2011WHERE WILL BASE RATE BE BY THE END OF

2011? - 1.5% - 2%

............even the so called ‘experts’ can get it wrong!

the new FSA rules requiring lenders tointroduce affordability tests which assesses anapplicants committed and essential householdexpenditure by 2013, this is likely to harden.

The market will probably have to look to newentrants to create more competition amongstthe mortgage lending community, but with theexception of Richard Branson who has boughtout the previously nationalised Northern Rockvia Virgin Money, few new mortgage banks areon the horizon. In addition there are fears thatmortgage rates might still rise in 2012 despiteno changes in the Bank of England base rate.Inflation and the Eurozone debt crisis couldforce lenders to put up their rates.

So all doom and gloom? Well not necessarily,mortgage rates are still at an all time low if youhave a good deposit and demand for propertyin this part of the UK remains high - owning ahome is still a major priority for us Brits - andfor those of us who are able to secure amortgage, now is still potentially a good timeto buy a home.

So the property market in 2012 promises tocontinue where 2011 has left off; uncertain andchallenging but with lots of opportunity!

Looking ahead to 2012 cont’d

Can they save the day?95% Mortgages

As another buildingsociety announces theintroduction of 95%mortgages, is this thesaviour of the First TimeBuyer?

With all the doom and gloom around during2011 there emerged a very quiet developmentin the mortgage market which hasn’t yet hitthe headlines - the re-emergence of the 95%mortgage. These are only offered at themoment by one or two very small regionalbased building societies, funds are limited andthey are strictly controlled but nevertheless asmall glimmer of hope in an otherwise difficultpicture for First Time Buyers. Maybe 2012 willencourage more lenders to re-enter themarket.

Many of us have benefitted fromthe reduction in the Bank ofEngland base rate in 2009, buthave we been fully utilising thebenefits?When your mortgage rate came down or youtransferred your mortgage to a much cheaperdeal, did you simply enjoy the much lowermonthly payments or have you been a littlewiser and instead looked to use the reductionto pay your mortgage off sooner?

A 2% reduction on a £150,000 20 yearmortgage allows you to knock more than 4years off your mortgage term by keeping thepayments the same. That could save morethan £45,000 in interest over the lifetime ofthe mortgage.

If this is an option you’d like to explore butyou havn’t done so yet then don’t worry,most lenders will allow you to increase yourmonthly repayments and reduce yourmortgage term, you simply need to give thema call. Alternatively you could look to set upa standing order to pay the extra seperatelyinto your mortgage account. It has the sameeffect plus it means that when rates start torise again, you can simply reduce the extraamount that you are paying.

Remember, the sooner you take action tomake the most of the low interest rates weare currently enjoying the more you willbenefit in the future.

Have you been making the best of low rates?

Offset Mortgages - a viable option?If you have savings and you’re lookingfor a way to get better returns, thencombining them with a flexiblemortgage loan or ‘Offset Mortgage’may be an option for you.The concept is a fairly simple one, yoursavings sit in an account which is linkeddirectly to your mortgage and whateverbalance is in your savings account thenreduces the balance of your mortgage onwhich the lender charges you interest. So iffor example your outstanding mortgage is£100,000 and you have savings of £30,000then by ‘linking’ the two you will only payinterest on £70,000. It gives you the benefitsof making your savings work harder andreducing the cost of your mortgage whilst stillkeeping your savings accessible.

You have the option of either reducing yourmonthly payments or keeping them the sameand reducing the term of your mortgage.Some lenders will also allow you to link morethan one account to the mortgage.

Offset mortgages are not for everyone

as their effectiveness depends on how muchyou have in savings compared to yourmortgage debt. A small level of savings is notgoing to have the desired effect needed.Lenders also tend not offer as many differentproducts as you can find with conventionalmortgages and in addition the interest ratesmay be less competitive, so we’d need to dothe maths to see whether or not you wouldbenefit from switching to an Offset mortgage.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BEREPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT

Mortgages

MAPS Mortgages is a trading style of Hometouch Mortgages Ltd who are authorised and regulated by the Financial Services Authority.Number 306063

15 Duke Street

Chelmsford CM1 1HL

Tel 01245 359536

enquiries@themaps.co.uk