Autumn 2012 NewsletterWith the country now officially out of recession,unemployment figures down and inflation still very muchunder control I guess you’d be forgiven for thinking it wouldmean the mortgage market would be showing strong signs ofrecovery.

Unfortunately not. Lenders are still being very cautious withtheir funding and with the FSA taking further measures torestrict lenders, such as limiting lending into retirement andinterest only mortgages, the market is anything but healthy.

But it isn’t all doom and gloom.....

October 2012

Housing MarketHousing Market - A mixed bag?

As 2012 starts to draw to a close, the picture ofthe Housing market is a mixed one.

On the one hand, mortgage lending continues tobe difficult and subdued - September 2012 was15% down on the previous year.September alsosaw a dip in House prices in England and Walesover the previous month by 0.3%, however theyremained 1.1% up on this time last year.

The average cost of a home is now £162,561.TheSouth East is much healthier, driven mainly by

London prices which continued to grow by5.5%.

And house sales overall were up by 2.2% overthe same period last year, with hotspots suchas Felixstowe recording increases of 60%,according to a report from Lloyds/TSB. Asexpected, most of the increase was felt inthe south of the country.

November starts to see the traditionalslowdown in the Housing market as thoughtsturn to the Christmas festivities, so change isnow unlikely before the New Year. We await2013 with hope.

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

The FSA has just published it’s latest proposalsdesigned to put ‘common sense’ at the heart ofthe mortgage market.

There were wide expectations that interest-only mortgageswould be banned as part of the review, given that 77% of allinterest only mortgages have no means of repayment. Manyborrowers have instead been relying on the expectation

The FSA mortgage review

that a rising value of their property will enable them to repay their mortgage, and experts havealluded to a ‘ticking time bomb’ should this not happen. Interest only however has instead hada stay of execution as lenders have been taking steps throughout the year to restrict and evenban this type of mortgage.

One of the measures that has been announced is that lenders will now be required to ask formore in-depth information on potential mortgage customers to assess their income andoutgoings and conduct affordability tests. This is intended to prevent borrowers ending up witha mortgage they cannot afford if, and when interest rates start to rise again.

Lenders will also no longer be able to take advantage of their borrowers who are unable toobtain a mortgage elsewhere through new lending restrictions, by treating them less favourablythan other customers, charging them higher interest rates.

These and many other new rules will come into effect in April 2014 as part of the FSA’smortgage market review, but they simply reflect many of the changes lenders have alreadybrought in since the financial crisis in 2008.

Martin Wheatley, managing director of the FSA, said: 'These new rules will help create a moresustainable market that works well for everyone, whether they are a borrower or a lender.'We recognise that many lenders are now using a far more sensible set of lending criteria thanbefore, but it is important that these common sense principles are hard-wired into the systemto protect borrowers.

Homebuyers and those remortgaging in the future will find that it takes longer to get amortgage and costs are also likely to rise.

Secured Loans - a good alternative?

Many of us are continuing to enjoy the low standardvariable interest rates on mortgages we took out inthe mid to late 2000’s.

However some would still like to borrow moremoney either to consolidate expensive loans orcredit card debts, to pay for large purchases such ascars or holidays or make those home improvements.

The normal option of re-mortgaging is no longer theobvious one as it means the loss of the very cheapmortgage deal we are currently enjoying.

If you feel you are locked in to your current mortgage, because it is so good, then helpmay be at hand.

A Secured loan may just be a solution to thoseproblems. Whilst Secured loans are generally moreexpensive than a normal mortgage, they are oftenmore flexible than many mortgages and becausethey can be taken over a longer term, can work outcheaper on a monthly basis than the more oftenused Personal Loan or Credit card option.

The loan is secured against your property in thesame way that a mortgage is and this allows thegreater flexibility that normally would be offered bya re-mortgage.

If you’d like more details, let us know

The Clock is ticking

Interest Only Mortgages-is now the time to break free?

Mortgage lenders have been slowlyrestricting Interest Only mortgages to apoint whereby they are almost impossibleto obtain any more.

The move has been driven by the FSA, who havebeen concerned at the numbers of mortgageborrowers in UK who have an Interest only mortgagewith no means of paying it back.

The crackdown on lenders has meant that, startingwith Santander at the start of 2012, most of thehigh street lenders have either restricted theirInterest Only mortgages to less than 50% loan tovalue or in the cases of Nationwide and the Co-op,banned them altogether. So even if you have aninterest-only mortgage with a traditional repaymentvehicle such as an Endowment policy or ISA, you willstill not be able to take a mortgage with them.

So is now the time to do something?

If you are in a position whereby you still have aninterest only mortgage, then maybe this is themoment, when interest rates are low and you canfix your mortgage at a very reasonable rate, youshould consider switching your mortgage across to aRepayment mortgage. The earlier you start, the

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

more impact it will have on your debt overthe lifetime of your mortgage, even if itonly seems like a small amount to startwith.

And if the switch would mean that theincrease in your mortgage payments wouldprove unaffordable, why not switch a partof the mortgage across, so at least you aremaking a start. Many lenders will alsoallow you to pay extra each month overthe counter or by standing order withoutpenalty.

If you’d like some information on what itwould mean to your mortgage or what youcan do, let us know and we will happilyadvise you.

The new EU ‘Gender Directive’ comes into law from January 2013. The neteffect will be that premiums for life assurance will increase markedly.

Life insurance premiums have been getting cheaper overthe last 10 years as advances in medical care andlifestyle have led to us living longer. So a regular reviewof your life insurance costs has been good practice.

The EU Gender directive from 2004 which outlawsdiscrimination on the basis of gender means that for thefirst time for many years the cost of life insurance,especially for women, will become more expensive fromnext year.

So if you were looking to reduce cost of your lifeinsurance, don’t wait for the ‘new year’s resolution’period, give us a call and review it now.

December 31st may be too late.

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