Here's an interesting video on the Northern Rock issue along with tips on how to find out if you've been over charged for your mortgage or insurance products.
This is external content so please remember these may not represent my views!
Showing posts with label northern rock - mortgage lender. Show all posts
Showing posts with label northern rock - mortgage lender. Show all posts
Wednesday, 2 January 2008
Thursday, 20 December 2007
End of Adverse credit mortgages?
Adverse credit mortgages are coming under increasing scrutiny since the recent credit crunch which has effected the current liquidity markets on both sides of the continent.
An adverse credit mortgage is a mortgage product designed to aid people who have had problems with credit is the past, the lending criteria varied from allowing one or two missed payments to lending money to bankrupts and repossession cases.
They would invariably have high interest rates and lend on a low LTV, loan to value, of the property which ensured high profits for the lender along with security on the property.
Unfortunately clients started having difficulty keeping up with the monthly payments, especially since rates rose in total 1% last year. Even with the recent interest rate cut there are ever more cases in both the US and UK of homeowners being unable to maintain the payments.
What happens when adverse credit mortgage holders want to remortgage?
Last month Kensington, the specialist adverse credit lender, pulled out of the market.
For clients coming off fixed rate mortgage deals onto the SVR, Standard Variable Rate, we may see even more homeowners facing repossession due to higher monthly payments.
Its put the whole industry in a catch 22. One the one hand adverse credit lenders need to tighten their criteria to ensure future borrowers are of lower risk. One the other hand homeowners coming off fixed rate mortgages may find it difficult to find an adverse credit lender prepared to take on the old terms.
Does this mean the end of adverse credit mortgages?
Whist there must be a re-evaluation of the lending criteria used by the likes of Kensigton we must also remember that stopping the money is not going to solve the problem, as we can already wittiness with the current LIBOR rate at an all time high and the effect this is having on lenders such as Northern Rock.
An adverse credit mortgage is a mortgage product designed to aid people who have had problems with credit is the past, the lending criteria varied from allowing one or two missed payments to lending money to bankrupts and repossession cases.
They would invariably have high interest rates and lend on a low LTV, loan to value, of the property which ensured high profits for the lender along with security on the property.
Unfortunately clients started having difficulty keeping up with the monthly payments, especially since rates rose in total 1% last year. Even with the recent interest rate cut there are ever more cases in both the US and UK of homeowners being unable to maintain the payments.
What happens when adverse credit mortgage holders want to remortgage?
Last month Kensington, the specialist adverse credit lender, pulled out of the market.
For clients coming off fixed rate mortgage deals onto the SVR, Standard Variable Rate, we may see even more homeowners facing repossession due to higher monthly payments.
Its put the whole industry in a catch 22. One the one hand adverse credit lenders need to tighten their criteria to ensure future borrowers are of lower risk. One the other hand homeowners coming off fixed rate mortgages may find it difficult to find an adverse credit lender prepared to take on the old terms.
Does this mean the end of adverse credit mortgages?
Whist there must be a re-evaluation of the lending criteria used by the likes of Kensigton we must also remember that stopping the money is not going to solve the problem, as we can already wittiness with the current LIBOR rate at an all time high and the effect this is having on lenders such as Northern Rock.
Tuesday, 18 December 2007
ECB to offer unlimited funds to banks at fixed rate
The ECB, European Central Bank, today stated it would offer unlimited funds to European banks at a fixed rate in the hope of encouraging banks to start lending to each other again.
What effect does this have on the UK?
It could possibly reduce the LIBOR rate which is currently at an all time high due to the limited supply of lenders willing to lend out their money. Most are keeping hold of their cash due to possible liquidity problems in the future.
If the funds can reduce the LIBOR rate it would make it easier, if not cheaper, for banks such as Norther Rock to borrow money to lend to its customers.
It will not solve the issue of the sub prime market but will ease the consequences the sub prime and adverse lenders have had on the market in general. It is still too early to tell if a reduced libor rate will help or hinder the current situation.
It all now lies with European banks to take up the fixed rate offers and start to lend to each other again.
How does this effect my Mortgage?
Well if you were looking for a fixed rate mortgage a few weeks back with a high LTV, the majority of the lenders were sourcing their finances from the LIBOR market. Now if the LIBOR rates falls due to more money being freely available you could see one of two things happening in the UK mortgage industry;
(i) Mortgage lenders make more profit.
(ii) Mortgage lenders pass on the savings to Mortgage borrowers in reduced interest rates.
With the number of mortgages available on the market I would predict more lenders leaning towards the 2nd option due to increased competition and vigilance from mortgage brokers who give independent advice.
If you use a good Independent Mortgage Broker he should be able to conduct a mortgage search for cheap mortgage with lower interest rates.
Daniel Morgan
FruitMortgages.com
Mortgage Broker Search
What effect does this have on the UK?
It could possibly reduce the LIBOR rate which is currently at an all time high due to the limited supply of lenders willing to lend out their money. Most are keeping hold of their cash due to possible liquidity problems in the future.
If the funds can reduce the LIBOR rate it would make it easier, if not cheaper, for banks such as Norther Rock to borrow money to lend to its customers.
It will not solve the issue of the sub prime market but will ease the consequences the sub prime and adverse lenders have had on the market in general. It is still too early to tell if a reduced libor rate will help or hinder the current situation.
It all now lies with European banks to take up the fixed rate offers and start to lend to each other again.
How does this effect my Mortgage?
Well if you were looking for a fixed rate mortgage a few weeks back with a high LTV, the majority of the lenders were sourcing their finances from the LIBOR market. Now if the LIBOR rates falls due to more money being freely available you could see one of two things happening in the UK mortgage industry;
(i) Mortgage lenders make more profit.
(ii) Mortgage lenders pass on the savings to Mortgage borrowers in reduced interest rates.
With the number of mortgages available on the market I would predict more lenders leaning towards the 2nd option due to increased competition and vigilance from mortgage brokers who give independent advice.
If you use a good Independent Mortgage Broker he should be able to conduct a mortgage search for cheap mortgage with lower interest rates.
Daniel Morgan
FruitMortgages.com
Mortgage Broker Search
Saturday, 15 September 2007
Northern Rock on a rocky road
NORTHERN ROCK NEWS UPDATE
You have all probably heard hours of news reports regarding the Northern Rock loan request from the Bank of England. I was so interested to see how scared everyone one gets by media gossip and reports from "Experts".
Northern Rock borrows money from the money market (other banks) and offers it to retail customers (me and you) in the form of mortgages, loans and other forms of credit. The public savings in the company amount to very little.
The main reason NR went to the Bank of England was due to them being unable to supply demand for their mortgages.
NR have become a victim of their own success however they have yet to request or draw down a penny from the BoE.
If you remember what happens when the "experts" predict petrol shortages they are usually correct. Not because there are any problems with the oil industry but rather the media scare the public into stocking up. The result is more demand which effects the supply chain.
The same situation threatens to effect the finance industry. If the media continue to report on problems that don't yet exist we may well see the media predicting future events by creating them in the first place.
I suggest that all my readers take stock of the situation and realise that the British finance industry is one of the safest in the world.
If you need advice on your mortgages then remember to visit my mortgage advice portal.
You have all probably heard hours of news reports regarding the Northern Rock loan request from the Bank of England. I was so interested to see how scared everyone one gets by media gossip and reports from "Experts".
Northern Rock borrows money from the money market (other banks) and offers it to retail customers (me and you) in the form of mortgages, loans and other forms of credit. The public savings in the company amount to very little.
The main reason NR went to the Bank of England was due to them being unable to supply demand for their mortgages.
NR have become a victim of their own success however they have yet to request or draw down a penny from the BoE.
If you remember what happens when the "experts" predict petrol shortages they are usually correct. Not because there are any problems with the oil industry but rather the media scare the public into stocking up. The result is more demand which effects the supply chain.
The same situation threatens to effect the finance industry. If the media continue to report on problems that don't yet exist we may well see the media predicting future events by creating them in the first place.
I suggest that all my readers take stock of the situation and realise that the British finance industry is one of the safest in the world.
If you need advice on your mortgages then remember to visit my mortgage advice portal.
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