Tories try to get HIPs voted out

The Conservative Party is reportedly trying to force a vote in the Commons to try and oust the controversial Home Information Packs that were brought in by the Labour government last year.

Whilst government officials have tried to claim that the packs are invaluable to home sellers and purchasers to make the process smoother and more effective, estate agents and even many consumers have said that they are costly, ineffective, and a waste of time.

According to recent date, more than 50% of HIPs are costing over the target price of £350, with many coming in at £500 or more. These packs are supposed to be produced within four or five working days, but only one in eight is being produced within this timescale.

Over 50% are taking around twelve days to produce whilst just over 30% are taking in excess of fifteen days. These HIPs are now a legal requirement on all residential properties being marketed for sale in England and Wales.

A spokesman for the Tory Party said: ‘Everyone involved, be it experts or consumers, recognises that HIPs have failed in every aspect.’

However, an official from the Communities and Local Government Department said: ‘The average cost of a HIP is between £300 and £350 which, apart from the energy performance certificate, is already part of the buying and selling process. The most authoritative analysis of HIPs found 72% of consumers were satisfied with them.’

A recent survey showed that only one in six potential buyers was getting to see the HIP before putting in an offer.

In response to this data the shadow housing minister said: ‘These results reveal what we and the industry have known all along, Hips are a complete waste of time. It is proving to be a very costly and bureaucratic joke. The Hip hasn’t made the process quicker or more certain, it has simply made it more expensive and choked in paperwork. It is the time this Government scrapped Hips once and for all.’

£5000 drop in house prices for March

According to a recent report there was a drop of £5000 on the average house price in the UK in March. Last month saw house prices take the biggest monthly fall since the housing market crash in the 1990s, with a fall of 2.5%.

In September of 1993 house prices fell by 3% in the space of one month, and according to Halifax figures this is the biggest tumble since that time.

Officials state that the average home in the UK is only worth just over 1% more than it was this time last year. Figures show that the average house price in February was £196,465 in February, but has now dropped to £191,556.

Many industry experts have predicted that house prices are set to plummet over the next couple of years, with some expecting them to tumble by up to 20% over this time period.

The Halifax has stated that at present house price inflation has hit its slowest pace in twelve years. One official from the bank said: ‘This fall is continuing the pattern whereby the market is readjusting. Sellers are having to adjust the price they ask for their properties.’

Halifax figures showed that there were regional variations in house price movement, and the West Midlands took one of the biggest hits, with a 5% drop, whereas the East Midlands actually saw a 2.2% rise.

One economist stated: ‘It is important not to put too much emphasis on one piece of data, and it should also be borne in mind that house prices were still only down 1% quarter-on-quarter in the first quarter of 2008, according to the Halifax. Nevertheless, the overall impression is that house prices were buckling markedly under the substantial pressure emanating from increased affordability constraints and markedly tighter lending conditions even before the latest escalation of the credit crunch.’

Two year mortgage range withdrawn by Co-operative

Over recent months an increasing number of mortgage providers have been withdrawing various mortgage deals from the shelves, tightening up on lending criteria, and closing the doors to new customers.

This has resulted from the effects of the global credit crunch, which has made it very difficult for mortgage lenders to get the finance that they need to fund their mortgage lending operations, and as such many have had to downscale radically.

The Co-operative Bank has recently announced that it is withdrawing its range of tow year mortgages on a temporary basis. Officials from the bank state that their mortgages are all funded through consumer deposits, so it is not lack of finance that is forcing the temporary withdrawal of these products.

The withdrawal of the two year mortgage range has been put down to impossible levels of consumer demand fuelled by competitive rates of interest and also by the fact that many other lenders have closed their doors to new customers.

The Head of Mortgages at the bank stated: “We have recently provided a range of very competitive mortgage deals, which have included a number of “best buy” two-year mortgages.

This has led to unprecedented levels of customer interest and demand, which has been fuelled further by the recent actions of other lenders to reprice and withdraw their products.”

He added: “We pride ourselves on our ability to create long-term customer relationships and will not compromise our market leading levels of customer service, by simply chasing business volume at any cost. We have as a result, therefore, decided to withdraw our two-year mortgage range on a temporary basis from close of business on Thursday 3rd April.”

Two year fixed rate deal withdrawn by Alliance and Leicester

In the wake of the global credit crunch, which has seen many banks and building societies withdrawing a range of their mortgage deals and tightening up on lending criteria, the Alliance and Leicester has announced that it is withdrawing its two year fixed rate mortgage.

Officials from the building society have stated that the reason behind the withdrawal of the two year fixed rate deal is because they lender cannot keep up with demand, which has far exceeded the ability to supply.

Many banks and buildings societies are now having to withdraw deals and cut back on lending levels as a result of difficulties in getting finance on the wholesale markets in order to fund their lending, which is a situation that has come about as a result of the credit crunch.

An official from the Alliance and Leicester stated: “Over the past few days we have seen a high demand for our 4.99% two-year fixed-rate product and therefore we have taken the decision to remove it from the range.”

In the past month the number of mortgage deals and products available to consumers has dropped dramatically from 7,726 to 5,700. The drop since last July, prior to the onset of the credit crunch is even more dramatic, with the number of deals plummeting by around two thirds from 15,599.

However, some industry officials state that the news could be good for first time buyers because the rapid fall in the range of mortgage products means that house prices will also fall.

One industry official stated: “The cheap and readily available credit has gone so there’s only one place for house prices to go and that’s to fall quite dramatically.”

Troubled mortgage lender to be shrunk

According to recent reports the chief executive of what was once the fifth largest mortgage lender in the nation has decided to scale down operations to try and halve the size of the bank.

Northern Rock hit problems last year after it became widely known that it had taken an emergency loan from the Bank of England, which resulted in the bank becoming the fist victim of a run on a British bank for around 140 years.

The bank was recently nationalised, coming into public ownership, and the man that was put in charge, Ron Sadler, said that he plans to cut the size of the bank by 50%.

In a bid to try and get the ailing bank to break even within the next three years, Sandler has laid out stringent plans to make cutbacks to Northern Rock operations.

His plan is to reduce the mortgage book of the bank from the current figure of £107 million to just £50 millions by 2011 Up to £30 billion worth of mortgages with Northern Rock could be up for renewal or subject to increased interest rates over the course of this year, and Northern Rock is trying to push some of its mortgage customers onto rival banks and lenders in order to try and reduce liabilities.

As part of his plans to downscale operations at Northern Rock Sandler plans to renew only 40% of mortgage redemptions that come up. He also plans to put an end to commercial and unsecured lending. Around two thousand staff members could lose their jobs as a result of these cutbacks, and costs will be cut by 20%.

He plans to repay the billions of pounds owed to the Bank of England by 2010. In a damning report over the true scale of Northern Rock’s losses last year it was revealed that in total consumers withdrew over £12 billion from the bank over a short period of time when the lender ran into problems last year.

Mortgage lender pledges to repay loan within next couple of years

The recently nationalised mortgage lender Northern Rock has promised that it will repay its state debt of £24 billion by 2010. This is despite the fact that it has been warned that it will not even start to break even for at least three years.

In 2007 the mortgage lender suffered pre-tax losses of £167.6 million in 2007. It has also admitted that it will be ’significantly loss making’ over the course of this year.

Adam Applegarth, the former chief executive of Northern Rock is to receive over three quarters of a million pounds as part of his severance agreement.

This level of payout has received criticism from shareholders given the extent of the problems that the mortgage lender suffered last year, when it became the victim of the first run on a British bank in nearly 150 years.

Roger Lawson of the Northern Rock Shareholders Association Group, stated: “A lot of shareholders will be very unhappy with the size of Mr Applegarth’s payoff but it looks like legally, the company could not have avoided paying that amount. Had Mr Applegarth taken the company to court then it could have ended up having to pay him even more.”

The former fifth largest mortgage lender in the UK is now looking to make a number of cutbacks in different areas in order to reduce costs.

In respond to these cutbacks, a union official said: “Unite is calling on the company to ensure that any proposed restructuring must consider the welfare of employees and long-term success of the bank. Decisions must not be made merely in the pursuit of short-term cost savings.

Mortgage customers with bad credit relying more on mortgage brokers

According to a recent report many mortgage customers with damaged credit ratings are now relying on brokers in order to help them to find a lender that will accept them for a mortgage deal.

Officials from the Financial Services Authority claim that many bad credit mortgage customers are now going straight to mortgage brokers rather than shopping around for a mortgage.

However, the FSA has stated that whilst these borrowers may be grateful for getting any sort of mortgage deal, many may not be getting the best deal by failing to shop around.

The FSA report went on to state that many people within the sub-prime market, which comprises those with bad credit, may be looking more at short term affordability rather than at how good a deal they are getting over the long term.

The report goes on to state that sub-prime customers tend to rely on the information provided to them by mortgage brokers, and assumed that they would not be steered in the wrong direction by brokers, thus not bothering to check deals for themselves.

Sub-prime customers are also reliant upon information regarding the risks of taking out a mortgage from their mortgage brokers, according to the report.

The report also showed that the main consideration for sub-prime customers was to find the cheapest deal possible.

In the current financial climate, where many lenders have tightened up on their lending criteria, many consumers may assume that they cannot find a mortgage deal for themselves if they have bad credit.

Consumers that are looking for a bad credit mortgage are urged to hunt around and compare different deals from a range of lenders in order to try and get the best deal on their mortgage borrowing, although the number of deals available to sub-prime customers has dropped over recent months as a result of the global credit crunch.

Mortgage applicants to struggle like the days of old

Over recent years credit conditions in the UK have been pretty lax, and even those with poor credit usually managed to find a suitable mortgage from one of the many lenders offering loans and mortgages to those with damaged credit.

However, a recent report has suggested that the days of being able to get a mortgage pretty easily have long gone, and consumers may now have to go back to the days of old, which meant going cap in hand to the bank or lender in order to try and persuade them to offer them a mortgage.

Many banks and building societies are raising rates and changing criteria to make it more difficult for higher risk consumers to get a mortgage, which effectively means that those without perfect credit are going to be left out in the cold with most doors slammed shut in their faces.

A number of lenders, including the Nationwide and the Cheltenham and Gloucester, have recently announced that they are increasing the rates on their mortgages, and many others have made significant changes to their lending criteria over recent weeks.

With all sorts of mortgage deals disappearing from the shelves – for instance there are now only nine lenders that offer 100% mortgages compare to 22 lenders just six months ago – and an increasing number of lenders raising their loan to value ratios and demanding higher deposits for affordable mortgage deals, the situation is set to get worse.

One industry professional stated: “Conditions in the mainstream mortgage market are now rapidly deteriorating at a frightening speed, with lenders changing their pricing and/or criteria at the fastest pace in living memory, and probably ever.”

Gloomy outlook for mortgages and house prices

Recent report continue to reiterate that there are bleak times ahead for the mortgage and housing markets in the UK for the future, with some industry officials stating that the unexplained house price increases in the UK over recent years could have set the nation up for an almighty house price crash. Officials from the International Monetary Fund have stated that house prices in the UK are around 30% higher than they should be, and this could lead to their collapse.

The IMF has said that Britain could be one of the most vulnerable countries in the world to fall victim to a major house price collapse because of the unexplained rise in house prices over the past decade. In addition to this bad news about house prices, the Bank of England continues to warn the nation that the mortgage meltdown is set to get worse, and said that already the number of mortgage deals has fallen by a massive 70% since the credit crunch swept across the country late last summer.

According to the bank of England, around 43% of lenders expect more mortgage deals to be withdrawn over the coming months, and there is set to be an increase in the number of people getting into mortgage arrears well as the number of people facing repossession. A Tory Party official said: ‘Reading between the lines, the Bank of England is telling us that “we ain’t seen nothing yet”. Hard-pressed British families are going to pay the price of Gordon Brown’s economic incompetence as the credit squeeze bites further on an ill-prepared nation.’

An official from the Liberal Democrats stated: ‘We are in the nightmare scenario where banks can’t lend and people can’t borrow. The UK economy has been running on little else than the wide availability of cheap credit for several years. With lending now drying up, there is a real danger this will have a serious impact on growth in the economy.’

Bank loses customer mortgage insurance details

Last year saw a range of data loss blunders by banks and government agencies, which put millions of consumers at increased risk of becoming victims of identity theft and fraud, including the loss of 25 million consumers’ personal and bank details lost by HM Revenue and Customs when two discs went missing.

Whilst we have only just edged into the second quarter of this year a bank has recently admitted to another huge data loss blunder, having lost the details of hundred of thousands of customer with mortgage related life insurance.

High street bank, HSBC, has recently admitted that it has lost a disc that contains the personal details of 370,000 customers that have taken out mortgage related life insurance with the bank. The disc was being sent out via courier around four weeks ago according to a recent report, and the information contained included the names, dates of birth, insurance cover details, and other information about the customers.

The bank has now reported the incident to the UK’s financial regulator, the Financial Services Authority, and reports indicate that the bank now faces an investigation over the loss of the data. If the investigation reveals that security measures by the bank were not up to scratch HSBC could face hefty fines and penalties.

An official from the bank stated: ‘There is nothing else that could in any way compromise a customer and there is no reason to suppose that the disk has fallen into the wrong hands. Nonetheless, HSBC would like to apologise to its life assurance customers for any concern this may cause them. Each customer will be contacted shortly and a thorough investigation into this matter is underway.’

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