Non-FD customers lose access to mortgages

The Internet banking giant First Direct, which is part of the HSBC bank, has recently announced that its mortgage products will no longer be available to consumers that are not customers of the bank effectively immediately. The move is said to be a temporary measure, and all of its mortgage products will be made unavailable to non-First Direct customers, including the two year fixed rate offset mortgage. The bank has confirmed that the products will still be available to its own customers.

Officials from the bank have stated that they have received record numbers of applications for home loans, and this temporary suspension will enable the bank to focus on the applications that it already has. A number of banks and building societies have had to put a hold on new lending over recent weeks, with some stating that they will only be able to lend to local customers and other putting a hold on new lending altogether. This comes as lenders continue to struggle to get finance on the wholesale money markets in order to fund their lending.

An official from First Direct stated: “We’ve seen unprecedented demand for our mortgages since January thanks to our highly competitive pricing and the decision of other lenders to raise rates. As a result, we’re currently seeing applications running at five times our normal volumes.”

He added: “First direct won its reputation for its amazing customer service and our first priority is to ensure we give all our customers the level of service they expect from us. The flood of interest in our mortgages has meant we’re taking longer than we’d like to handle applications, especially from non-customers. Rather than increase interest rates dramatically to discourage new applications, we’ve decided to withdraw temporarily from offering mortgages to non customers until we’ve cleared the backlog. I’d like to apologise to customers for any delays they may have experienced and give them my commitment that we’ll not rest until we’ve restored first direct’s normal standards of service.”

Woolwich introduces longer term fixed rate mortgage

Over recent months the Chancellor of the Exchequer, Alistair Darling has been calling for longer term fixed rate mortgages to be introduced, claiming that these mortgages could help to bring stability to the housing and mortgages sectors and could provide security and peace of mind to homeowners.

Darling addressed the issue in his recent first budget, and has even drawn up proposals to encourage lenders to offer this sort of longer term fixed rate deal, stating that these mortgages work well in other countries.

In a recent announcement the Woolwich has stated that it will now be offering one such mortgage, and this will be in the form of a ten year fixed rate mortgage, with a fixed rate of 5.29%, which is only marginally over the current base rate.

This is a deal that could appeal to those due to come off cheap fixed rate mortgages in the coming weeks, although it is for a lower period than the 20 and 25 year fixed rate terms that Darling has been calling for.

However, unfortunately there is a catch – in order to qualify for the mortgage borrowers must put down a deposit of 40%, as the mortgage has a 60% loan to value ratio, and this means that it is not going to be suitable for first time buyers who do not have a large deposit to put down.

However, it may suit those that are selling their homes and moving to another property, as they can use the equity from their previous homes to put down by way of a large deposit.

An official from the Woolwich stated: “The mortgage market is hugely uncertain at the moment and lenders are continually re-pricing products. However, the long-term swap market has steadied at lower levels and we have been able to put together a long-term product at a historically very competitive rate.”

Trial shows HIPs to be ineffective

A recent trial has suggested that the controversial Home Information Packs, which are now compulsory for all homes being marketed for sale in England and Wales, are not proving to be as effective as officials had hoped.

HIPs were introduced just before summer last year, and due to various delays did not come into full force until December of last year.

The idea behind HIPs was to make the sale of a home a smoother and easier process, and provide vital information to potential buyers.

Many people have been against HIPs from the start, claiming that they cause unnecessary delays and prove costly, but officials involved in their implementation have said that they should prove to be a valuable asset when it comes to the sale of a home. However, according to recent figures the HIP is only seen by one in every six people before they make an offer on the property.

The shadow housing minister stated that the figures proved a point – that HIPs were ineffective, stating: ‘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.’

However, Caroline Flint, the current housing minister stated: ‘What is clear from the trials is more buyers wanted to see the Hip but it was not always made available to them. We have taken action to increase awareness of the right to see a Hip and to remind agents of their responsibility to provide one. Consumers are benefiting. Search costs are falling, first time buyers are receiving important information.’

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