Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Calls on the Government and the Mortgage Industry to Help UK Homebuyers

Housing-Market / UK Housing Mar 12, 2008 - 04:46 AM GMT

By: MoneyFacts

Housing-Market On the eve of the launch of the first ever Moneyfacts mortgage report “Tougher times in the UK residential mortgage market”, Andrew Hagger of Moneyfacts.co.uk comments on the following topics:


Government intervention required to help the first time buyer
“The current stamp duty threshold set at £125,000 is totally out of line with the housing market in 2008. An increase from £120,000 to £125,000 in 2006 was nothing more than a token gesture and will have done little to help the majority of first time buyers (FTB). Now that the majority of mortgage lenders have tightened their lending strategy post credit crunch, and 100% LTV deals have either been withdrawn or repriced to an almost prohibitive level, there is even more of a requirement for FTBs to save at least a 5% deposit towards the cost of their home.

“In light of these recent developments, Moneyfacts is calling on the Government to increase the threshold to £200,000 or as an absolute minimum that borrowers should only pay duty on the margin above £125,000. Without positive action from the Government in the budget on Wednesday, there is real danger that getting on to the property ladder will be nothing more than a dream for the vast majority of would be homeowners.

Minimise uncertainty levels surrounding longer term fixed rate borrowing
“With the Government looking to promote longer term mortgage deals in the UK, lender innovation could help improve the appeal and subsequent take up rates of such loans. Whilst interest rate uncertainty is a risk that a borrower opting for the long term will have to accept, there are life events that may cause the borrower to redeem their mortgage early and have to pay a considerable redemption penalty.

“Whilst it is possible to insure against illness and unemployment, there is still the potential issue of marriage break up which could result in a change of mortgage requirements. If a clause was introduced to cover uninsurable life events such as marriage breakdown whereby the borrower could switch to a more suitable mortgage (with the same lender) without being subject to an expensive redemption penalty, such innovation would perhaps make longer term deals more appealing.

Improve KFI content by including more relevant product comparison data
“The current Key Facts Illustration (KFI) highlights the total cost of a mortgage over the full term of the advance. Whilst this information allows a consumer to compare products from different lenders, Moneyfacts is calling for additional information in the form of the true cost of the introductory deal to be highlighted. This calculation is more in line with consumer behaviour. Very few people will remain on their mortgage deal, once the introductory rate expires. Most borrowers will move to a new product rather than paying their lenders standard variable rate for the remaining period of their loan.

Standardise adverse categories in the sub prime mortgage market
“A long standing area of confusion within the UK sub prime arena surrounds the lack of industry-wide definitions on levels of adversity. It is impossible to categorise the sub prime sector solely by considering an individual lender’s interpretation or definition of light through to extra heavy. What is perceived as medium by one lender may be light for another lender that aims their products at a riskier section of the market. Following detailed analysis of the sub prime sector, Moneyfacts has established clearly defined parameters for each category of sub prime adversity.

“Since County Court Judgements (CCJs) are the main reason that the majority of consumers initially resort to a sub prime lender, these form the basis of our benchmarking for these categories. Other adverse measures such as arrears, bankruptcy or individual voluntary arrangements (IVAs) are considered by lenders in line with the severity of a consumer’s overall credit position on a case-by-case basis.

“Moneyfacts has established a link as evidenced by lenders’ current sub prime products, between the numbers of CCJs and the maximum value of these judgments, to arrive at the following categories:

Light sub prime: 2 CCJs, maximum £3K
Medium sub prime: 3 CCJs, maximum £5K
Heavy sub prime: 4 CCJs, maximum £10K
Extra heavy sub prime: Unlimited CCJs, over £10K

“Going forward, industry-wide definitions of levels of adversity will help consumer understanding and facilitate easier product comparison.”

Details of the report can be found at http://www.moneyfactsgroup.co.uk/reports/ and will be updated after the launch event and will include the ability to purchase a copy online.

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

www.moneyfacts.co.uk - The Money Search Engine


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in