Mortgage mayhem as Bristol & West withdraws deals and First Direct raises cheap rate

brit1234

Mortgage mayhem as Bristol & West withdraws deals and First Direct raises cheap rate

The volatile mortgage market continued to throw up more uncertainty yesterday when one bank was forced to pull almost a quarter of its mortgage products a day after it launched a new range of deals.

Bristol & West, the British mortgage arm of the Bank of Ireland, said yesterday it was withdrawing seven of the 29 mortgage offerings - mostly fixed-rate and buy-to-let deals - it launched on Tuesday. The bank said it took the decision in response to "unprecedented volumes of business received during the past week".
First Direct added to the turmoil yesterday by raising the cost of what had been Britain's cheapest two-year fixed-rate mortgage.

The internet and phone banking division of HSBC said the rate would rise from 5.49% to 5.99% - although borrowers still have to come up with a 20% deposit and a £1,499 fee.

The moves have further muddied the waters for consumers trying to find a reasonably priced mortgage. Prices have been changing so fast that homeowners who stop to check rates can soon find the best deals have disappeared.
"It's all a bit crazy out there," said Ray Boulger of the broker John Charcol. "Some of these changes have been a delayed reaction to the big increase in swap rates that led both the Nationwide and Woolwich to re-price their rates upwards at the start of the week."

He said that despite endless predictions of a higher bank rate, he considered it was in no way a "done deal".
"I can't see rates rising by more than a quarter point - if at all," he said.
"I'm predicting they will fall away quite considerably next year, making tracker rates probably the way to go for those who don't need the security offered by a fixed-rate deal."

Earlier in the day, the Council of Mortgage Lenders (CML) said that home loans remained "slow" in May, with total lending down 19% over the year.

Tightened lending criteria and falling confidence in the housing market contributed to a £6bn fall in the value of mortgages advanced, CML said - from £31.5bn in May 2007 to £25.5bn last month. After bouncing back 8% in April, lending levels dropped by 2% in May.

The financial data compiler Moneyfacts said this week that the average two-year fixed-rate mortgage now stands at 6.75% - the most expensive level for 10 years.

http://www.guardian.co.uk/business/2008/jun/20/banking.mortgagelendingfigures?gusrc=rss&feed=business

Investors with buy to let portfolios must be getting extremely nervous the way these rates jeep going up every few days. As for house prices in general these increased rate increases are bound to leave house prices falling further.
:rotfl:

IveSeenTheLight

brit1234 wrote: »

http://www.guardian.co.uk/business/2008/jun/20/banking.mortgagelendingfigures?gusrc=rss&feed=business

Investors with buy to let portfolios must be getting extremely nervous the way these rates jeep going up every few days. As for house prices in general these increased rate increases are bound to leave house prices falling further.
:rotfl:

This article mentions nothing about BTL, why do you choose to highlight them in particular?

There are far more OO mortgages than there are BTL mortgages.

wisbech_lad

Uhm, if you read the bit he bolded, it does mention buy to let deals. Just saying, that's all...

JonnyBravo

brit1234 wrote: »

http://www.guardian.co.uk/business/2008/jun/20/banking.mortgagelendingfigures?gusrc=rss&feed=business

Investors with buy to let portfolios must be getting extremely nervous the way these rates jeep going up every few days. As for house prices in general these increased rate increases are bound to leave house prices falling further.
:rotfl:

Agree entirely.

However as IveSeenTheLight alludes to.... its going to be harder for any would be FTBer too. It would seem this is a spiral of "we would rather you borrowed elsewhere". It's hard to see where this will stop and so monthly payments for all new deals are looking like they'll be higher than in previuos recent history.
Renting is likely to remain cheaper than buying in these circumstances for quite a while despite price drops.

IveSeenTheLight

JonnyBravo wrote: »

Renting is likely to remain cheaper than buying in these circumstances for quite a while despite price drops.

Surely with sustained / increased rental demand, this would mean the BTL's are more secure for rental periods even if mortgages rise when properties are re-mortgaged / go to SVR

JonnyBravo

IveSeenTheLight wrote: »

Surely with sustained / increased rental demand, this would mean the BTL's are more secure for rental periods even if mortgages rise when properties are re-mortgaged / go to SVR

Possibly.
Or more precisely... yes for those who have done their sums.

No, for those who have only just been covering their mortgage with their rent. There's no way rents will rise as fast or as far as mortgages IMHO. They are now going to have to put in the extra. Or sell up of course.

pamaris

Wow... we completed 7 weeks ago with a 5 year 5.24% deal from B&W with 95% LTV! I knew those deals were going to dry up fast, but I can't believe how fast! The same deal (with a higher arrangement fee) is now 7.19%- higher than the SVR of 7.09%!

I knew that 95% deals would go away soon... basically, at 7.19%, for the mortgage payments to be equal the price of our house would have to drop 22%... which it probably will happen, but I'm sure it will take a couple of years. In our case, we wanted to get on with our life now. Plus, God knows what interest rates will be like in 2 years. Also, even with prices falling I knew it would take a LONG time to save a 20% deposit.

There is no way FTBs are going to be able to afford 7.19% rates. Obviously, prices will drop accordingly.

The only "winners" are those who bought ages ago (and haven't MEWed). It looks like inflation is going to erode the debt, but it's going to take a long time for wage inflation to reflect that and actually help out.

lostinrates

pamaris wrote: »

Wow... we completed 7 weeks ago with a 5 year 5.24% deal from B&W with 95% LTV! I knew those deals were going to dry up fast, but I can't believe how fast! The same deal (with a higher arrangement fee) is now 7.19%- higher than the SVR of 7.09%!

I knew that 95% deals would go away soon... basically, at 7.19%, for the mortgage payments to be equal the price of our house would have to drop 22%... which it probably will happen, but I'm sure it will take a couple of years. In our case, we wanted to get on with our life now. Plus, God knows what interest rates will be like in 2 years. Also, even with prices falling I knew it would take a LONG time to save a 20% deposit.

There is no way FTBs are going to be able to afford 7.19% rates. Obviously, prices will drop accordingly.

The only "winners" are those who bought ages ago (and haven't MEWed). It looks like inflation is going to erode the debt, but it's going to take a long time for wage inflation to reflect that and actually help out.

Congratulations! :T

This potential ftb is working out finances with 8% optimisticly but 12% being livable with for a couple of years. with a resonable deposit we were offered 6.2(6.24 I think actually) with an interest only flexible mortage a couple of weeks ago...I wonder what they'd say today, lol. If we didn't want the facilty to overpay substantially we could have gone lower and if we hold out to 2009 we could look at a more standard 10% over pay faciltiy and a 1 rather than 3 year IO period, but would rather be able to overpay where possible. Anyway we are not going to find someting to take that offer, so it will be interesting to se what happens in the next few months.

neverdespairgirl

pamaris wrote: »

The only "winners" are those who bought ages ago (and haven't MEWed).

Or those with nice large deposits who don't need a big mortgage.

WTF?_2

JonnyBravo wrote: »

Agree entirely.

However as IveSeenTheLight alludes to.... its going to be harder for any would be FTBer too. It would seem this is a spiral of "we would rather you borrowed elsewhere". It's hard to see where this will stop and so monthly payments for all new deals are looking like they'll be higher than in previuos recent history.
Renting is likely to remain cheaper than buying in these circumstances for quite a while despite price drops.

I beg to differ, I'm a potential FTB and it's getting a lot easier for me.

* My deposit cash is growing and reasonable interest rates on savings help boost it further.

* Prices where I live have dropped around 15-20% off the peak already and I reckon they'll come down at least another 20% before this is done.

* There's no longer the worry and hassle about securing a property in a hot market where bidding wars develop and you can be gazumped. I can pick and choose properties at my leisure and the only unknown factor is the size of my discount over asking price.

* With my amount of deposit and salary level I can still get a very good rate as - shock, horror - headline interest rates are still low by historical levels. I hope not to have to get a mortgage at all though. If prices fall at the rate they have been doing over the last year then I could buy a typical FTB place outright in about another year.


However, I'll be waiting at least another year before looking at buying. This thing has only started to roll. Also, there's the small matter of a coming recession and if I were to lose my job I don't want to be worrying about making payments on a falling asset.

JonnyBravo

!!!!!!? wrote: »

I beg to differ, I'm a potential FTB and it's getting a lot easier for me.

Good for you and others who have a large deposit.
I'd argue that most people haven't been saving large deposits. They haven't needed to in recent past history so why should they?
Don't get me wrong... more fool them.... (I had to save and I'm a strong believer that those taking 100% deals were asking for trouble)..... just not sure how many do have that big deposit.

!!!!!!? wrote: »

* My deposit cash is growing and reasonable interest rates on savings help boost it further.

Please see above.
My original post was a generalisation not an analysis of your situation or indeed of any of those who are motivated enough to inform themselves (ie anyone using the MSE forum regularly is surely a little more savvy than the general public?)

!!!!!!? wrote: »

* Prices where I live have dropped around 15-20% off the peak already and I reckon they'll come down at least another 20% before this is done.

I'll take your word for it... I have no idea where you live.

!!!!!!? wrote: »

* There's no longer the worry and hassle about securing a property in a hot market where bidding wars develop and you can be gazumped. I can pick and choose properties at my leisure and the only unknown factor is the size of my discount over asking price.

Good for you.

!!!!!!? wrote: »

* With my amount of deposit and salary level I can still get a very good rate as - shock, horror - headline interest rates are still low by historical levels. I hope not to have to get a mortgage at all though. If prices fall at the rate they have been doing over the last year then I could buy a typical FTB place outright in about another year.

Good for you.

!!!!!!? wrote: »

However, I'll be waiting at least another year before looking at buying. This thing has only started to roll. Also, there's the small matter of a coming recession and if I were to lose my job I don't want to be worrying about making payments on a falling asset.

OK... erm.... thanks.