Hip view (Home Information Packs and Energy Performance Certificates EPC

The Council of Mortgage Lenders (CML) has stated that the resumption of new mortgage lending by Northern Rock will hopefully help to ease the continuing lack of supply of mortgage lending to the market. Northern Rock was a significant lender before nationalisation, and its previous strategy of balance sheet reduction inevitably meant that in having to absorb business from borrowers remortgaging away from Northern Rock, other lenders had less funding available for other lending.

CML director general Michael Coogan commented:

“While other lenders will no doubt be watching carefully to assess the competitive impacts of Northern Rock returning to the market as an active mortgage lender, in overall market terms anything that improves the supply of lending is a positive.

“Mortgage redemptions funded nearly all the £18 billion of the loan that Northern Rock repaid to the government. This was £18 billion that had to be absorbed by the rest of the other mortgage lenders. By removing this market pressure, other lenders as well as Northern Rock should experience an increased capacity to lend to other borrowers.”

On the other topical question of 100%+ mortgages in the wake of the Prime Minister’s article in yesterday’s Observer, the CML says there are side issues to consider that should not get lost, despite the inherent appeal of a simple policy such as this to mitigate risk and encourage responsible borrowing. In particular, what about negative equity products for borrowers who want to move house but whose own house price has fallen? What about shared equity loans made to the affordable housing sector, where borrowers are not asked to pay a deposit? And what about the fact that people may simply “top up” their borrowing with second mortgages or other unsecured loans on more expensive terms? These issues all need to be considered in deciding the right regulatory approach to 100%+ mortgages in the future.

Interest Rates Slashed Again.

The Bank Of England has cut the rate of interest again today by 0.5% to bring it to its lowest ever rate of 1%. In a statement by the Bank Of England said the global economy was in the throes of “a severe and synchronised downturn”.

Bank’s Recent Rate Decisions

 Sky News Money Panel member Ian McCafferty, the CBI’s chief economic adviser, welcomed the cut.

He said: “This drop in rates should support business confidence and, when added to recent cuts of the past couple of months and the fall in the pound, provides a very significant stimulus to the ailing economy.”

If passed on in its entirety, the cut will save someone with a £150,000 mortgage around £40 a month.

People who are more heavily mortgaged with a £250,000 home loan will be £66 a month better off.

But around 300,000 customers with tracker mortgages will not benefit from the cut, as so-called ‘collars’ have already kicked in on their loans, meaning the rate they pay cannot fall any further.

The real question on my lips is will the lenders pass this on? Will they start to offer fixed rate mortgages that are below 4.99% for the duration of the fixed period?

Hopefully the Home Information Pack market will now increase as more and more houses come on to the market and mortgages become cheaper.

Housing Minster Margaret Beckett has agreed a deal worth more than £400 million to help first time buyers who aspire to buy their own home and help the tackle the current difficulties in the economy.

Over 130 developers will now be able to offer the HomeBuy Direct Scheme and help 18,000 first time buyers purchase a home to specific sites across England. This will be aided by an equity loan funded by the developer and the Government. The loan will be free for the first five years and can be used as a deposit for cover up to 30 per cent of the purchase price.

This will mean a first-time buyer can purchase a house for £180,000 for a little as £126,000. However with the other HomeBuy schemes you will be only available to apply for this scheme if your household earns less than £60,000.

First time buyers who are eligible will be able to apply for the scheme from early 2009 by contacting a HomeBuy agent in their region.

     Housing Minister Margaret Beckett said:

“We are determined to give families real help in the current economic climate. For many young families who aspire to own a home, the difficulties in the housing market have made the step on to the property ladder that bit harder. This deal will give them more support and put their dream of becoming home owners within reach. At the same time, this scheme will also help developers to weather the tough times in the market, by protecting jobs and helping to keep business going.”

     Sir Bob Kerslake Chief Executive of the Homes and Communities Agency said:

“There has been a tremendous response from developers to this scheme and we believe there is demand from purchasers who want to get on the property ladder. Our flexibility means that we have been able to add in additional funding from the National Affordable Housing Progamme to meet demand and respond quickly to the market.”

HomeBuy Direct is designed to help families to get onto the housing ladder and have already helped more than 110,000 buy their own homes. The Government has been helping people since 1997 with shared equity and shared ownership deals and is investing a further £8 billion over the next 3 years (2008-2011) for the provision of new affordable housing for both low cost home wnership and social rent.

HSBC have promised to increase the amount it lends next year. They are enlarging its planned mortgage fund in Britain to £15bn, a 20% increase on this year and almost double the amount it lent in 2007.

HSBC were one of the few banks to pass on the entire 1% cut in iterest rates last week, however it only reduced it’s standard variable rate by 0.8% in response to the previous 1.5% cut by the Bank.

Paul Thurston, HSBC’s UK managing director, said the bank “has no intention of closing its doors to customers”. HSBC lent £7.8bn in mortgages in the UK in 2007 and £12.8bn this year. It has 350,000 UK mortgage customers.

Mortgage brokers welcomed the move but said it would not boost the first-time buyer market and it would help only borrowers looking to remortgage who have a decent chunk of equity in their home.

The move is also being welcomed by government ministers who have been trying to encourage banks and building societies to resume lending in the hope of getting the moribund housing market moving again.

Melanie Bien, a director of independent mortgage broker Savills Private Finance, said: “HSBC’s move, in theory, is welcome – but we wait to see how it will be applied in practice to ensure it isn’t just a PR stunt. The plus-75pc LTV arena [borrowers with a deposit of less than 25%] is one where borrowers are struggling to remortgage and first-time buyers are facing difficulty in buying so it would make sense to allocate extra funding in this area.

The Bank of England governor, Mervyn King, said recently that getting banks lending again was the single most pressing challenge facing policymakers. Alistair Darling, the chancellor, will ratchet up pressure on banks this week to pass on the recent interest rate cuts to their customers to kickstart the market.

John McFall, chair of the Treasury select committee, said: “I’m extremely pleased to see HSBC’s initiatives this weekend. Making money available for lending is one of the most important economic issues facing us today.”

HSBC said it had seen an opportunity to increase its share of the market as others pulled back during the credit crunch, but it would not be relaxing its lending criteria. Most first-time buyers will still be required to find a 10% deposit, although some other banks are demanding deposits of up to 25%.

The government has told banks accepting its £37bn bailout that they must continue to lend at last year’s levels. But the volume of money being lent continues to shrink. Figures released last week showed new mortgage approvals fell to just 32,000 in October, the joint lowest number on record. Overall mortgage lending fell to just £459m, a third of the £1.49bn lent in September and down from the £8bn lent a year ago.

For people who want to buy a house, good mortgage deals remain, especially for those with a sizeable deposit.