News today that the Halifax have cut their rates for the second time in a week, will bring joy to many faces who have been waiting to cash in on the falling housing prices.

The Halifax are the country’s biggest mortgage lender and they have cut their rates for the second time in a week, following the suit of Nationwide, who have done the same in as many weeks.

Some 22 mortgage products have been cut, including fixed rate and tracker rate mortgages and self cert mortgages.

Mortgages brokers and experts are continuing to be optimistic after months of uncertainty and rates increasing.  Have we turned a corner?

The Halifax have reduced their benchmark fixed rate 2 year deal (for those with a whopper 25% deposit) from 7.24% to 6.57% and it seems that this is going to be the case amongst the larger lenders who seem to be keen to enter the market again.

It is finger crossed all round that we are finally going to see the beginning of the end of the mortgage crunch.  Last June banks and building societies lent 32% less money than they did in the same month of last year and the lowest number of home loans were sold last month since June of 2003.

Although mortgage rates are falling, they have a long way to go before they reach 6.5% - which was the average rate last March.

If you are still looking for a mortgage and would like to investigate your options, then Click n go Mortgages have many products that can fit your needs and a team of advisors who know what will work best for your circumstances.

Last month we reported how the Government had opened up shared ownership schemes to all first time buyers who earned a household income of under £60K and now we can report on a new scheme that allows first time buyers to rent a property as they save to buy.

The pilot scheme will allow first time buyers to rent a property at 80% or less of the real market price for two or three years, whilst building up a deposit to put down on a property.  Again, the annual income of the property must be under £60K and the scheme will be managed by the Housing Association and therefore certain criteria must be met in order to qualify.

Once the buyer has saved enough and can afford to do so, they can begin to buy a share of the property, starting at 25%, and then continue paying rent on the remaining percentage.

Eventually the buyer can purchase the full 100% share in the property or they can move at take the equity that they have built up to another property.

The idea behind this scheme and the original plan to open up shared ownership mortgages to first time buyers has been born out of the fact that first time buyers are the worst hit by the credit crunch.

The Rent to HomeBuy scheme, as it is being heralded, is designed to give more choice and flexibility to first time buyers, who are often left wondering whether they are ever going to be able to get onto the property ladder.

At the beginning of 2008 100% mortgages, which were created to help FTBs to get onto to the property ladder, have been withdrawn from the market and now most mortgages require a deposit of at least 10%.  Considering that the average house in the UK has been priced at £180K, this would mean getting £18K together and this doesn’t take into account the cost of fees and stamp duty.

Regardless of the falling house prices, first time buyers are still up against it when looking to buy.

The Government have said that they are determined to help first time buyers and promote fairness and long term stability in the housing market.

The Rent to HomeBuy option will be attractive to developers, who have taken a hit over the past few months as well as housing association who are having to meet the housing needs of many within their local constituencies.

Although many are championing these schemes, the shadow housing minister has blasted the Government.  Grant Shapps has stated that given the recent increase in stamp duty and the introduction of pointless redtape (Hips), are we now to believe that the Government are on the side of those who want to get onto the property ladder.  He has called the Government to write off stamp duty for 9 out of 10 first time buyers and abolish Hips altogether.

The argument will continue to rage until first time buyers, who are forever being persecuted, get a real break.

We recently reported the story of a mortgage broker who was fined £10,500 for what was seen as fraudulent self cert mortgages.

The FSA have fined the mortgage broker, following what they have seen as unsatisfactory income checks being carried out on self cert mortgages, which has sparked a debate amongst mortgage brokers and who is really responsible for self cert mortgages.

A mortgage broker will advise you on what you can afford and the risks involved and what will happen if you do not keep up with repayments, so should a mortgage broker really be responsible post-sale? Or should the responsibility be with the lender or firmly with the self cert mortgage applicant?

What is also interesting, and should be considered, is that although subsequent checks may find that the applicant should not really have been awarded a mortgage, they may have been able to keep up with repayments. When applying for a self cert mortgage, you will be expected to sign a declaration stating that you can afford the mortgage, so whose responsibility is making sure that the mortgage is repaid? The lender has to agree the mortgage, so is the broker just the middle man and therefore exempt from any come-back if the mortgage is not successful?

The FSA view it as the responsibility of the mortgage broker as they are the ones who have advised the client when they applied for the loan and that the lender goes by the information supplied by them and therefore rely on to heavily when processing an application.

Many mortgage brokers have spoken out against this, especially as all self cert and fast track mortgages are still authorised by the FSA and not the sole responsibility of the mortgage broker.

The argument will no doubt continue, but what is clear is that when you are applying for a self cert mortgage, and ultimately cannot meet your repayments, it is your home that will suffer.

Chichester District Council have worked with the Housing Association to provide Shared Ownership Housing in the village of Kirdford near Petworth in West Sussex and the Wadey family talk about their experience and finding home.

The Wadey family of five previously lived in a much smaller house and the Shared Ownership Scheme has meant that they have secured a home in the Rydon Homes newly developed Bourn Meadows.

The family have moved into one of four houses that have been provided by the Southern Housing Group for social rent. The scheme has been set up to offer people the chance to get onto the property ladder and so they have also acquired some flats for first time buyers too.

The Shared Ownership Scheme that the Wadey’s have entered into has meant that they have been able to remain in the village of Kirdford where four generations of Wadey’s have grown up. In fact Mrs Wadey’s grandmother used to work in the apple-packing house in the former Kirdford Growers, which is where their house has been built.

Mrs Wadey has remarked that the scheme has afforded them the opportunity to part buy their home whilst paying rent on the rest. The home that they have bought using the Shared Ownership Scheme has a garden and because of the wonderful location, they are able to bring their family up in the Countryside that they love and going to the same schools with all of their children’s friends.

The partnership between Chichester District Council and the Southern Housing Group has provided a valuable, affordable scheme giving young people the chance to live in a rural village in the heart of the countryside and restore ‘long term viability’ to the village.

The Bourn Meadow’s are a great example of a successful partnership for providing shared ownership housing. If you would like help in finding a similar scheme in your area, then please contact us.

Cynical?

The cynics in the mortgage industry have been calling them ‘liar loans’, but for those who are self employed or have no actual documents to prove how much they earn, we will call them self certification mortgages.

As with standard mortgages, you fill in a form detailing how much you earn, but the difference being that you are not required to confirm how much you earn and the company providing you with the mortgage simply takes your word for gospel as far as how much you earn.

In the last decade self certification mortgages have become particularly popular, especially amongst people with ‘dodgy’ credit histories and this has in turn attracted the attention of the FSA.

Serious Failings

The US has been hit hard after sub-prime customers lied about their earnings in order to obtain self cert mortgages. Now the banks are in trouble and defaults have gone through the roof.

The FSA are now believed to have now found serious failings with the UK market, warning those brokers who are putting through ‘fraudulent’ self cert mortgages that they are being watched and monitored.

Back lash

With the credit crunch in full swing, self cert mortgages are being yanked from the market. According to reports there are now 186 self cert products on the market in comparison to last year when we have the choice of 1,704. The main reason for withdrawal of self cert products is that people who took them out last year can’t afford to pay them back and defaults are rising.

Bradford and Bingley are feeling it more than most on the high street and some £321 million of the self cert mortgages B&B committed to are now 3 months or more in arrears – this is up 37% from the end of 2007.

If you are looking for a self certification mortgages, then consider what you can afford and we will advise you on the best product for you budget.