Spruce Up Your Home

If you are thinking of letting a property and planning on filling it with designer items and furniture, then now is the best time to buy. Due to the current recession, shops are putting on sales and offering items at bargain prices, just to make a sale and a little bit of money. A number of high street stores are offering items of furniture at almost half the original price.

A friend of mine bought a number of designer radiators the other week and managed to get them at a discounted price due to the store having a closing down sale. They look great and were a complete bargain!

Make sure that before you go shopping you take a look around the house to see what items you could do with being replaced. It may be useful to make a little list so you don’t forget. You may realise that the office chairs you have been using could really do with being thrown in the skip or the headboard on your bed needs updating. Now is the best time to take a trip to the shops to bag a bargain.

If you are planning on letting for the first time, then now is the time to invest in time such as washing machines and sofas for the future.

Housing slump likely to be over in 2009, says LSR

A forecast by the Lombard Street Research (LSR) says that the UK housing slump may be over by end of 2009.

LSR, regarded as one of the most reputed economic consultancies of London, claimed that home prices have now come to “affordable” levels.

LSR worked out an affordability index in co-ordination with The Daily Telegraph, which revealed that house prices throughout the UK are far better than their long-term average, for the first time in 5 years.

According to LSR’s senior economist, Jamie Dannhauser, house prices levels will bottom out at the end of 2009, and the recovery will be little extra than the bounce from bottom.

Dannhauser believes that current average prices are quite affordable for those with hefty deposits and good credit rating.

Property prices have gone down by around 20% since onset of credit crunch in last 18 months. There are many industry watchers who are forecasting further decline of 15% on account of rising unemployment.

But LSR believes that combination of low interest rates and falling prices means prevailing prices are good value for those having capacity to pay big deposit.

Earlier in April, Halifax reported 1.9% fall in the UK house prices in March, as compared to February. But just a day later Nationwide’s house price index showed 0.9% increase in March.

The Centre for Economics and Business Research (CERB) also hinted that housing market recovery may be around the corner.

Stewart Milne Homes’s sales showing positive increase

Good days seem to be here for the housebuilder Stewart Milne Homes. Renewed optimism seen in the Scottish housing market has helped the housebuilder in registering increase in sales on its quality homes, since beginning of 2009.

From January onwards, the premium housebuilder’s sales in Scottish portfolio have risen every month with increase of over 100% during February and March 2009.

The Stewart Mine Homes group offers different incentives to buyers in the form of tailor-made purchase plans which can help individuals with mortgages.

According to Group Managing Director – Homes, John Slater, increase in number of visitors and enquiry levels is indicator of renewed optimism. He claims that the group tailors purchase plans by working closely with customers which makes buying a Stewart Milne home an affordable proposition. He supports this claim by giving example of ABeleven development in Aberdeen where growth in sales has been double every month since beginning of 2009. He asserts that given the right homes and right location, consumers are ready to buy again.

Recent UK house price data indicates that Scotland is the only area which witnessed price rise during last one year.

However, more than 50% of aspiring home buyers believe that house prices will remain static or increase marginally, while 66% consider that now is the right time to purchase a home.

Government launches Homeowners’ Mortgage Support Scheme

The Homeowners’ Mortgage Support Scheme (HMSS) by the Government has been launched on 21 April. Details of scheme were announced last year.

It is aimed at helping homeowners who are losing part of their income and will allow postponement of up to 70% mortgage interest payments.

Housing Minister Margaret Beckett claimed that the Government is aiming to help people who are unable to pay their mortgages because of economic downturn and are ineligible for re-housing.
Applicants will have to have sufficient income to pay at least 30% of their interest.
Those with mortgage debt lower than £400,000 and savings of less than £16,000 will also qualify for the HMSS.

Lenders who have agreed to participate in the scheme include Bradford & Bingley, Lloyds Banking Group, Clydesdale, Yorkshire Banks, RBS, Northern Bank and Cumberland Building Society.
The Post Office, Bank of Ireland and Standard Life Bank are also expected to sign up, as are sub-prime lenders GE Money, GMAC and Kensington.

However response from Council of Mortgage Lenders (CML) to the scheme backed by the Government’s guarantee seems to be gloomy. According to Michael Coogan, director general CML, the HMSS is an additional helpful tool but CML is not sure that guarantee will be triggered in most of the cases.

Borrowers in negative equity being offered 120% mortgages

Halifax, one of the biggest mortgage lenders in the UK has come to the rescue of existing customers with offer of 120% loans at the end of their current deal.

HBOS, member of the Lloyds Banking Group is planning to offer new loans to customers who are in negative equity and whose current deals such as fixed rate are about to expire.

Normally in case of borrowers in negative equity, rates are reverted to standard variable rate (SVR) and it becomes difficult for them to re-mortgage if the amount of new loan exceeds property’s current value on account of house price decline.

Lenders are approving loans up to 95% of property value, but the customers bargaining for most competitive deals have to borrow not more than 60 to 75%.

However Halifax and bank of Scotland are offering same rates of 95% loans to re-mortgage customers who require 120% of the property value.

HBOS are extending negative equity loans this month up to 120% LTV, but will not be publicizing this anywhere. Brokers believe HBOS is possibly the only major lender helping the customers in negative equity.

Melanie Bien of Savills Private Finance remarked that HBOS was doing decent thing by providing loans at fixed rate to those in negative equity, which is normally given only to customers borrowing at 95% LTV. She urged other lenders to follow HBOS’s good example.

900,000 borrowers enter into negative equity, reports CML

Data released by the Council of Mortgage Lenders (CML) reveals that nearly 900,000 borrowers are in negative equity due to continuing fall in house prices.

After reaching a high in summer 2007, house prices in the market have plunged by 20%, leaving those with mortgages more than property value, with too little equity.

Negative equity poses a problem only when people are compelled to move. Those who can continue to stay in their homes will gain in future as the market starts stabilising.

CML figures indicate that borrowers from North are the worst affected, with 9.2% (over 70,000) of homes occupied by owners in the region falling in negative equity.

The number of those in negative equity in the South East is 150,000, equating to 5.7% of homes in that region. However, situation in Scotland is not that bad with only 1% of owners in negative equity.
CML recalls that 1.5 million borrowers had gone in negative equity during early 1990s housing slump, but recovered later. CML is expecting similar outcome for the present borrowers particularly in the backdrop of easing of situation due to lower interest rates.

Survey by the research group GfK NOP, conducted in February, had forecast negative equity for 5 million homeowners by the end of 2009, if down trend in house prices continues.

But these figures are termed as “a little extreme” by the Royal Institution of Chartered Surveyors. CML also called these estimates as alarming and implausible.