Two-Year Fixed-Rate Mortgage Deals Hit 7%
It means these loans are more expensive since February 1997.
The tightening of credit and mortgage shortage of funds has led to a sharp increase in the cost of borrowing to buy a house.
With lenders require large deposits, the number two-year fixed rate mortgage offers available for loans of 95% has almost disappeared, only 12.
Moneyfacts said that the increased cost of loans between lenders passed directly to customers.
“Lenders are also taking a greater margin at the top, since the prices of their products at risk,” said Darren Cook at Moneyfacts.
“The average level of variable rate (SVR) today stands at 7.02%.
“With most lenders do not charge a fee for their product moving to SVR, this is becoming a more viable option for many at this time,” he added.
Limited choice
Two-year fixes have been among the most popular types of loan in the past two years, especially among first-time buyers.
But the former wide selection of short-term concerns is rapidly disappearing.
The Woolwich, for example, now offers only a period of five years or 10 years to fix. The Bristol & West has only a five-year period compared to offer, like his father’s bank, Bank of Ireland.
“The kind of choice that is first-time buyer is now very limited,” said Aaron Strutt to mortgage brokers Chase De Vere.
Previously, the British Bankers’ Association, revealed that the number of mortgages that were approved for house purchase has fallen by almost 60% over the past year because of the mortgage squeeze.
Rising costs
With lenders to have their ration of money, all major mortgage companies such as Halifax, Nationwide and Abbey, have been pushing up the cost of their mortgage loans.
This has been reflected not only in higher interest rates but also increased demands for deposits and payment in advance of broader agreement fee, which could previously be rolled into the loan.
With the collapse of housing prices, lenders have been motivated by a desire to protect themselves against the possibility of losing their money if borrowers default on their subsequent payments.
In January, the average of two years will set a price of 6.61%.
Already in June last year, concerns like these costs were borrowers only 6.2% - nearly one percentage point cheaper than the current average rate of 7.02%.
The increase in the past year have added £ 77 to the monthly cost for someone to draw a typical home loan of £ 150000, with both interest and capital payable in 25 years.
Such a loan will now take £1,073 out of a borrower’s earnings.
One In Ten UK Citizens In The Dark About Their Level Of Debt
New research from CreditExpert reveals UK society in denial
As a nation, we’re in the dark about our finances, according to new research released by CreditExpert today. The survey reveals that despite 96 per cent of us claiming to be familiar with the state of our current finances, when questioned further it appears that many of us do not have a really clear picture of our credit commitments.
The research revealed that:
Only one in four (26 per cent) of us can accurately state how much we have left to pay on our loans
One in five (20 per cent) admit to only planning finances once every six months or less
One in ten of us admit to having no idea about how much debt we are in
Jim Hodgkins, Managing Director for CreditExpert, comments: “It’s alarming to see that while almost the entire UK population think they are on top of their finances, many aren’t. Keeping track of your commitments and planning for the future are always important and in addition to checking bank and credit card statements, you also need to regularly check that your credit report is accurate and up-to-date.”
APR – Approximate Price Reckoned
As well as being unaware of what is going on in our credit accounts, a significant proportion of us are also unclear about the APR (annual percentage rate) we are charged on credit cards, loans and overdrafts. Whilst most of us know our overdraft limit, the study revealed that over a third (36 per cent) of the population are unsure what APR is. The lack of APR awareness is even more marked when it comes to credit cards, with 48 per cent of the nation unable to recall the APR on the cards they hold.
Young Money
The younger generation (18 – 34 year olds) are the worst when it comes to financial management. Nearly a quarter (23 per cent) admit to being bad at managing their finances and almost one in five (18 per cent) claim to have no savings, compared to 13 per cent of all adults who claim to have no savings.
On loan
The research also reveals the British public are not confident when it comes to applying for loans. Twenty three per cent of us expect to be refused a loan of £1,000, 42 per cent do not believe we could secure a loan of £10,000 and 66 per cent think that we would be refused a loan of £30,000.
Jim Hodgkins added: “This research provides a worrying insight into people’s perceptions of their finances. It is clear that many of us are not as familiar with our finances as we believe. This could lead to disappointment when people are planning to get a loan or change existing credit arrangements. Having a better understanding of your credit report could make the difference between being refused credit or being offered credit with a higher APR. If you want to take greater control of your finances, an online credit report monitoring service such as CreditExpert can help by providing a summary of your credit status and advice on how to improve it. Get a 30-day free trial today with creditexpert.”
