UK Personal Finance

According to research people are willing to go to great lengths or rather prices, for an extra bedroom in an excellent family home.

A survey has been carried out by Yorkshire Bank that reveals the prices people are willing to pay for another bedroom in their new desired family home. The average cost that buyers are likely to pay for an extra bedroom is £34, 000, however, the urge for the perfect family home has shown that buyers across the UK are willing to stretch out to figures up to £80,000 for the additional space, this will be funded via a homeowner loan, a remortgage or existing savings.

The findings of the survey indicate that almost a quarter of the UK population will not move house as the current house prices are too high. But the remaining population are happy to move to a larger family home.

Research shows that it is not necessarily the extra cost of another bedroom that puts some of the population off, it is the worry to keep up with the overall increased repayments for the house.

Three quarters of the people surveyed expect interest rates to increase further, this was following recent rises already made by the Bank of England’s monetary policy committee, the rise was the third this year and the second in three months.

From figures released this month Mortgage Lending is the highest it has ever been as a reaction to the new Interest Rates.  In June Mortgage Lending raised to £34.2bn, a further 9% then the previous month.  In effect Homeowners sought to lower their costs by Remortgaging.

Mortgage approvals grew as a result of this and many people were coming to the end of their Short-Term Fixed-Rate deals.  CML explained lending figures were still Lower Rate then this period last year where it increased to 12%.  CML went on to say although strong levels of lending were expected in autumn; this driven by Remortgaging was expected to make the number of home purchasing to fall.

CML’s director, Michael Coogan, explained that there might be signs in the market for the cumulative effects from the 5 Interest Rate rises.  All effects will become more evident over the next few months; many borrowers with Fixed-Rate Mortgage deals will end the existing deal.

Building Societies Association shows figures to back up the significant drop in gross advances; the figures falling from £5.13m in 2006 to £4.65m last month.  Building Societies also experienced a significant fall in Mortgages Approved this is £6m to £4.6m.

BSA’s head of savings policy, Brian Morris, explains that people who decide to borrow money should be very careful not to overstretch themselves at the time of high Interest Rates and only borrow if they are sure they can afford it.

British Bankers Association have released information that they have seen a slow down in the amount they are lending in Mortgages and Credit Cards. The Net Mortgage lending rate has also rose by £5.3bn this is down from the previous month’s figure £5.8bn and recent monthly average if £5.3bn.

In June unsecured lending remained unchanged, following a fall in may of £0.5bn.  It’s said that as a £0.1bn fall Credit Card borrowing has been cancelled out by the £0.1bn rise in the personal loans and overdrafts.  Also continuing to rise if the Household Savings, deposits into banks are also rising over the month by £3bn, with the monthly average of £3.1bn.

David Dooks, the BBA’s director of statistics, explained that the increase of money on deposit and the unsecured lending shows household budgets seem to be in a good shape.  Chief United Kingdom economist as Global Insight’s, Howard Archer, said that BBA’s and BSA’s Mortgage figures are a general impression that the Housing Market is coming off the boil.  Mortgage activity fluctuates on a monthly basis; falls in the activity are being exaggerating by the activity in 2006 was robust.  Overall all the evidences is pointing to the housing market activity.

HBOS are revising their forecast in the Housing Prices that will rise next year, because of the expected growth in the market.

Some Banking Groups believe that a 6% rise will happen in the growth of House-Price in 2007, but the previous forecast was 4%.  The revision should reflect the greater movement in the prices in January, February, March and April next year.

The Association of Residential Letting Agents (ARLA) believes that the beginning increase of Private Landlords began when housing laws were amended so that it was impossible for tenancy agreements to accidentally become a sitting tenancy.

The initial idea of becoming a Private Landlord seems to be a satisfying idea among people of today, it can also be a very wise financial decision in the long- term period. What could be easier? Borrowing money cheaply, to buy a house or flat and then letting it out to a tenant, while you enjoy the benefits of the rent income and rise in property value.

This is apparently one of the modern concepts of today’s buy- to- let market that has resulted in an increase of Private Landlords. Buy to let borrowing hit record figures at the beginning of the year. The Council for Mortgage Lenders (CML) have confirmed that approximately 152,500 buy- to- let Mortgages were taken out at the start of the year, 17% more than the previous six months. In 1999 figures show that only 1% of mortgage lending were buy- to- let borrowers, which has now increased to 8 %. For lenders this has creating a new area of business.

The majority of private landlords have seen good returns and have experienced growth in their property amount.

The Council of Mortgage Lenders (CML) has confirmed that there has been an increase of 49% in popularity for Offset mortgages over the last year. It has been said that approximately 170,000 Offset mortgages were taken out last year, which are worth around £30bn in total.

An Offset Mortgage allows users to keep balances in different accounts with all balances being offset against each other. Possibly allowing a reduction in the interest paid, which could allow the borrower to repay the mortgage early. They are designed to be flexible, allowing the user to make over- payments and under-payments.

When introduced in the UK in the mid 1990’s from Australia, Offset Mortgages proved to be initially popular and were heavily marketed by Building Societies and Banks. There popularity was diminished with more competitive fixed Rate Mortgage deals. However, recent changes in interest rates have shown that Fixed Rate Mortgages have become increasingly expensive, thus taking a back seat when compared with Offset Mortgages.

The change in interest rates, according to experts has encouraged buyers to choose Offset Mortgages and it is thought that after more than a decade the Offset Mortgage approach has quietly contented the public’s expectations.

A survey has shown first time buyers are borrowing record amounts of money to get on to the property ladder. In April the typical amount borrowed was 3.33 times their income and went up to 3.37 in May. Those already on the property ladder are also borrowing record amounts; in April the typical amount borrowed was 3.01 to 3.03 in May.

In May 89 per cent of first-time buyers took out fixed rate mortgages, which is an all time high that was set in March and 73 per cent of those already on the property ladder also took this root which has risen by 1 per cent from last year.

Last month showed the fastest annual inflation of house prices in two years which was 11.1 per cent. To curb the pressure Interest rates have risen in 5 times from The Bank of England within a year, but the housing market still seems to be holding up.

It is expected by some commentators that the speed of rising house prices will slow down by the end of the year as the recent record rise is felt, but most economists expect that it is only likely to increase by six per cent by the end of the year.