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Housing Market News Summer 09 (5)

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Rates on Fixed Rate Mortgages Increase

The big lenders have all been increasing the interest rate on the fixed rate mortgages this week, despite the record low level of base rates. They have blamed the the rise in swap rates.

This week, Abbey, the UK's second largest mortgage lender, increased its fixed-rate deals by between 0.25% and 0.5%. Lloyds Banking Group has also increased some of its fixed rate deals this week.

With base rates at an historic low, fixed rate deals have become very popular recently - during April, 69% of all new mortgage lending were at fixed rates. The expectation from mortgage experts, such as Savills, is that now is a good time to fix, with base rates only likely to rise from current levels.

Currently, the average 2 year fixed rate mortgage with a minimum 25% deposit is 4.28%.

Mortgage Lending Falls In May

Mortgage lending fell in May, to £10.3bn, a fall of 2% on April, and 58% lower than May 08.

Lending for home buyers appears to have been rising but lending for remortgaging or people changing their mortgage provider, has fallen.

According to the Council of Mortgage Lenders, the volume of mortgage lending has stabilized, but at a very low level.

Mortgage Lending Up In April

Mortgage lending was up by 16% in April compared with March. Although this figure is down 28% on April 08, experts say it points to a sign of a spring bounce in the housing market and provides more evidence that the bottom of the market may have been reached.

48% of mortgages taken out in April were on fixed rate deals, with an average rate of 4.83%, the lowest since Jan 04.

Buy To Let Landlords Lose Out

New figures from the Council of Mortgage Lenders (CML) shows that buy to let landlords are having their properties repossessed at a rate of three times greater than other homeowners.

1,700 buy to let properties were repossessed in the first quarter of 2009. 4,100 properties were lost when including case of lenders appointing a 'receiver of rent' (appointed by the mortgage lender when a landlord defaults on mortgage payments).

In the first quarter of 2008, just 300 receivers of rent were appointed - this figure was 2,400 in the same period of 2009.

Buy to let mortgage are now also much more difficult to obtain. At the peak of the boom in Sept 2007, there were 3,662 different buy to let mortgages available - now there are just 218! for those getting a mortgage, the deposit required is now usually 25%, up from the previous norm of 15%.

Many landlords are struggling from a flooded market, reduced rents that don't cover their mortgages, and falling prices which means they struggle to sell or certainly can't cover their mortgage if they do sell.

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