Archive for mortgage arrears
Feb
02
Subprime Mortgage Plan - How to Get Help and Avoid Foreclosure With Subprime Mortgage
Posted by: | CommentsThere are many opportunities and places where you encounter the assistance needed in preserving your home. But it is not easy to find assistance in the last moment when dealing with subprime mortgage and wanting to avoid foreclosure. The best solution when facing subprime mortgage and the effects of the inevitable mortgage crisis is to revise you budget as fast as possible and see what you can do about it. If you find yourself in the position of not being able to pay your mortgage, you must act fast and look for alternatives.
The subprime mortgage plan is the most recent and best solution and comes into the rescue of those dealing with subprime mortgage. The plan is programmed to help those borrowers who have a bad credit situation and even those who do not change their interest rate because of the ARM mortgage which is due to reinstall. The objective of this plan is to lock in the interest rate for at least 5 years and, thus to ensure all borrowers of keeping their homes. This program helps to avoid foreclosure and, therefore is a big advantage for those who are in danger of losing their homes.
No matter how deep in debt you are, most plans that are created to avoid foreclosure do not help with nothing else than avoiding foreclosure. So, if you already are fallen into foreclosure generally there are very few things you could do to spare your home. But the key of survival is to act fast and if you notice that you are having problems with your mortgage payments you must not wait any longer and act as soon as possible so that you get the best results by using the programs. You must not wait until the last moment because maybe you will not have anything more to save and lose your home.
Though, if you are certain that you are in foreclosure there are still some options left which can help you to preserve your home, such as a quick sell and a foreclosure can occur until the last second. It is important to take the time needed in order to find solutions. These options could be applied only if you are qualified and being in foreclosure does not mean you are necessary qualified. The ideal solution to your problem and that could help you in solving your subprime mortgage problems is one that unfortunately, most consumers find it too late.
You could just have a discussion with your lender and this is a very important and helpful step towards avoiding subprime mortgage foreclosure. Most often, if you try and talk to your lender until the loan is being affected you can establish some arrangements that in the future will help your credit to be safe and stable. By ignoring the foreclosure process will lead you only to more problems and even the danger of losing your home.
You could just have a discussion with your lender and this is a very important and helpful step towards avoiding subprime mortgage foreclosure. Most often, if you try and talk to your lender as soon as possible or before the loan is being affected you can establish some arrangements that in the future will help you to keep your credit safe and stable. By ignoring the foreclosure process will lead you only to more problems and even the danger of losing your home.
Quick House Sale
Jan
29
Back Room Mortgage Deal Has Legislators Up in Arms
Posted by: | CommentsAmerica’s two largest mortgage controllers, Freddie Mac (FMLC) and Fannie Mae (FNMA) recently agreed to enact tougher standards on appraisers and lenders beginning in January 2009. FMLC and FNMA buy mortgages from all facets of the mortgage industry and together they control over 80 percent of the mortgage industry. They either hold these mortgages in their own portfolios or package them into mortgage-backed securities for resale to investors. Any variation from current policies within these two agencies would create a ripple effect that will be felt by all mortgage institutions and appraisers large and small.
November of last year Mr. Cuomo, the New York State Attorney General and long time champion of equal housing, began investigating FMLC and FNMA as part of his industry-wide investigation of mortgage fraud. In this investigation Mr. Cuomo specifically targeted Washington Mutual (WaMu), the nation’s largest savings and loan, and threatened to widen his investigation to other large lenders like Countrywide and Wells Fargo. His point of contention is the appraisal process and how it affects the housing market adding that he believes that “the appraisal process is broken.”
It is very likely that Mr. Cuomo’s investigation would have turned up problems and inconsistencies within these two mortgage giants, as is the case with most large companies. Many people in the mortgage industry argue that any large company such as Wal-Mart, Starbucks and Microsoft are almost certain to have problems on close inspection but on the whole run a tight ship. The problem is that in today’s over sensitive mortgage market any negative news that concerns FMLC and FNMA will be given national attention in effect making mountains out of mole hills.
Mr. Cuomo doesn’t have the power to make policy changes for FMLC and FNMA; however, he does have the ability to garner national attention from the media by calling the two giants into question. Amid scrutiny, FMLC and FNMA have agreed to abide by Mr. Cuomo’s “suggestions” and only buy loans only from banks that agree to his standards of appraiser independence. In exchange, Mr. Cuomo has agreed to forego his investigation. These standards are set to go into effect January of 2009, and among other things, will bar lenders from using in-house staff or a company it controls to conduct appraisals.
As is the case with most regulations and legislation, Republicans feel that the rule is over –reaches and Democrats feel it doesn’t reach far enough for. The problem is that Republicans and Democrats have been left out of the loop on a policy that has huge ramifications for the mortgage industry. If this were to be legislated there would the normal give and take and eventually come up with a compromised version of the policy that is arguably better.
This policy change was reached as an agreement between the OFHEO (Office of the Federal Housing Enterprise Oversight) and Mr. Cuomo. According to OFHEO mission statement “has regulatory authority similar to such other federal financial regulators as the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency…” Basically they were designed as a fail-safe for Fannie Mae and Freddie Mac when they became publicly-owned corporations whose shares are listed on the New York Stock Exchange.
According to John Dugan, the Comptroller of the Currency, Congress should make the call on this policy change, not OFHEO and a state attorney general behind closed doors. In a lengthy letter to the OFHEO Mr. Dugan wrote, “Provisions of the National Bank Act would prevent this de facto regulation from being applied to, or enforced against, national banks.” If oversight of the appraisal process is to be revamped, he argues that Congress should be making that call on issues that affect so many homeowners not a regulatory committee designed to protect the fiscal security of FMLC and FNMA.
Mr. Dugan contends that this provision will “undermine the quality of appraisals and raise the cost of appraisals to both the consumer and the lenders.” Sentiment among Republicans such as Elizabeth Dole agree with Mr. Dugan’s position and are using his recent letter as ammunition to take up the charge. However, she will be struggling with a seasoned adversary from the Democratic Party, Charles Schumer, who has sided with Mr. Cuomo.
Either way, homeowners, mortgage companies and appraisers need to brace for the wave of regulations to come. Many in Congress who have tried for years to regulate the banking industry have all the ammunition they need to do it now. Don’t expect much too much to happen in election year due to deadlocks on both sides of the aisle. However after the election, you can expect change in the banking industry, and according to which side wins will be the degree of regulation.
Repossession
Jan
21
Be Mortgage Free With a Fast House Sale
Posted by: | CommentsAre you concerned about the state of your mortgage? Are you worried that your home might be repossessed. Phone us now to allay your fears with a fast house sale. You might be in arrears after a payment holiday. Some mortgages allow you to take a break, as long as you pay up later. This payment holiday is helpful when you need flexibility and finances are tight.
But payment holidays are a double edged sword. You have to pay up when the balance is due or you will have mortgage arrears. Your lender won’t hang around, but will soon ask for the money that’s owed. If you get into arrears by several months, then it is difficult to stage a recovery and your home might be at risk. A fast house sale can help when you need cash fast to deal with this situation.
Handling Mortgage Problems
Once you become aware that you have a problem, contact your lender. Your lender will help you willingly if you are really trying to fix your finances. The error that some people make is that they ignore the mortgage arrears issue in the hope that it will disappear. That won’t happen. However a fast house sale can help even if your lender is on the verge of repossessing your home.
Getting Help With A Quick House Sale
Financial recovery is only a step away with a quick house sale. When you contact St Genix Fast House Buyers you will benefit from:
Lower legal fees
Savings on bill and mortgage payments
A guaranteed sale in a month or less
No chain
If you want to become debt free then a fast house sale is the answer. If you are seeking information on how to determine the price for a house for a quick sale, contact St Genix Fast House Buyers. We will offer a cash price depending on the property market and your property and we will complete the sale fast. Your fast house sale will be done and dusted within a month. We can even complete the deal quicker if you need cash fast so you can stop a repossession from going ahead.
If you want to discuss a quick house sale, call us now on 0800 316 7600. We are specialists in assisting you to sell your house fast. You will soon have the cash you need to satisfy your mortgage lender. At the end of the sale, you can stay at home by using our rent back deal.
Sell and Rent Back
Jan
16
Problem Remortgage: Cutting Down the Rate of Interest
Posted by: | CommentsIf you think that the rates of interest of your current loan is too high, then consider the highly preferred loan policy known as problem mortgage. Problem mortgage is a loan scheme in which a person can switch their mortgage from current lender to a new lender who offer low rate of interest. This is a secured form of loan as mortgage is used by borrowers to the lenders. Problem mortgage generally helps the person to reduce the burden of interest rates.
In problem mortgage, the new lender will pay all the dues of the borrower to the former lender in a single amount. And the borrower will be responsible to the new lender. Problem mortgage can be worth considering, if the rate of interest show a hike in the few months. With the help of this policy, you can very easily lessen your burden, and stabilize your financial positions. This scheme also creates opportunity to save money for the borrowers.
In the market, there are numerous lending institutions, who offer problem mortgage at marginal rate of interest. So, before coming to a particular decision always collect and compare the offered rates by different lenders. Following such steps will help you to get a rate according to your payback ability. You can also seek recommendations of the financial experts for a better deal.
Problem mortgage can be regarded to be the best loan strategy for bad credit holders. They can get an opportunity to recover and retain their weak financial position. Usually, in this loan policy lenders approve loans depending upon the applicant’s monthly income, repaying capacity and his latest bank statement.
If you are thinking of approving problem mortgage in instant, then click the online application device, which is offered by every lender. This application process is fast and reliable, as it saves your time, and provides instant results. While using the hi-tech application process, furnish the precise information concerning your personal and credit score. So, problem mortgage has brought a great relief to the people who are paying high rate of interest.
Rent Back
Jan
11
Reverse Mortgage Loan: the Best Companions of Senior Citizens
Posted by: | CommentsGetting old is no reason why one should not get the liberty to enjoy life. One has all the rights to do the things that they want to even if they are old. In fact, with old age comes in problems, as in health problems, financial problems and many more things. In fact, at times old age seems more like a liability, a burden and many a times it has been seen that children do not agree to up the responsibilities of their parents and therefore, parents feel left alone. They face many problems and one of the most important among them is that of financial problems. Once retired from a job, people do find it difficult to solve their financial problems and to fulfill their needs. In fact, being retired also hinders a person from getting a loan. However, the introduction of reverse mortgage loan by the HUD (Department of Housing and Urban Development) more than a decade ago has proved to be a beneficial thing for the senior citizens of the United States of America.
The basic requirements to qualify for a reverse mortgage loan are that the applicant has to be of sixty-two years of age or more, he or she should have an owned property. In fact, the best part is that there is no requirement for any minimum income or credit. Reverse mortgage loan helps a senior citizen of the United States of America have a smooth and hassle free life. Money is one of the most vital things to have a peaceful life and to lead life smoothly. However, at times, we all face some or the other financial problems and we know that we would need some or the other help to solve these financial problems. In such cases, when a person is a senior citizen and has already retired from his job, then it becomes very difficult for him to get a loan. However, the introduction of reverse mortgage loan has definitely solved this problem of the senior citizens and now they do not need forward to anyone for any sort of a financial problem.
Old age brings along with it many problems and many hazards and one has to be fully prepared to face these problems. Health hazards lead to medical bills and to pay these medical bills, one has to have ready cash. In such situations, if a senior citizen does not have money, then he or she can take up a reverse mortgage loan against the home equity that his or her house has. Now this money can be taken in the form of a lump some amount or can be taken in the form of monthly installments. This also helps to have a monthly income with which one can solve their financial problems and also meet their needs.
Therefore, if you are a senior citizen and facing financial problems, then you need not worry anymore, as you can take up a reverse mortgage loan to solve your financial problems. Moreover, the best part with this is that it is government registered and you can be rest assured that you have taken the right step.
Passive Income
Jan
08
Dealing With Mortgage Problems if the Lender Refuses to Negotiate
Posted by: | CommentsA major mortgage problem that most people are faced with is foreclosure. Foreclosure happens to millions of people every day and if you want to avoid having a foreclosure in your credit report, you might as well take immediate action.
The best thing that you can do to avoid a foreclosure is to negotiate with the mortgage lending company. However, there are some instances when your lender refuses to negotiate. In such cases, you should consider taking other actions that may prevent or minimize the impact of a foreclosure.
File for Bankruptcy
Bankruptcy refers to the financial situation when you cannot pay your debts because your creditors or lending companies have all your assets tied up. If you file for bankruptcy, this technically means that you are not capable of paying for your mortgage debts.
In general, filing for bankruptcy can help you keep your home for some time or it can help you prevent your mortgage company to take legal actions against you. The moment you file for a bankruptcy status, the “automatic stay” statute is enforced. This means that the foreclosure process will be temporarily stopped and it cannot be processed until your mortgage lender gets court permission to “lift the stay”. Moreover, the “automatic stay” statute will remain effective for as long as your bankruptcy case is still in effect.
On the contrary, bankruptcy cases will terribly bring negative consequences to your credit report. It may prevent you from getting another mortgage or getting other forms of loans. Such bad credit records will appear in your credit report for at least ten (10) years.
Sell Your House
In cases where you think that your financial shortcoming will last for several months or even a year, you may consider selling your house. Selling your house not only prevents a foreclosure. It can also help you deal with your debts and eventually have some spare money for rental fees.
You can opt to sell your house if you know that the value of your house has increased. Most of the time, you will know that your house value has appreciated if many real estate agents are bargaining for your house.
If you opt to sell your house, be sure to contact your mortgage lender first. He may be willing to help you make the sale arrangements or he may be able to recommend potential buyers or agents that can make the sale easy for you.
Deed in Lieu of Foreclosure
If you think that you will find it hard to sell the house, you can opt to contact the lender and ask him to take the deed and your house before your mortgage debt ends up in a foreclosure. This is highly appropriate for you if you have not missed three (3) or more monthly payments.
In such cases, the lender may agree to a “deed in lieu of foreclosure”. This means that the lender will take the deed and actually sell your house. However, they will not declare your debt as a foreclosure. As such, no bad credit record will appear in your credit report and you can ultimately find it easy to find another mortgage for a new home.
Sell House Quick
Dec
31
The Mortgage Forgiveness Bill of 2007: Will it Raise or Lower your Taxes?
Posted by: | CommentsOne of the most controversial and paradoxical real estate and mortgage finance stories to hit the media in recent weeks was that of a newly crafted real estate tax bill – the so-called Mortgage Forgiveness Bill of 2007. The bill, which may help you hold onto your money if you face foreclosure but will likely hit you hard in the wallet if you own a second home, was drafted by Democrats and approved by the powerful House Ways and Means Committee.
Rising Foreclosures Led to the Drafting of the Bill
During the past two years, a number of economic factors have conspired to create a perfect storm of problems for many homeowners. First of all, prices of residential real estate fell precipitously. Then, as interest rates rose, the monthly payments for many adjustable rate mortgages jumped. Next the mortgage industry hemorrhaged, thanks to the volume of bad loans and delinquencies, and this trouble spilled over into other areas of the financial industry. In an attempt to control losses and appease government regulators and investigators, mortgage lenders tightened their guidelines for approving loans – after a long period of lax standards and “easy money”.
Just as homeowners realized the imminent danger of rising adjustable rates and rushed to refinance into more affordable conventional fixed-rate loans, the ability to refinance got harder as loan applications became much more stringent. As the challenges for homeowners increased, so did the number of foreclosures.
Lenders May Show Leniency, but the IRS Does Not
Sometimes banks and mortgage companies will forgive a portion of the debt owned to them, in order to process delinquent loans in the most cost effective manner. Lenders typically lose about 50 percent of their investment when a property goes to foreclosure. So forgiving debt can actually save them money in the long run, by encouraging third-party investors to step in and buy the house before it goes to foreclosure and fetches less money on the auction block. And many government officials – including the President – have asked that lenders show flexibility to homeowners faced with foreclosure, so there is an added incentive for banks and mortgage companies to work out arrangements that are mutually beneficial for lenders and borrowers.
Most homeowners who have part of their debt forgiven are relieved. But many are shocked to find out that under current tax law the forgiven debt is taxed as ordinary income. In other words, if your lender forgives $20,000 of your mortgage debt, the IRS will immediately tax that $20,000 as extra income. Those taxpayers recovering from mortgage problems are already in financial crisis, so paying a hefty tax can easily make a bad situation even worse.
The New Bill Would Cut Out the Tax but Repay it by Curbing a Tax Break
If the Mortgage Forgiveness Bill of 2007 passes and becomes law, homeowners facing foreclosure won’t be responsible for paying taxes on debt forgiven by lenders. That is the main focus of the bill, and is great news for those homeowners.
But in order to make up for tax revenues that will be lost if the bill goes through, a major tax break for those who own second homes will be drastically trimmed.
Under current tax law, a married couple is entitled to a tax break of up to $500,000 worth of profit on the sale of a second home, as long as they have lived in it for at least two consecutive years within the five year period before they sell. Single people can claim a tax exclusion worth half as much, or a maximum of $250,000. (Of course gay couples still face tax discrimination in the USA because it is illegal for them to marry, so gay and lesbian couples who buy a second home together are only eligible for the $250,000 tax break offered to singles.)
One clever way to take advantage of the current law is to buy a second home – for instance, a vacation property – and live it for two years. Then you sell and take your profits – and your tax break – before moving back into your first home. But under the proposed new legislation, the tax exclusion would instead be based upon how many years you live in the second home. The longer you live there, the bigger your tax perks. For the most part, the big tax break offered to those who sell their second homes would be severely curtailed, and numerous opponents of the provision say it undermines a tax incentive that promotes investment that helps the economy.
But, ironically, the bill has the support of many of America’s largest real estate industry organizations, including the National Association of Realtors, the Mortgage Brokers Association, and the National Association of Home Builders. One reason they support it is that while it does slim down the tax exclusion, it nevertheless preserves it – instead of totally eliminating it.
When buying, selling, or financing property, get expert help from professionals committed to the global GLBT community at www.GayRealEstate.com. and www.GayMortgageLoans.com. Or call toll free 1-888-420-MOVE (6683).
Quick House Sale
Dec
30
Applying for Bad Credit Mortgages
Posted by: | CommentsWhen you apply for a mortgage, or indeed any financial product, your credit rating is checked. A credit rating helps a lender decide whether you fit their criteria as a risk worth lending money to.
The lenders look at the reasons for your mortgage application and study your financial status and your income and outgoings. For the credit check they will use one of the two main credit reference agencies: Experian or Equifax. These agencies keep a track of your credit history – how well you have paid off your past loans and mortgages and whether you have missed any payments. Different lenders will use the results from the agencies in different ways, but there is little or nothing that won’t be recorded on your file if you have had problems in the past.
It is worth keeping an eye of your credit rating via either of those agencies so you know where you stand. It is also help you to bring to light any erroneous problems on your file – which do occur from time to time. You need to raise any such problems with the agency and try and get them cleared as soon as possible.
One thing you should try and do is to avoid applying for a mortgage that you who be rejected for, as any rejected applications for credit will be show on your file and may count against you in future applications.
If you do have an impaired credit rating then you might need to look for a bad credit mortgage. Over recent years the number of brokers and lender specialising in bad credit mortgages has grown. The reason for this is that is money to be made for people providing these mortgages, thanks to the higher interest rates that the mortgages attract.
Ironically, the credit crunch, which has made life tougher for most people and helped to push more into the “at risk” categories, has reduced the number of bad credit mortgage providers.
Although it is wise to shop around, to avoid problems of multiple applications counting against your credit rating, it is best to use an independent specialist bad credit mortgage adviser. They will know how likely you are to be accepted by the lender, and help you avoid the rejection spiral.
The best way to find such a professional is by personal recommendation. If you can’t find one in this way, search the interent for an independent, whole of market mortgage broker.
Sell House Quick
Dec
25
The Best Mortgage Program Since the Introduction of the Fha, Va Mortgage
Posted by: | CommentsIn the past the mortgage industry only focused on people who had money or were looking for a home to grow their families. The FHA and VA were the programs that were introduced to the public that would allow a person who wanted a home to purchase with little money down. These programs are totally different in the FHA is an insured mortgage which does not look at credit in the same way as a conventional mortgage. The VA is for veterans from the military and is a guaranteed loan back by the GI bill. Both of these programs help millions of people become home owners with little or no money down.
A new era is dawning in this country; with a new group of citizens that are in need of a program that will help them live life in a dignified fashion. This group is growing faster then any segment since the great war. This group is the Senior of the age of 62, with the senior group now making up more then 18% of the population the best is yet to come. Over the next 20 years the largest group of people will become over the age of 62 the group is the Baby Boomer.
With the rising age of the American citizen which will near 80 million people over the next 20 years they will make up 25% of the total population of this country. This is going to become a huge problem in the future and is already being felt today.
The growing problem is where will this group of hard working people who built this country live in the years when they were always told would be the Golden Years! In today’s financial crisis with more seniors loosing their ability to earn extra monies to supplement their incomes and many are also caught up in the mortgage industry crunch what will they do.
Since 1982 the Federal Government took action and came up with a multitude of solution to help the senior. The problem; as with most programs that involve financing there are the few that try exploit the program and make it their money machine these are the same crooks who caused the financial crisis that we are in today.
Now the program of the Reverse Mortgage which is exclusively for the Senior over the age of 62 was not exception to the problem. Over the last few years the Reverse Mortgage industry has gone through it’s share of media attention and a select few of misfits trying to profit on the backs of out seniors. This is appalling to the true professional! The Government has realized this a put in place some of the most restrictive instruments to protect the senior, and God knows they need to be protected from the blood sucking vultures.
Now today the Reverse Mortgage is one of the safest programs on the market today, the media in many cases has taken another look and have given it a thumbs up. But there is much more work to do to get the word out and expel or the myths that have been associated with the program. The Reverse Mortgage of today is not even close to what it was just a few years ago. Today the guidelines are ever changing to keep up with the times and more protection is being added everyday. Seniors now have more options then ever before to provide themselves with monies to live a decent life that they worked so hard to achieve.
Today’s seniors have seen their live saving disappear because of the investment that were made in the retirement account that were risky and now they are paying the price as is everyone else. But the problem is more for the senior; simply because of time. Yes time is not on their side, they cannot go out into the market over the next 20 years and recover their losses and rebuild their nest eggs.
The one asset that they have that in most cases never even look at it has an investment is their home. But think about this is was and always be the biggest single investment that anyone can ever make in their lives. We are talking about the Home the roof over your head, the place that not only gave you dignity and warmth, but provided a foundation to which many great memories were born.
Over the years you made payments paying not only the principle, but interest in the hundreds of thousands of dollars. Not to mention the measly tax right offs for the interest and taxes that you received. Now that you are over the age of 62 and you are depended on Social Security, and maybe if you are one of the lucky ones a pension or savings that still exists you are faced with the biggest financial collapse of your lifetime. So what are you going to do to help replace the monies that you thought you would have to enjoy your retirement years, think my home can pay me back.
Yes with all of the changes that have taken place in the Reverse Mortgage industry it is emerging as a very viable solution to your problem, if you looked at it before or you just paid attention to the media you need to take another look.
The Reverse Mortgage is going to be the pension of the new century it is the only safe bet for the senior, simply because of it is the safest instrument available to the largest group in history. With a growing problem in this country of where will all the people go when they need care or housing there is not enough places for them. In a recent survey most seniors said they would prefer to stay in their homes until the end of time.
It is time for your Investment that you made in your Home to pay for your retirement years with the Safety and security that you had planned for over your working years. To find out more about how this secure program can save your life visit http://www.bestmortgageplans.com
Quick Property Sale
Dec
13
House Price Falls May Lead to Problems for 125% Mortgages
Posted by: | CommentsIt is now possible for you to borrow 125% of the value of the property you are buying. The idea of 125% mortgage may appear attractive to potential borrowers. House bought, all extra fees paid for, no deposit needed, and all that cash!
For first-time buyers a 125% mortgage could make the difference between buying a property and being unable to do so. In addition they can pay the stamp duty, solicitor’s fees and still have enough money for furniture.
Those people already on the property ladder can change lenders and take advantage of this mortgage in exactly the same way.
Indeed you don’t even have to move house. If you want to consolidate debts (credit card bills, bank loans, finance), or use the money to build an extension, buy a new car or even help a child with their deposit for their first purchase, you can do it via a 125% mortgage.
The way these loans work varies, but the loan is often made up of a secured part (95-100%), and an unsecured part (25-30%), but with the same interest rate applicable across all the borrowed money – which would be a lower rate than on a regular unsecured personal loan.
The main problems are that the interest rate is usually higher than on regular mortgages, and you will be borrowing more than the value of the property. This puts you into negative equity (the value of your house being less than the outstanding mortgage) straight away. Most people would wish to avoid getting anywhere near negative equity.
The possibility of negative equity returning to haunt Britain’s mortgagees has been in the news recently as house prices have shown signs of falling. Negative was last a real problem for British families in the early 1990s. The main problem is that people can’t move because they will have to actually find money to sell their property, let alone buy a new one.
The continuing rise of house prices has helped avoid the equity trap, in spite of rising interest rates over the last year, and all costs associated with moving going up. However, recent surveys have shown that house prices are beginning to fall on a monthly basis, and although annual house price inflation is still positive, industry experts expect it to stagnate or even go into reverse in 2008.
For people who take out a 100% mortgage this could mean potential problems. An estimated 33,000 first-time buyers have borrowed the full value or more of their property to the end of August 2007. The Mortgage Advice Bureau says that the number of people taking out 100% mortgages has more than doubled in the first nine months of the year compared to the same period in 2006.
Both the Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling have told the banks and building societies to lend more responsibly, but mortgage providers continue to offer 100% mortgages and above.
Many products have been withdrawn by lenders that were available to higher risk customers, but first-time buyers with stable jobs are still being offered these mortgages.
The latest property price forecast is not encouraging. Capital Economics expects the value of house prices to fall by 3% in both of the next two years.
Rent Back
