Blowin Cheese

House prices across the UK have hit a two and half years, with average year on year price falls of 7.3%. The bad news for homeowners? The situation is likelt to get worse before it gets better.

Recent figures also show that the supply of new homes in the UK has almost dried up - a worrying sign for the house building sector.

However, there was an increase in the number of house sales completed in October, which was up 5.4% on the previous month - sellers seem to be becoming more realistic about the prices they should be expecting to receive.

Guidance will be issue to judges shortly, according to the PM, to try and ease repossession rates. Lenders will now have to show the courts that they have been down every alternative route, before issuing the repossession order. This is in response to charities saying that some lenders haven't used the option as a last resort.

The CML estimates that 45,000 homes will be repossessed this year, so the new guidelines should be a good way to try and avoid unnecessary ones.

These new rules are in addition to ones from the FSA, which stipulate how lenders should deal with debtors.

So, rather than being faced with a repossession order straightaway, homeowners will now be able to discuss further options with their lenders - even the aggressive ones. Other options can typically include full/partial repayment holidays until the borrower can continue with their normal repayments, or changing the mortgage type/extending the length of the mortgage.

A recent announcement showed that the average home across the UK has lost £23,000 in value over the past year and it seems as thought this figure may grow substantially before we see economic improvements.

We have also seen a massive increase in the cost of living over the past year. Just think of the financial consequences! Also, if you multiply the number of homes in the UK by £23,000, you will see just how much has seeped away from the property sector over the last few months. Ouch.

Brits are realising the money making potential of their spare rooms, as mortgage lending constricts and mortgage rates are rumoured to rise again.

New research shows that 27,000 more homeowners have taken a lodger in the last year - an increase of 8.3%. The lodger population now stands at 477,000 and the number of live in landlords has increased from 324,000 to 351,000.

The lodging market sees an income of £2.3bn a year - £6,617 per lodger household. The research has shown that the average lodger's rent is £406 a month - this could cover more than half hte monthly mortgage payment on a £120,000 mortgage.

Savills have said that there is a strong correlation between changes in house prices and the number of divorces in England and Wales. Falling prices makes divorce less affordable, and as more equity is involved as the average age of splitting up is getting older, people are choosing to not go down the divorce route.

The Office of National Statistics said that the divorce rate in England and Wales is at a 26 year low, with 11.9 in every 100 of the married population opting for divorce.

The average age for a divorce is up to 43 in men and 41 in women. However, a poll commissioned by Mischon de Reya, a London law firm, suggested that a fifth of high fliers in London have been issued with divorce papers since the slump began. Bit of an opposite going on in the Capital it seems.

It looks as though the government may be forced to extend the £50billion asset swap deal announced warlier this year. The scheme was described as a major success, but rather than increase and support the level of mortgage finance available to the UK market, may banks have used the opportunity to bshore up their balance sheets.

An initial move has been made by the Council of Mortgage Lenders in the UK, with representatives visiting the treasury. They are begging the authorities to extend the scheme and revise the quality of debt which can be exchanged for government backed bonds.

Maybe this scheme will boost confidence? That's definately yet to be seen.

Following on from a recent post of what things could put off a potential buyer, research has also gone into what attracts buyers to their new home:

• A white front door - a survey by Co-operative found that a white door is most attractive, followed by red, blue, green and brown. Unpopular colours included pink, orange, yellow, purple and grey.
  
• A celebrity living next door - unless it's a less desirable celeb i'm assuming?
  
• A green home - Environmentally friendly, including double glazing, central heating, energy-efficient boilers, loft insulation
• A good school - According to Alliance & Leicester, they are the most important amenity for homebuyers. Newsagents and pubs were also sought after.
  

The list of what buyers look for can go on forever. After all, every buyer is different and have their individual specifications - the most important one would probably be a respectable price. Is the house you are selling value for money? If it is, it will more likely be sold than if you have over-priced it.

The HSBC 'rescue mortgage' carries with it a price. They are charging an arrangement fee of almost £10,000 for its much publicised Rate Matcher Mortgage, which is aimed at more than a million customers who are due to come off cheap fixed-rate deals this year.

It promises to match existing deals for a further two years, but revised fees mean that the maximum charge for new customers applying for a 4.79% deal on a £250,000 mortgage goes up from £5,000 to £7,699. But, for those customers on larger loans, the fees rise to a whopping £9,999.

HSBC said that they didn't have much choice but do this. If they didn't raise the fees, they would have had to have pulled the offer.

Normally, May is the month for mortgages, with many homeowners looking to secure their deal after the Easter break.

Not this year. May 2008 has seen a record nose dive in approvals due to the mortgage crisis - 28,000 mortgages were approved. This is 20% lower than April, and a massive 56% lower than May 2007.

Arrears seem to be set to creep higher during the rest of 2008 and 2009, and with the higher cost of living, could push many of the UK population into financial disarray.

They are increasing their mortgage costs for some borrowers who want to take out a new home loan. Anyone with only 5% deposit must now pay the arrangement fee of £2499 upfront, instead of just adding it to the sum of the loan. This is the latest example of lenders toughening their criteria when it comes to their lending.

Most borrowers now need at least 10% deposit, which will foce customers who are interested in the deal to save more money.

Abbey's choice of increasing their costs for people with less deposit shouldn't affect too much of their target borrowers, with only 3% of their lending being to this part of the market. Their only deal for borrowers who have 5% deposit is their fixed rate deal for five years, at 7.04%.

There is a new mortgage which Lloyds TSB has launched, which offers consumers the chance to earn airmiles as they repay their loan.

The offer comes on a range of 3 year fixed mortgages, starting at 5.89% for those with a 25% deposit (who have to pay £995 fee) and rising to 6.19% for those with a 10% deposit. People will receive 6000 Airmiles when they first take out the loan, and 50 per month for every month of the mortgage term. That means, that over a 3 year period, people can earn about 7800 Airmiles - the equivalent of a return flight to Barbados, Hong Kong or Delhi, or 5 return flights to Barcelona, Prague or Rome.

Although the rates are quite competitive, considering the Airmiles offer, there are better deals regarding interest rates, especially if you have don't have 25% deposit:

• HSBC has a 3 year fixed rate at 5.77% at up to 90% loan-to-value with a £499 fee
• The Post Office has a 3 year fix at 5.89% at up to 95% loan-to-value with a £599 fee
  

But, if you are a frequent flyer, it may be worth opting for the Lloyds TSB Airmiles deal, but be aware that, as with any other good sounding gimmick, it may be worth opting for a mortgage with a better interest rate, and pay for the flights yourself.