Buyers can now take out a mortgage for 130 per cent of the value of their home.
Mortgage Express, the specialist lending arm of the Bradford & Bingley Group, has released its Max 130 product to the whole of the UK, following successful trials in Northern Ireland.The new product allows homebuyers to borrow significantly more than the value of their property, with no higher lending fee, at a fixed or discounted rate.

Mortgage Express explains that the Max 130 mortgage is designed to meet the needs of people without a deposit, first-time buyers, and those in need of debt consolidation.
The extra money beyond the value of the property can be used for any legal purpose, including home improvements, capital raising and debt consolidation.”We are confident about the need for a product such as this, designed specifically for first-time buyers struggling to get onto the housing ladder, in addition to those looking to consolidate credit cards, personal loans, and second charges into one competitive loan,” said Roger Hillier, product development manager at Mortgage Express.

He added that the Max 130 can make repayments more manageable and might be better alternative for customers in the long term.The Max 130 is available at a three-year fixed rate of 6.49 per cent and a two-year discounted rate of 6.24 per cent (at current lending levels)

Mortgage payments mean people are not able to save for their retirement, according to a new survey by Yorkshire Bank.The bank found that 52 per cent of mortgage holders are afraid of a poor retirement, as mortgage payments prevent them from investing money for their future. Almost two in three (60 per cent) mortgage holders believe they will be working into their 70s save a enough for their retirement.

And one person in four (24 per cent) has no financial plans for their retirement at all.”Our research also shows that house price growth in recent years has resulted in many homeowners finding their mortgage commitment is leaving them with insufficient income to invest for their future,” said Gary Lumby, Yorkshire Bank’s head of personal financial services.”Affording to move up the property ladder has homeowners taking out loans that will see them repaying them up to, and in some cases beyond, retirement age, leaving them with little time to ramp up the money they can afford to plough into funding their retirement.”This problem has been made worse by the number of homeowners who do not have the time to make their finances run more smoothly.

Figures detailing property transactions in January show that the number of transactions fell by 18 per cent from December.However, in contrast to a year earlier, January’s transactions were down 29 per cent.These figures come from the Inland Revenue, following a report by the Royal Institution of Chartered Surveyors (RICS).”A break in interest rates since the last rise in August 2004 has provided a platform of stability which has given greater confidence to prospective buyers,” explained RICS’ economist, Milan Khatri.

“However, further interest rate increases cannot be ruled out. This would keep market conditions restrained throughout 2005.”The four interest rate hikes of 2004 seemed to have made their impression in the property market with the apparent decline in transactions.The main drop in activity occurred in the second half of the year as households faced a 33 per cent rise in mortgage costs over just one year.

The credit card industry has rejected claims by Which? that it is rife with underhand practices and hidden charges.A spokesperson for the Association of Payment Clearing Services (APACS), Sandra Quinn, said Which?’s comments are out of date.Speaking yesterday she denied that credit card firms are levying unfair charges against consumers. “Late payment charges and over limit fees are to compensate the banks for the costs that they incur in those fees in charging customers,” Ms Quinn said.Richard Mason, director of price comparison website moneysupermarket.com, added: “Many of the providers’ ‘bad practices’ are slowly being dealt with by the industry.”But he conceded some of Which?’s underlying points.”

As the market for personal loans and credit cards has become increasingly competitive and robust in recent years with many lenders battling for market share, more low-rate deals for the consumer have been on offer than ever before. “The downside of this has been that providers have tried to claw-back profits through other avenues instead - such as expensive payment protection insurance and hidden charges.”According to Which? the credit card industry makes around £427 million a year from charging consumers who pay late or go over their credit limit.

The consumer watchdog also estimated that the personal loan industry makes £1 billion a year from selling payment protection insurance.Ms Quinn countered charges made by Which? that the credit card industry was profiteering from theses charges, by saying card providers were not “making any profit out of” the charges.

Interest rates look set to stay on hold this month, as business leaders urge the Bank of England to consider weakening economic data.Since November last year the Bank of England’s interest rate setting Monetary Policy Committee has increased the cost of borrowing five times from 3.5 to 4.75 per cent.

However, since August rates have been held at their current level. Over that time the booming property market has ground almost to a halt and oil prices have hit record highs.The CBI has now said given these factors interest rates should be frozen until consumer confidence returns.It has been joined in its calls by the Engineering Employers Federation (EEF), which reports that confidence among manufacturing companies has dropped sharply.”The coming three months are expected to see a cooling of activity [in the service sector] but firms will be hoping that Christmas spending exceeds their expectations. Interest rates must be held until confidence returns to the economy,” said Ian McCafferty, the CBI’s chief economic adviser.

EEF chief economist Steve Radley went further, suggesting a rate cut might be needed: “The Bank of England should leave rates on hold until well into the New Year and, if the current dip in confidence translates into a renewed manufacturing downturn, respond by cutting rates.”

A majority of buy-to-let property owners, developers and intermediaries have said that they are confident in the market and plan to take on more properties. Confidence is remaining high due to the combination of increasing numbers of tenants looking to rent, the potential for a fall in interest rates, and the capital appreciation that is expected on buy-to-let properties.

Research carried out by the Association of Residential Letting Agents (ARLA) shows that returns on buy-to-let commercial mortgages stand at 22.4 per cent, while Mortgage Trust has found that most buy-to-let intermediaries expect the market to grow.However, the ARLA has reported revenue falls throughout the sector: seven per cent for houses and five per cent for flats.

Robert Jordan, president of the ARLA, said: “A large proportion of experienced buy-to-let landlords are clearly at odds with some of the commentators.”These real investors in the rental market understand both the long term nature of the investment and its resilience in the face of house price movements.”Mortgage Trust’s monthly buy-to-let intermediary forecast found that 69 per cent of intermediaries expect to do more buy-to-let business in the next three months than they have in the last three, with just one in eight expecting to do less.

Close to half (48 per cent) of this new business is set to come from existing landlords increasing their property portfolios, Mortgage Trust found. A third of the new business is predicted to come from remortgaging existing properties.

One in four first-time buyers is finding that stamp duty land tax is a “major obstacle”, Alliance & Leicester has revealed.Barring some exceptions, stamp duty is paid on properties worth more than £60,000 at a rate of one per cent. This trebles on houses costing more than £250,000 and for properties worth more than £500,000 purchasers pay four per cent.

Without exception all properties sold worth more than £150,000 incur stamp duty.As a result of rises in house prices, four times as many first-time buyers are being affected by the tax, which last had its lower threshold raised more than a decade ago, Alliance & Leicester found.The average house in the UK currently costs £162,086, Halifax has revealed today, however the £60,000 stamp duty threshold was set in 1993, at which time the average house price was £62,000.
Alliance & Leicester surveyed the people who bought their first property in the last 12 months, and discovered that half of them realised that stamp duty was an additional expense only after beginning the mortgage buying process, meaning it had not been factored into their plans.A quarter of first-time buyers found stamp duty could delay their attempts to purchase their first home when they were shopping around for their mortgage, the bank added.”Alliance & Leicester’s findings show that the cost of stamp duty is a real issue for first-time buyers.

There are more than four times as many first time buyers today who view stamp duty as a challenge to buying a home, compared with 30 years ago,” said Stephen Leonard, director of mortgages at Alliance & Leicester. When the bank looked at the people planning to get onto the property ladder in the next 12 months, it discovered that 63 per cent had not even thought about stamp duty, with one in three not knowing what it was.

Hopes of a cut in interest rates were raised today, following the publication of the Bank of England’s Monetary Policy Committee minutes.Earlier this month the Monetary Policy Committee decided to keep interest rates on hold at their three-year high of 4.75 per cent, and today the reasons behind that decision were released.The minutes of the December meeting show that a cut in interest rates was discussed then.

While none of the nine-member committee felt the time was right “to make a persuasive case for a reduction [in interest rates]” then the fact cuts were considered is significant, according to Simon Rubinsohn, chief economist at wealth management firm Gerrard.In the wake of the Bank’s decision economists, banks and mortgage brokers said they expected interest rates to fall. In the ten months leading up to this August the Bank of England tried to bring inflation under control by raising interest rates five times.This saw mortgage repayments increase by as much as ten per cent, HBoS has said, but a brighter future could now be in store for mortgage lenders.After four successive meetings of the Monetary Policy Committee where no rate change has occurred, many people now believe the period of rising interest rates is at an end.

This optimism was undermined last week when figures for inflation, the economic indicator that the Bank of England tries to control by raising and lowering the cost of borrowing in the UK, came in ahead of expectations.But the details of the minutes of the Bank’s December meeting have raised hopes again that the cost of borrowing in the UK could be set to fall for the first time in more than a year.

Shoppers are being encouraged to take out a personal loan instead of using store and credit cards.Research by the Yorkshire Bank found that instead getting a bargain, customers taking advantage of offers during the sale season actually end paying a significant price if they do not realise the real costs behind the different ways they choose to fund their purchases.

This is especially problematic as many shoppers plan to buy expensive “big-ticket” items such as a new kitchen (23 per cent) or bathroom suite (16 per cent) and many plan to put the cost onto credit or store cards or use shop finance packages.Yet of the people polled six out of ten people (59 per cent) admitted they are unable to pay off their store card each month, with the result that the longer they take to pay for their sales bargain, the more it actually costs them.Gary Lumby, Yorkshire Bank’s head of personal financial services, said: “If you do not have a budget in mind before hitting the sales then the ’spend now, worry later’ mentality can prove extremely expensive.”Store cards can be ideal for shoppers who can meet their monthly bills.

However, if you can’t and the high rates of interest start kicking in, they can prove real problems with some shoppers paying far more for products than they originally were before the sales.”

A leading high street bank has issued debt and credit card advice to help consumers manage their personal finance during the Christmas period - and beyond. The Co-operative Bank is offering consumers suggestions designed to help them avoid a festive financial hangover.

Short-term advice consists of not letting debt build up during the Christmas period - it won’t go away by simply forgetting about it. The Co-op also advises that consumers could benefit from checking out consolidation loans as a way of getting a better debt management deal. If consumers have problems in controlling their credit cards - hide them - that way there is no chance of adding to debts that may already exist.Long-term financial solutions are also important; the Co-op states that by working out a budget consumers can accurately assess their income and expenditure.

Sheila Macdonald, chief operating officer at the Co-operative Bank, said: “People often make resolutions at this time of year, and it is the perfect time to make some serious decisions about your financial future.”Taking simple steps, like transferring to a credit card provider that offers a cheaper borrowing rate than your existing provider will save you money if you don’t pay off your balance every month.”