The Cheltenham & Gloucester Building Society has just announced that it will no longer help its existing clients in the current financial crisis. It has said that in future (from two days ago), when an existing client says they want to change from a repayment to an interest only mortgage they will not allow this to happen. Many advisers and commentators have said that this will leave many borrowers unable to help themselves to be responsible by reducing their mortgage payments in their time of need.

We believe this is irresponsible and unfair. Any existing client should be able to benefit from features of their mortgage which were available when they took it out until such time as they move lenders or change deals. To refuse this facility implies that C&G are giving advice, which they are not authorised to do – what is the FSA saying about this? As borrowers reach breaking point with their finances, C&G will be responsible for additional financial hardship to those clients in trouble and for any additional repossessions which may take place.

They have said in their statement that they will assist customers in the best way possible if they are struggling and deal with customers individually – why remove the facility of this is the case, especially if the client has a mortgage adviser who is in a far better position to advise the client than C&G?

Several buy to let lenders have recently withdrawn from the market place making the placement of buy to let mortgages extremely difficult. Several lenders have withdrawn their products for the time being, but with the demise of the Bradford and Bingley, Mortgage Express has had to withdraw probably permanently. Many others have released a severely reduced portfolio of products. 84% of all buy to let mortgage products disappeared yesterday!

However, it is not just the buy to let market which has been hit, as some 60% of all residential products have been withdrawn since yesterday.

For the time being, things look grim, and with no let up in sight, it could get a lot worse yet.

After the near collapse of the banking institution this week, HBOS, much of the market is concerned at the new “super bank” which has been formed under the umbrella of Lloyds TSB and whether it will help the floundering mortgage market.

On the first point, a super bank can not be good long term for the banking industry. Many feel that the Government was wrong to not refer the merger to the monopolies and Mergers Commission and that there will be mass redundancies and office closures in the future as it seems illogical to have so many banking halls in each high street owned by the same organisation. Obviously, reduced competition in the high street can only be a bad thing.

However, for the mortgage market, with some of Britain’s biggest lenders under the banner of Lloyds TSB (Halifax, Cheltenham and Gloucester, Birmingham Midshires), consumers about to re-mortgage could find deals are somewhat higher than expected as Lloyds now control much more of the market. With the additional collapse of the Lehman Brothers and a massive rescue package for AIG, it is expected that lenders will have to start increasing interest rates again, just after they have come down from the highs of this summer. This could work contrary to the Bank of England rate which is likely to come down in the near future as the bank tries to assist the economy.

The Nationwide Building Society is set to get bigger. The Cheshire and Derbyshire Building Societies are to merge with it which will strengthen their positions which have become come weak as a result of the current economic conditions. Interest rates associated with mortgages have not helped.

This is a purely business proposition and members of both building societies will be disappointed if they thought they may get a pay out: there won’t be one. This deal is designed so save both companies whose futures looked bleak without a merger.

As the credit crisis continues to deepen, more such mergers and takeovers must surely be on the cards in the future.

Fixed rate mortgages below 6% are available again after the rises see in the early part of the your due to the credit crisis. That said, it is possible to obtain mortgage rates below 5%, but you will wither be paying huge set up fees, or be subject to a tie in. Fixed rate mortgage are even more competitive (rate wise) that variable rates at the moment.

However, it may be that a fixed rate is not the best longer term proposition. If the Bank of England does reduce interest rates then you will be stuck. On the other hand, if rates increase as a result of The Bank’s commitment to reduce inflation, then perhaps fixing is the best plan. Difficult call! The mortgage market is likely to be unpredictable for a time to come yet, so care should be taken. Look at your budget: if you do not have the flexibility within it for rates to rise, then fixing would seem sensible. Never forget your overall budget. Make a budget, yes, but ensure it is honest.

It has just been announced that stamp duty will be suspended on residential property purchases up to the value of £175,000. This will take effect from tomorrow.

The word “suspended” in interesting in the statement released by the Government, as it implies that it is a temporary measure, but as the housing crisis continues to worsen, this can be seen as some form of help. The bad news is, it is temporary! This is a one year opportunity, which will expire on 3rd September 2009. So, if you are a first time buyer, and need to avoid stamp duty in order to get on the property ladder, then you need to move fast (assuming in the current crisis you can find a suitable property in the first place).

However, does it go far enough? With the average value of a property at a figure higher than that, and may parts of the country being substantially higher than that, the measures seem not to go nearly far enough. In a year’s time, we will merely go back to having the same problem as we currently do.

The Home Information Pack provider, Openbook has announced that it will be closing its doors to all new business from tomorrow. This is the second large HIP provider this month to go into liquidation which further underlines the state of the housing market.

This also draws into question once again, the whole concept of HIP’s. Most of these are being sold over the internet, and in order to be competitive, providers are having to slash their costs as consumers shop around. The margin for profit within them to the provider is reduced substantially, and thus leads to an unsustainable business model.

We predict that more could go the same way, unless they are diversified into other fields.

  The mortgage packager, Trustguard, has just been placed into administration with a view to winding up the business.  

This has happened as a result of the credit crunch and the mortgage crisis, but mainly as a result in the ever increasing difficulty mortgage advisers are having placing deals for clients with adverse credit histories.   They will not take any further business and most staff have been laid off.  

June saw house prices fall by just under 1%, which makes then nearly 6.5% lower than the same time list year, but the June fall is less than half of that in May. Although house prices are still higher than a couple of years ago, the number of mortgages being granted in June are substantially down on the same time last year. In fact, last month saw 64% fewer mortgages agreed when compared to the same time last year.

House prices themselves remain extremely high, with the average price of a property in the UK now standing at £172,000. There is currently no end in sight for the rate crisis as it remains expensive for lenders to lend money to each other and the public, so we can expect subdued activity in the housing sector for some time to come.

The next stage of the implementation of the Home Information Packs has suffered a further set back as the Government has delayed the 1st June deadline.

At the moment, vendor’s need only to have ordered their HIP in order to sell their property, without necessarily having the actual paperwork in their hands when they sell their house. The next stage of the implementation process was to have made it a legal requirement for a vendor to have had the documents in their procession when the house goes on the market. These rules will now be implemented at the end of this year.