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.

The crisis within the UK mortgage market is getting worse as the credit crisis deepens. This has meant that lenders have been increasing their mortgage interest rates, increasing the amount of deposit required from first time buyers and higher risk areas of the market (such as self certification), and changing their credit scoring criteria to make it more difficult to obtain finance unless you have a really squeaky clean record. Added together, this means that fewer mortgages will be granted in the coming months.

Some lenders, like First Direct, have now withdrawn from the mortgage market whilst they put their house back in order. This was brought about largely as a result of them not putting their rates up as their rivals did and as a consequence they took on too much new business. Newbury Building Society has closed its doors temporarily to new business, as has the Co-Op who have withdrawn all of their short term fixed rates.

The mortgage market will be difficult in the coming months. However, taking an independent view of whole of the market via a good independent adviser could well still open up lenders who have a product to suit your need.

One of the countries leading experts has predicted that house prices could fall by as much as 20% over the next two years. However, he is not on his own, as other major players within the property market tend to agree. He goes on to say that although these figures look gloomy, they are unlikely to impact on the wider economy, and he feels that a recession is equally not likely.

We have know that house prices in this country have been over inflated for a long time, so a reduction by this amount should be seen in that light as opposed to a disaster in the housing sector. This could signal a sign of better things to come for the poor first time buyer who has been disadvantaged for some years now.

Mortgage lenders are being criticised over their recent decision to further disadvantage the first time buyer market by withdrawing mortgages which would allow the borrower to borrow more than the value of the property they are trying to purchase. The fact that first time buyers are being further squeezed out of the market will do nothing to improve things within the market as a whole.

Mortgages at 125% of the purchase price are now a thing of the past, but as more and more deals at 100% plus are also being withdrawn, the future is not so bright for the first time borrower. This in turn may further undermine a weakening housing market.

We are all aware that house prices have been steadily (and in many parts of the country, not even steadily!) rising in recent years. However, this has had the effect of meaning that a greater percentage of a person’s income is assigned to covering their mortgage payments. By the end of last year, a typical first time buyer was giving up just over 20% of their income to cover mortgage interest payments (interest, mind you, with no capital repayment). Although a reduction in mortgage interest rates will help to alleviate the issues surrounding credit debt and so on, unless house prices come down substantially, first time buyers especially will continue to have relatively little disposable income after paying their mortgage each month. Being stretched at the moment with their repayments is bad enough, but if interest rates were to go back up again, the current credit crunch will be made to look like a picnic.

The Bank of England has just announced that the Base Rate will be reduced from 5.5% to 5.25%. This cut has been widely predicted, but is not perhaps as aggressive as some may have hoped for. The United States has recently slashed its rates, but in light of rising prices this side of the Atlantic, the Bank said it needed to take a more balanced view. Although close to its target, inflation is expected to rise in the coming weeks due to higher food and energy costs.

As far as mortgage lenders are concerned, there is no guarantee that the rate cut will actually be passed on to their clients. There is no compulsory stance on this, but it is likely that most lenders will pass on the base rate reduction.

For those who have invested their savings into the buy to let market, it seems that last year will have given great rewards. There are more and more people seeking rental accommodation to live in as they are unable to obtain a mortgage or find a property they can afford to buy, which has had the effect of pushing up rental income. Landlords must be feeling rather pleased with themselves.

Rental income is said to have risen by nearly 20% last year which will have increased the rental yield to over 6% for the first time in more than a year. The flip side of this is that the public, who are currently renting as they can not afford to buy, are spending more on their rent, and thus reducing the amount they are able to save for a potential future mortgage. Professional landlords seem positive about the future of the buy to let market.

The Government has just published new guidelines which are designed to completely overhaul the process of obtaining local authority searches. Currently, the process can be expensive and time consuming, which makes it poor value for money.

However, the future is set to produce these searches much more quickly to the tune of one working day! This will come at a cost, but it will substantially quicken up the conveyancing process. This will even have the effect of providing continuity between local councils as some currently take far longer than others in producing the search results. Search companies often have to take out insurance as they are unable to access the information held by local authorities, but this insurance cover will also become obsolete.

All this should mean that information on the properties in question would be available much quicker, and the cost of obtaining this information should also come down.