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Mortgage deals are likely to get cheaper

People planning to remortgage or fund a house purchase may find that the deals on offer get cheaper over the coming weeks and months, mortgage industry insiders have said.

The release of the minutes of the April meeting of the Bank of England’s Monetary Policy Committee last week has quashed rumours of an imminent rise in base rate. This led to lenders including the Woolwich, Skipton and the Halifax cutting some fixed-rate mortgage deals.

“What is happening is that the money markets priced a more immediate Bank rate rise into the cost of mortgages. Now it seems that this may not take place until August or even next year. This is starting to feed through to rates,” said Brian Murphy, the director of the Mortgage Advice Bureau.

The downward pressure could continue, said Ray Boulger, the technical director of broker Charcol. “Fixed rates could go even lower. The market is still anticipating rates going up more quickly than they actually will. The fact that inflation went down rather than up last month was a bit of a game changer,” he said. The best-buy, five-year rate available though the Yorkshire Building Society is 4.19 per cent but Mr Boulger thinks even cheaper rates could soon be in the offing. “Fixed rates could get as low as 4 per cent,” he said.

But Mr Murphy warned against people gambling too much on rates going much lower. “We have seen as many people moving their mortgages to new providers as at anytime since before the credit crunch, and you can understand why. Rates, although there may be some downward moves over the summer, are abnormally low and those locking their rate in now are definitely getting the deal near the bottom of the market.”

Tracker mortgages are also becoming more keenly priced. David Hollingworth from London & Country mortgages said, “Mortgages that track the base rate for the lifetime of the mortgage are interesting at the moment. ING Direct and HSBC are offering lifetime tracker rates at just 1.85 per cent above the base rate and 1.89 per cent respectively, and that’s with no fee.”

Those with smaller deposits – such as first-time buyers – will also be cheered by the latest moves in the mortgage market. “Some lenders have cut their rates on higher loan-to-value mortgages – 80 or 85 per cent – more aggressively. This means the price differential between higher and lower loan-to-values has narrowed a touch,” Mr Hollingworth said. In particular, he cited ING Direct’s three-year, fixed-rate mortgage at 80 per cent LTV priced at 4.49 per cent with no fee.

Credit Report

We all love to enjoy good things in life. Fast cars, great clothes, wonderful vacations, all make our lives more enjoyable and refreshing. With credit, we can buy as many things as possible. We can buy things even when we do not have sufficient money or resources to pay for those things. It is here that credit can provide solution to the financial needs of most of the average consumers in their purchase decisions.Like all the things in life, credit is also good or bad depending upon how you use it. If used properly, credit can add greatly to your wealth and financial security. However, abuse of credit facility can also cause financial mismanagement and bring bad reputation. Use of credit for buying things which are perishable and which do not add value over a period of time is not a wise financial planning and should be avoided at all costs. Well all this blah blah is not taking us anywhere. Let us illustrate by way of an example.

Using credit to purchase perishable items such as gasoline, everyday consumables, dining or vacations is not a good use of credit as you are not creating any asset with it. Better uses of credit would include buying items which are though not perishable yet may depreciate over a period of time. These would typically include automobiles, household furniture, appliances, clothes and so on. The best use of credit is for things and assets purchases that actually appreciate or increase in value. For example, purchasing a home would be a good credit investment since its value is expected to rise over a period of time.
Whenever you want to buy things on credit, knowing how your credit report stands is important for being able to obtain good credit. All your major decisions such as buying a house, getting a car loan, getting a credit card etc. will depend upon your credit report. Your negotiating power and ability to obtain favorable terms and conditions will also to a large extent depend upon your credit report and credit history. Credit report in most of the cases is free and easy to obtain. You can also order it online from most of the financial websites, which are more than eager to help you in your efforts as any request for a credit report means a potential credit customer for them. In fact most of the financial websites and mortgage lenders offer instant credit report where you can fill an online form giving some of the vital details about your financial position and past history and you get the online credit report. This credit report can be used for obtaining mortgage loans and other forms of credit.

The underlying thing in the way things operate now is that credit is a way of life and can not be avoided if you want to enjoy good things in life at an early stage. This is true for most of us. While indiscriminate use of credit should be avoidable as it would lead to financial ruin and also adversely affect your credit report, prudent use of credit is the key to success. Your good credit report is in your hands. It all depends upon how you have managed your finances over a period of time. If you have managed well, a good credit report can add further to your wealth and financial well being.