Home loans resume at First Direct - BBC News

First Direct, portion of the HSBC banking group, have started merchandising mortgages again to new customers, six hebdomads after it called a impermanent halt.

It stopped offering them on 1 April after being deluged by new appliers as the mortgage drought took hold.

Meanwhile the Halifax have go the up-to-the-minute large loaner to cut the involvement rates on some of its mortgage deals.

From Wednesday it will cut down some offerings by 0.15%, but only for existing borrowers seeking to re-mortgage.

Last week, two of the UK's greatest mortgage lenders, the Abbey and the Nationwide, made flimsy cuts to the involvement rates on some of their place loans.

These were early marks of a possible moderation in the United Kingdom mortgage market, which have shrunk dramatically because of the recognition crunch affecting the banking system.

"Our terms reductions, for existing clients only, are on both our mediator and subdivision based ranges," the Halifax said.

"These terms decreases reflect a recent, modest, decrease in the still very high cost of Libor related funding."

Backlog

First Direct was the first depository financial institution to retreat its full mortgage scope to avoid being swamped by new business, but it said it could now manage new applications after glade its backlog.

Chris Pilling, First Direct's head executive, said his staff had processed a year's worth of applications in just three months.

"Last calendar month we took the bold determination to retreat from mortgage gross sales to non-customers to let us to procedure the immense figure of questions we had received," he said.

"We've now assessed all the loan applications outstanding from 1 April and earlier and allow everyone cognize the outcome," he added.

More recently though, First Direct's parent group, HSBC, have been taking a large share of the marketplace for new mortgages though its Rate matchmaker offer.

This have been pitched at people who are trying to travel their loans from other lenders, such as as the Northern Rock.

It offers to fit their expiring fixed rates and, according to the bank, have attracted four modern times the figure of questions that it would normally receive.

The trade have been extended to the end of June.

Fewer transactions

As a consequence of the recognition crunch most loaners have got got been rationing their loaning by withdrawing existent mortgage trades and pushing up the terms of the remaining loan bundles they have on offer.

Typically, borrowers are now being asked to pay higher involvement rates and to set down sedimentations of at least 10%.

The Depository Financial Institution of England have sought to ease the state of affairs by making millions of lbs available to commercial Banks in the word form of particular loans.

But on Monday there was a warning that the recognition crunch and mortgage squeezing were far from over.

The Royal Institution of Chartered Surveyors (Rics) warned that the figure of place gross sales this twelvemonth might fall by 40% arsenic new borrowers happen it impossible to raise the money they necessitate to purchase a house or flat.

Prices are widely reported to be falling and industry figs have got shown that mortgage loaning for house purchasers have already fallen to its last degree for 33 years.

HSBC U.K. Unit Halts Home Loans as Applications Soar (Update3)

First Direct, the British online and
telephone banking unit of measurement of , suspended mortgage
lending to new clients after a low-rate home loan caused
applications to lift fivefold.

The Leeds, England-based unit of measurement of Europe's greatest depository financial institution by
market value received more than applications than awaited after
other loaners withdrew merchandises and increased the cost of loans,
said spokesman today.

''It's A impermanent backdown for a substance of hebdomads until
we clear the backlog of applications,'' said Skinner. ''It is
not about funding, but about client service.''

The figure of mortgage merchandises in the U.K., including
residential, landlord and subprime loans, have declined by 66
percent to 5,272 since July, according to , the
price comparing provider. Both mainstream and subprime lenders
have withdrawn products, said spokeswoman .

First Direct offered a 4.95 percentage two-year fixed rate
deal, described as ''market-leading'' side , senior
technical director at mortgage agent The most
competitive trades are being swamped as the scope of mortgages
declines, he said.

Mortgage suppliers like , the
U.K.'s greatest customer-owned home lender, have got also cut the
mortgage merchandise range. On March 27, the company said it would
stop offering four of its two-year loans.

U.S. Subprime

In 2003, HSBC bought Prospect Heights, Illinois-based
Household International for $15.5 billion, which lent directly
to clients with subprime status. It have since trimmed lending
at the unit, closed trading operations and ousted direction following
an addition in delinquencies. Bad loans worldwide rose to $17.2
billion in 2007 from $10.6 billion a twelvemonth earlier.

HSBC 0.5 percentage to 865.5 pence in Greater London trading,
against a 2.2 percentage rise in the .

First Direct, which have 1 million customers, said borrowers
seeking the 4.95 percentage two-year offer can obtain a mortgage
from HSBC, which offers a similar loan at 4.99 percent. First
Direct's existent mortgage clients are unaffected.

''We are going to see more than loaners looking for ways to
restrict lending,'' said Boulger. ''First Direct have got got a market-
leading merchandise and they would have had to set the terms up a
long manner to have an impact.''

U.K. mortgage blessings dropped close to the last level
in nine old age in February. Sir Joseph Banks granted 73,000 loans for house
purchase, compared with 74,000 in January. That was close to the
fewest since records began in January 1999, the Depository Financial Institution of England
said in Greater London today.

Royal Depository Financial Institution of Scotland Group Plc and its NatWest unit
became the first loaners this twelvemonth to raise their variable
mortgage rates for existing clients from today, the Financial
Times reported earlier.

To reach the newsman for this story:
in Greater London at

Dwindling mortgage options leaves Bay Area home sales mired in misery

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Bay Area place gross sales limped along at a decades-low pace in October, as purchasers continued to happen few mortgage options.

A sum of 5,486 new and existent houses and condominiums changed custody last month, down 35.7 percentage from October 2006 and the last gross sales count since at least 1988, the twelvemonth existent estate research house DataQuick first began tracking the market.

Sales of existing, single-family homes in the nine counties that touching the bay slid 41.3 percent, from 5,761 last twelvemonth to 3,384 in October, the house reported Thursday.

Although it was the 33rd calendar month in a row of year-to-year sales declines, the marketplace have been slammed in recent calendar months by a tightening in the mortgage market, which is making place loans harder to come up by and more than expensive.

Of peculiar concern in the high-priced Bay Area lodging marketplace is that the figure of elephantine loans, or those over $417,000, have slowed to a trickle. This summer, after higher defaults in the subprime sector - where mortgages were given to people with chancy recognition - investors stopped buying elephantine mortgages, leading purchasers to walk away from trades or avoid the marketplace altogether.

"We don't have got liquidness in the marketplace, and that's creating a driblet in marketplace value because people can't fold on a purchase," said San Francisco mortgage agent Leon Huntting.

According to DataQuick's analysis, the figure of places purchased using elephantine loans tumbled 50 percentage between July and October.

Price information demo a bifurcated market, with lessenings in many of the counties outside the region's urban core. For instance, in Solano County, the terms for a detached place plunged nearly 18 percent; in Sonoma County, the median value dropped nearly 12 percent.

On the impudent side, terms in Santa Clara County and San Francisco were up 7.4 percentage and 4.3 percent, respectively. Even in those submarkets, however, DataQuick analyst Saint Andrew LePage and others state the image is mixed. Gross Sales at the higher end of the marketplace are relatively lively compared with the less end, helping to pull the overall median value higher.

For all existent places in the Bay Area, the median value paid in October was $685,000, up 3.8 percentage from $660,000 in October 2006.

"Housing marketplaces stopping point to the seashore and occupation centres are holding up much better than in inland countries farther away from jobs," LePage said.

Vacaville, in eastern Solano County, was long an low-cost option for place purchasers who didn't mind a long commute to the interior Bay Area. But that marketplace have changed substantially within months.

Larry St. John, proprietor of an coverage brokerage, bought a place for more than than $900,000 early this twelvemonth in a new development on the city's northwest side. This weekend, St. Toilet said the detergent builder - DeNova Homes - is planning an auction bridge of more than than a twelve similar homes, with starting commands about $300,000 less than what recent purchasers paid.

"This is huge, this is our greatest investment," said St. John, 32, who have lived in Solano County his full life. "I can understand a corporation pickings losings to remain in business, but an individual taking a $300,000 hit is not something I have got got got the capacity to do."

As a householder in the Bay Area, "every couple of old age you have an chance to refinance and make some improvements and still have equity," St. Toilet added. "That doesn't go on calendar calendar month to month, but every few years. If you're starting off from a place of negative $300,000, that takes more than than than a few old age to rectify."

Unlike in other lodging downturns, when gross sales and terms slackened first near occupation centers, this moving ridge have rippled from the outside in - from countries with more plentiful land for building. In many of those communities, foreclosures are soaring and the purchasers who are willing to take the dip have got dozens of choice. But the rectification isn't limited to far-flung suburbs.

Last week, 44 places were repossessed by loaners in Santa Clara County, according to Richard Calhoun, proprietor of Creekside Real Property in San Jose. If that continues, Calhoun estimations one-half of all existent estate minutes in Santa Clara County could soon be made up foreclosure sales.

"If it acquires to that point, loaners are going to begin controlling the prices," Calhoun said. "Anyone who states that foreclosures aren't going to impact the Santa Clara lodging marketplace is crazy."

E-mail Emmett Kelly Zito at .

U.K. Banks Raised Two-Year Mortgage Rates in October, BOE Says

U.K. Banks raised involvement rates on
two-year mortgages in October as they passed higher recognition costs
onto the most popular type of loan used by homebuyers, Depository Financial Institution of
England information show.

The norm charge per unit offered by loaners on a mortgage for 95
percent of the terms of a property, fixed for 24 months,
increased to 6.37 percentage from 6.32 percentage in September, the
central depository financial institution said today on its Web site. The information show the cost
of all other types of two-year home loans also rose.

The study proposes Britons, already struggling to pay
record debts, will necessitate to stretch along their finances additional to buy
homes whose values have got tripled in the past decade. Borrowing
costs are climbing after five interest-rate additions by the
Bank of England and a leap in loaning rates between Banks caused
by contagious disease from the U.S. subprime mortgage slump.

''This was always the hazard that in the current financial
environment, mortgage involvement rates would turn out gluey relative
to their equivalent adulthood barter rate,'' said Saint George Buckley,
chief U.K. economic expert at Deutsche Depository Financial Institution silver in London. The report
''suggests rates are gluey on the downside.''

Today's information shows mortgage rates are still rising even as
the cost of funding two-year loans have fallen. The charge per unit on a
two-year interest-rate swap, which loaners can utilize to hedge
against rising involvement rates, drop to 5.5595 today in London,
the last since March.

To reach the newsman on this story:
Brian Swint in Greater London at

Mortgage Lender Halves Dividend After Reporting Loss

, ache by mounting delinquencies and a collapse in demand to purchase its place loans, posted a quarterly loss yesterday that was more than than five modern times what it had projected.

The company, one of the biggest independent United States mortgage lenders, halved its dividend, as expected, and said another cut would be possible if it kept losing money.

"It's going to be a tough year, twelvemonth and a half," the head executive, Michael W. Perry, said in a conference call.

IndyMac shares closed down 28 cents, or 2.2 percent, at $12.49, after the company said it had enough liquidness to sit out the lodging slump.

The third-quarter nett loss for the company, based in Pasadena, Calif., totaled $202.7 million, or $2.77 a share, in direct contrast to a year-earlier profit of $86.2 million, or $1.19 a share.

Excluding items, the loss was $2.74 a share, according to Estimates, six modern times the analysts' norm prognosis for a loss of 46 cents. On Sept. Seven IndyMac had prognosis a loss of up to 50 cents a share.

IndyMac, the parent of IndyMac Bank, one of the nation's biggest nest egg and loans, joined and 's Residential Capital among big independent loaners to describe large quarterly losses.

The nest egg and loan used to specialise in Alt-A place loans, which often travel to people who cannot fully document income or assets.

As investors stopped buying these loans, IndyMac transformed itself to stress smaller, safer loans that the government-sponsored enterprises and would buy. Countrywide did the same, and GMAC have also sharply cut its volume of lower-quality loans.

IndyMac reduced its quarterly stock dividend to 25 cents a share from 50 cents. Mr. Perry, the head executive, said another big cut would be "prudent" if IndyMac was not profitable in the 4th quarter.

Not all adjustable home loans are created equal

Editor's note: Robert Bruss is temporarily away. The following column from Bruss' "Best of" collection first appeared Sunday, April 16, 2006.

DEAR BOB: In a recent article you said, "Now you know why I never recommend negative-amortization adjustable-rate mortgages (ARMs)." Does that mean you changed your advice? I recall your many articles recommended the COFI (cost of funds index) ARMs, which have negative amortization. --Tom C.

DEAR TOM: ARMs that use the COFI do not always have negative amortization where the borrower's monthly payment increases slower than the interest index increases. The result can be the unpaid interest is added to the mortgage balance, thus creating negative amortization.

Purchase Bob Bruss online.

I have never recommended negative-amortization ARMs. Personally, I have had several COFI adjustable-rate mortgages that didn't have negative amortization.

The key question to ask is how often the ARM monthly payment and the index change. If the index rate can change faster than the borrower's monthly payment changes, then negative amortization results, thus increasing the mortgage balance by the unpaid interest amount.

I have not changed my viewpoint. I do not recommend negative amortization ARMs, which can be a very bad deal, especially when the home buyer made a low- or zero-cash down payment.

CAN THREE OWNERS EACH QUALIFY FOR $250,000 HOME-SALE TAX BREAK?

DEAR BOB: I read in your column that two principal residence co-owners (who are not spouses) can each qualify for up to $250,000 of tax-free sales profits under Internal Revenue Code 121. Can three owners of one house qualify? Would $250,000 be available to each co-owner, or is $500,000 the maximum exemption per home sale? Is there any limit to the number of co-owners who can qualify for this tax exemption? --John S.

DEAR JOHN: There is no limit in Internal Revenue Code 121 to the number of $250,000 principal residence sale exemptions if each co-owner qualifies.

However, when the co-owners are not husband and wife, then all their names must be on the title at least 24 of the 60 months before the sale and the property must be the principal residence of each owner for the required 24 of the last 60 months before sale.

An example would be three sisters who own and occupy their principal residence for the required minimum time before selling, thus qualifying for up to $750,000 tax-free sales profits. For further details, please consult your tax adviser.

DON'T GET A REVERSE MORTGAGE UNLESS YOU EXPECT TO LIVE IN THE HOME AT LEAST FIVE YEARS

DEAR BOB: I am way over 65 and live in my condo that is worth around $300,000. The life expectancy of males in my family is only 50 years. I am considering a senior citizen reverse mortgage, or I might sell my condo and invest the sales proceeds. Which option do you feel is best for me? --Wally D.

DEAR WALLY: If you are in reasonably good health for your age, and expect to remain in your home for at least five years, I suggest you seriously consider the benefits of a reverse mortgage.

The reason you should plan to stay in your home at least five years is to amortize the reverse mortgage up-front loan fees. To illustrate, if you are in poor health with a life expectancy of two years, a reverse mortgage would not be a smart decision.

More details are in my special report, "The Whole Truth About Reverse Mortgages for Senior Citizen Homeowners," available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at . Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his ).