House prices on the rise says Halifax - Published:24/11/07
House prices in the UK rose to their uppermost levels in six months, a situation attributed to demand outstripping supply and a strong economy, according to the latest Halifax House Price IndexThe index is the largest survey of home prices in Britain and it found that property prices had greater than before by 17 per cent during October and could result in the store of England raising the Base Rate to five per centAn average house price of £184,593 was reported which represents a rise of 86 per cent on the corresponding era last yearHowever, Halifax chief economist Martin Ellis stated: "Significantly higher utility bills and the add to in mortgage rates over recent months - both in fixed and variable speed products - are expected to limit housing demand, causing the annual speed of house price inflation to ease over the coming months"Halifax, the country's largest mortgage lender, found that the go up.
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Why Mortgage Affordability Matters - Published:27/10/06
The Council of Mortgage Lenders recently announced that the standard first-time buyer was now borrowing 324 era their income when attainment a mortgage - the highest income multiple level ever recorded But being obtainable just over three times your gross salary isn't much employ if you live in an area where house prices are rather higher than thatWhich is why more lenders are beginning to change their criteria when bearing in mind how much you can borrow Affordability is the key word rather than straightforward profits multiples - in other words, ability to pay backAccording to the independent research company, Moneyfacts, five of the top 10 mortgage lenders now employ 'ability to repay' in preference to profits multiples in determining the amount they are prepared to loan They are Alliance & Leicester, Halifax, HSBC, Nationwide and regal Bank of ScotlandFor example, someone earning £25,000 a year would, in usual situation, borrow £81,000 using the average 324 income manifold At a mortgage rate of, speak, 5% it'll cost £474 a month - nearly a third of their monthly income - over a 25-year word But if lenders work out a debt to income ratio, which as a rule of thumb should not go beyond 40%, then our homebuyer could have enough money a £105,000 mortgage with monthly payments of around £614 This is assuming they have no other debt, of courseSpread the payments over a 30day term and he could afford a mortgage of £115,000 for the same monthly outlay, again assuming they have no other amount overdue And they could overpay later on when they're earning more to shorten the term and diminish the interest hitThat's not to say that lenders still working on income multiples refuge't refined their criteria For instance, those on larger salaries, with a bigger deposit or in a professional job may be offered senior multiplesIn all cases though, just because a lender thinks you can afford a bigger mortgage doesn't denote you should put yourself in a position where you might overstretch yourself Remember, not only can interest rates go up as well as down but house prices can go down as well as up© Copyright 1998-2006, The Motley Fool Limited All human rights reserved This fabric is for personal use only The Motley Fool, Fool, and the "Fool" symbol are registered trademarks of The Motley Fool, Inc Legal Information Disclaimer solitude and Cookie.
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