Michael Knight’s Blog

in a recent mortgage review meeting, my client revealed that he had enquired with 4 or 5 estate agents as to the possible selling price of his property. He bought it 2 years ago for just under £100,000 and has just received market appraisals ranging from £95,000 to £120,000!! Looking on several valuation sites, I think the value is very much at the bottom of those quotes bearing in mind prices have fallen year to date by 14%.

My question is: how do estate agents value a property - do they use evidence or simply stick a finger in the air!!

No wonder estate agents suffer from poor public perception, perhaps professional qualifications would help.

Call me on 0845 0291962 or email at mike@bartonmortgageservices.com

The widespread reduction in lender standard variable rates today following the Bank of England drop of 1.5% yesterday could mean mortgage brokers having little or no role in todays market. If the cheapest products in market have no set up costs or early redemption charges and can be easily sourced on the internet, then why should customers use a broker?

As it happens, I think there is still a purpose for brokers - not everyone is a perfect fit for prime providers and in todays market, even a small blip on your credit record can put you out of the running. That and the requirement of a significant deposit still makes it a minefield for the unsuspecting customer.

First-time buyers are particularly vulnerable and tend to be overwhelmed with all types of insurances they either do not understand or need.

Taking your insurances via a lender tends to be expensive as they only offer their products and in a lot of circumstances you are dealt with by an inexperienced clerk who is heavily targetted to sell all insurances regardless of need.

Brokers tend to be more experienced and in it for the long run - we’re not going anywhere and rely on providing a high level of personal service to get repeat business.

Support your local broker, you need their expertise and advice! Call me on 0845 0291962 or email at mike@bartonmortgageservices.com

With permission from Paul H, his remortgage completed last week - base rate tracker plus 0.99%. When we were discussing options, his repayments were scheduled to be £914.80. With base rate dropping to 3%, his repayments will actually be £817.81, a drop of £96.99!! It would have been more but Paul’s term is only 17 years.

I have advised Paul to keep payments at the original level so he immediately will be speeding up eventual repayment of the mortgage.

One happy customer!!!

No!

At least, not for while.

You won’t find me in this position many times but the lack of understanding about how mortgage rates are set dismays me. In the past, bank base rate has been a governing factor in guiding mortgage rates as it has been slightly above that at which banks lend to each other e.g. LIBOR. This has changed and has been until now some 1% higher.

LIBOR will not drop to 4% any time soon so you will not see mortgage rates at similar levels (unless you’ve got a great existing tracker deal) for a while yet.

Commentators have perpetuated the myth that banks work in OUR favour and owe us a drop in rates. We must remember that banks operate SOLELY to make a profit for themselves and their shareholders. The fact the majority have taken OUR money to bail them out of difficult circumstances is irrelevant. The sooner they can pay off the payments they have taken, the sooner they can get back to spending their money as they see fit.

Rant over, jolly frustrating for all of us on fixed rates but good luck to those with competitive tracker products.

The Monetary Committee announce today a massive drop to base rate by 1.5% to 3%. This reflects the panic running through the Government that recession will quickly move into depression and backs up the US Treasury dropping their base rate to 1% a short while ago. Whether or not this drop will be enough to give the electric shock required to the UK economy and spark a recovery remains to be seen.

Many economists belive that base rate could dive to as low as 2% in 2009 as the global credit squeeze takes further hold with potentially an uplift in 2010.

We will have to wait and see what happens - this confirms we’re in deep trouble, let’s see what the sheep in the stock market do!!