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  • Mortgages - HousePriceWiki
    mortgage over i e extend its term these are called Interest only mortgages Most of the mortgage types described below can come as interest only Do not be fooled these mortgages do not save you money in fact they cost you significantly more The banks job is to part you from your money Contents 1 Repayment mortgage 2 Variable rate mortgage 3 Tracker rate mortgage 4 Fixed rate mortgage 5 Self cert or self certification mortgage 6 Flexible Mortgage 7 Endowment Mortgage 8 See also Repayment mortgage This is the traditional mortgage each month you pay of the interest and part of the capital Recently these have been out of fashion however they are a good solid mortgage Variable rate mortgage A variable rate can change whenever the bank feels like changing it Tracker rate mortgage A tracker rate mortgage tracks the Bank of England base rate When the base rate goes up then the mortgage rate goes up by the same amount and vice verca Fixed rate mortgage A fixed rate mortgage is fixed for however long you agree the term of the fix This can be useful if you want piece of mind to know how much you are paying but you can often end up paying more unless the interest rate moves in your favour Self cert or self certification mortgage If you are self employed or can t prove your income then this mortgage is based on affordability It has been widely abused though and has played its part in driving up property prices Flexible Mortgage Flexible terms often meaning that you can take payment breaks and overpay on your mortgage repayments without penalty Endowment Mortgage With these mortgages you paid of the interest each money and also paid some money in to an investment fund

    Original URL path: http://www.housepricecrash.co.uk/wiki/Mortgages (2016-02-08)
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  • Savers - HousePriceWiki
    links here Related changes Special pages Printable version Permanent link Savers Housepricecrash Index Main Page House prices Differences in the house price indices First Time Buyers Buying a home Buying to Let Renting your home Mortgages Savings Investing Pensions Economics Topical Northern Rock Sub prime Credit Crunch Quotes Categories Keywords Articles People Savers are people who put aside part of their salary in to an investment Retrieved from http www

    Original URL path: http://www.housepricecrash.co.uk/wiki/Savers (2016-02-08)
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  • Investment - HousePriceWiki
    pension fund companies then have no choice but to go out and find property projects in which to invest in This is also the case for property unit trusts OEIC s and investment trusts At the time of writing April 2006 most of the large property funds are currently running and high cash levels of around 20 which is much higher than the long term average simply because there is too much money flowing into this asset class If you move down the scale to the medium size companies then the range of property investment becomes more diverse with more of a reliance on turning projects around quickly for a profit Many of these companies are looking for short to medium term returns on their investment rather that medium to long term Private developers Buy to Let This covers all the buy to let investors who either do this as a full time job or do it in addition to having a full time job and fit in developing around evenings weekends and holidays This is the area which has seen the biggest growth with the number of buy to let mortgage increasing from 120 300 in 2001 to a staggering 701 900 in 2005 This is without doubt the biggest factor in the current housing bubble which has been fuelled by the availability of cheap credit and low interest rates Secondary property investment It is also possible to invest in the housing market without getting your hands dirty There are a range of Unit trusts OEIC s Investment Trusts and various other property investment schemes to choose from You can also invest directly in the shares of house builders mortgage lenders or commercial developers Cash savings Cash can be invested in a wide range of savings account ranging from

    Original URL path: http://www.housepricecrash.co.uk/wiki/Investing (2016-02-08)
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  • Pension - HousePriceWiki
    and demands for compensation Gordon Brown dividend stealth tax robbed pensions of 5billion per year Longevity people are living longer but they still want to retire at 60 Stock market collapse Inflation can present a significant problem to savers as it can seriously erode the purchasing power of money It is for this reason that public sector pension schemes are index linked to the RPI not CPI For private sector pensions you need to read the small print to see if they are indexed linked Pensions come in many different forms at a high level pensions can be catergorised in to the following catergories State Pension Company Pension Personnel Pension e g SIPPS Final Salary Pension Scheme A final salary pension scheme pays out an amount of money that is linked to the average of your last few years salary The investment risk is born by the company as opposed to the employee The Final Salary Scheme was viewed generally viewed as a good pension scheme however it was killed of by Gordon Brown stealth taxes and the stock market collapse Provided the scheme is well funded then there is thus no risk for the employee If the company goes bankrupt and the pension scheme was not well funded then the employees may either loose all or some of there pension While Chancellor Gordon Brown introduced a new stealth tax that cost the pension funds 5billion per year This tax and the stock market crash resulted in a lot of companies final salary pensions schemes being closed Money Purchase Pension Scheme A money purchase scheme pays out an amount of money that is linked to the return on the investments The investment risk are thus born by the employee Public Sector Pensions These schemes tend to be final salary and

    Original URL path: http://www.housepricecrash.co.uk/wiki/Pension (2016-02-08)
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  • Economics - HousePriceWiki
    such that inflation as measured by the CPI is kept below 2 The combination of using the CPI as oppossed to the RPI and the actions of the US Federal Reserve lowering interest rates during every Financial Crisis has led to historical low rates and thus it has been easy to borrow money In the past ten years we have seen low unemployment with unusually low pay rises due to cheap Chinese labour and low interest rates however both taxes and real inflation as measured using RPI have been high The higher taxes being used to fund increased public sector spending which in turn have enabled public sector workers to bid up house prices To date the U K consumer has ignored higher taxes as the low interest rates have made mortgages appear cheap thus increasing house prices These high house prices then enable the consumer to borrow money MEW Thus the economy has been kept going by house price inflation increasing debt and public sector spending This boom to bust policy has now led to increasing inflation and thus increasing interest rates and declining affordability with the result that some sub prime mortgage borrowers are now unable to meet their repayments and are therefore having there homes Repossessed Due to this some banks have now lost a significant amount of money These bank losses have caused a loss in lending confidence resulting in the Credit Crunch and the bank run on the Northern Rock We are now at the top of the cycle with the affordability of house prices low The danger now is that the bubble will burst leading to a siginificant loss of capital and the misery of negative equity for thousands of people The US Federal Reserve has already cut interest rates however with both Sterling

    Original URL path: http://www.housepricecrash.co.uk/wiki/Economics (2016-02-08)
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  • Northern Rock - HousePriceWiki
    and high loan to valuation mortgages to low risk customers This is in contrast to some other lendors who were gradually tightening lending rules It is reported the NR had to borrow 23billion from the Bank of England In response to the House of Commons Treasury Committee NR stated that the target growth for NR had now been reduced The Bank could only continue to trade after the Bank run due to the loan from the Bank of England Employees At present NR is still trading and has not made any employees redundant However this may change if NR problems continue and thus the employees future is far from certain even thought they have not done anything wrong 75 of employees are also thought to own NR shares Savers See Financial Services Compensation Scheme for information on the level of protection savers have in the event of bankruptcy Note In the case of Nothern Rock the accounts opened prior to the end of the bank run have a special protected status as they are guaranteed 100 by the government However this is a fast changing situation so savers need to watch the news to remain up to date This was the first Bank run in the internet age The Banks web site crashed as savers rushed to withdraw their deposits further increasing anxiety In the response to the House of Commons Treasury Committee Adam Applegarth stated that the leaking of the news had removed the time the bank needed to improve the web sites bandwidth Northern Rock Foundation Northern Rock Foundation is a charity that is funded by donations from the Northern Rock Bank typically the funding was 5 of Northern Rocks pre tax profit It was founded in 1997 when the Northern Rock converted from a mutual organisation Building Society to a Bank Share Holders Share Price Bond Holders Northern Rock Share Price Between 2000 and January 2007 the NR share price rose 325 In January 2007 the NR share price stood at an all time high of 12 However between February and the end of August the price had fallen to 7 a decline of 42 as hedge funds started to short sell the stock on rising concerns of the effect of the Credit Crunch Following the announcement on the 13 September the shares fell to a low of 1 32 a 90 fall since January The announcement caught out savers and traders alike On 13 September one trader tipped Load up with NR for your children your mum your goldfish it is not going bust gives an interesting yield is cheap and is a realsitic takeover target buy it now Unlike savers there is no protection scheme for share holders and as such they stand to loose a significant amounts of money Shareholders still own the company and some are concerned that the government may force the company to be sold at a discount price similar to Railtrack in a fire sale Some big shareholders were pension

    Original URL path: http://www.housepricecrash.co.uk/wiki/Northern_Rock (2016-02-08)
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  • Sub-prime - HousePriceWiki
    which causes people to think that they can afford the repayments U S Sub prime Lending Sub prime lending losses in the U S caused the Credit Crunch The amount of money lent to U S sub prime borrowers was reported to be approximatly 600bn or about 20 of the total U S mortgage market As inflation increased the US Federal Reserve increased interest rates to try and keep inflation in check and the number of sub prime repossesions increased to around 8 This was not thought to be a problem as the 600bn sub prime loans only represented a small amount of U S GDP however the bankers via elaborate mechanisms had geared the original debt by a staggering ratio of 100 1 This debt was then sold around the world to institutions such as pension funds that wanted a low risk but high yield investment The problem was that many of these were really high risk but credit rating agencies had awarded them a low risk rating U K Sub prime Lending At first there was denial that the U K had a sub prime lending market however recent evidence proves that there is such a market and that it may be significant Sub prime lending is thought to account for about 8 of the U K mortgage market A recent investigation by the FSA found that many sub prime lendors failed to check that the borrower could afford the repayments some were on benefits Many sub prime mortgages seem to have been sold door to door to people who were renting there council houses and as such they thought it better to pay a mortgage than rent This ignores the risk that interest rates may increase as they are now doing due to the Credit Crunch This

    Original URL path: http://www.housepricecrash.co.uk/wiki/Sub-prime (2016-02-08)
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  • Credit Crunch - HousePriceWiki
    Bank Credit Crunch Explained Housepricecrash Index Main Page House prices Differences in the house price indices First Time Buyers Buying a home Buying to Let Renting your home Mortgages Savings Investing Pensions Economics Topical Northern Rock Sub prime Credit Crunch Quotes Categories Keywords Articles People In the simple old days a person would put their money savings in to a Building Society for safe keeping and be paid interest at say 5 A person wishing to buy a house would then borrow the money mortgage from the Building Society and pay an interest rates above that of which the saver was getting e g 6 However this made money scarce and thus people found if difficult to borrow money and thus were unable to buy expensive houses or cars they still bought them In the complex world of today the Building Society is a rare thing and instead we have banks These banks borrow money on the international money markets therefore avoiding the problem of needing a saver and lend it to the borrower The assumption being that the borrower will return the capital and the interest due on the loan However put very simply the US sub prime crisis has shattered the confidence of the foreign lender that they will get their money back and thus they are no longer willing to lend to UK banks who use the money to advance mortgages Thus the banks unless they can induce us to start saving again will only have a small amount of money to lend to people wishing to buy a house However we now have so much debt to repay we cannot afford to save Therefore it is vey likely that the amount of money banks lend for mortgages will reduce thus reducing the number of buyers in

    Original URL path: http://www.housepricecrash.co.uk/wiki/Credit_Crunch (2016-02-08)
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web-archive-uk.com, 2016-10-28