My First Home Ltd.

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Editor’s Letter

Having waited over fifty years for interest-rates to decline to 2 per cent the UK population is not amused to discover the low levels of liquidity within the banking sector. Despite the Bank of England base rate surprise reduction of 1 per cent to 2 per cent, the Monetary Policy Committee (MPC) said that the past two months have seen a substantial downward shift in the prospects for inflation, and therefore judged that a significant decrease in the base rate was necessary now in order to meet the 2 per cent inflation target.

Adrian Coles, Director-General of the Building Societies Association (BSA) said,

“Homeowners will welcome the MPC’s decision to cut the Bank Rate by 100 basis points to 2%. However, not all mortgage borrowers will find today’s fall mirrored by their lender - building societies have to balance the interests of borrowers and savers. Although low interest rates are good news for borrowers, they are not so good for savers.

“Savers will be disappointed at today’s news. Building societies which “pass on” both this base rate reduction and the last could halve the interest which they pay to their investors in a very short period of time. A large proportion of the funds invested in building societies are held by those over the age of 55; building societies will wish to do what they can to protect pensioners from what will be, potentially, a very sharp reduction in their income.

“More generally, building societies have a number of factors which determine mortgage rates, some of them much more important than the Bank Rate. They include trends in money market rates, competition in the savings market, the requirement to fund their share of the Bradford and Bingley and Icelandic bank bailouts, and the returns which they earn on their liquid, non-mortgage, assets. In addition, some mortgages also have “collars” below which the rate may not fall”

The tried and tested machinery of banking has stopped. Banks do not trust the ability of other banks to pay back the loans they make one to the other, on the interbank capital markets. It is these loans usually at LIBOR (London Inter Bank Rate- interest rate paid by one bank to the other).

Traditionally these rates have been set at or below the Bank of England base rate, but in recent months it has been higher and by quite some margin. The LIBOR rate indicates the risk inherent in inter bank lending. The consequence from this well publicised problem is that the banks have effectively closed the capital markets.

Mortgage Lenders who relied on the long standing tradition of borrowing on the capital markets to lend out on mortgages, can no longer get access to these funds. The lenders are either closed to new business or charging fantastically high rates of interest and or fees, to try recover their position and rebuild their balance sheets.

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First Home Is Now Within Your Finger-Tips

For the first-time in several years a slow down of the Housing market, has resulted in house builders and developers having large numbers of homes waiting to be sold. To ease their slow moving stocks, they have begun offering buyers incentives and reduced selling prices considerably.

It has been well publicised, that many first-time buyers are struggling to get on the property ladder in the United Kingdom. With the commencement of the ‘home buying season,’ myfirsthomeltd.co.uk is launching ‘Service At Your Finger-Tips’ with the objective to further assist first-time prospective purchasers, onto the property ladder.

This service is designed to bring house hunters into direct contact with professionals within the industry.

We all lead such busy lives nowadays and it’s not surprising that we sometimes struggle to fit everything in. Home hunters finding their dream home is no exception. So whether you’re a first-time buyer too busy with work to look for your first home, an investor looking to expand your portfolio, or busy parents desperate for some more space, but struggling to find time to look between baby-sitting and raising your children.

First-time buyers registering with www.myfirsthomeltd.co.uk will have free access to our newsletters, magazines and information centre. Designed to make house hunting easier, enjoyable and rewarding, giving prospective purchasers:-

Updates on market news and consumer trends.
Alerts on forthcoming developments.
Information on new homes and developments.
Promotions and events…

Technology is transforming the way we search for our next home. Gone are the days when people’s property searches begin with the nose pressed against an estate agent’s

Window and hours spent browsing through publications and driving through neighbourhoods. For many first-time buyers, the starting point is instead the internet.

For a new experience visit: www.myfirsthomeltd.co.uk and register immediately via the following link: Service AT Your Finger-Tips

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