Car Insurers Debate Over Future Profits

UK car insurers have been running an unprofitable business for 14 years. Independent market analysts, Datamonitor, say 2009 looks to be a profitable year despite the doubts

March 13, 2008

Budget Report Expectations

Chancellor Darling's Budget Report is expected to raise taxes on alcohol, fuel emissions, flights and many other issues concerning the economy. Tax burdens expected to increase on poorer families

March 12, 2008

Card Fraud Rises Again

Card fraud has increased over past year. Whilst chip and PIN technology has been successful in the UK, criminal activity overseas has increased 77 per cent

March 12, 2008

Tax Cuts Needed To Restore Confidence

Appeals for corporate tax cuts are submitted to the Treasury as it prepares its Budget report this Wednesday. Business and banking sectors are worried about the direction of the UK economy

March 10, 2008

First Time Buyers Take Hit From Stamp Duty

Stamp duty tax has not kept up with the rate of increase in house price inflation over the past decade. Yet another hurdle first-time buyers must leap over to get on the property ladder

March 10, 2008

Read all Finance News

Mortgage Lenders Set To Pull Plug On 125% Mortgages

In the aftermath of the credit crunch three high street mortgage lenders have been forced to stop selling their 125% home loans.

Mortgage lenders Alliance & Leicester, Abbey and Coventry & Godiva claim they have no other option but to cease their 125% mortgage deals as a result of the slowdown in the property market and falling house prices. Many homeowners may now be faced with the possibility of losing their homes.

125% mortgages became increasingly popular last year, particularly amongst first-time buyers when house prices were rising. Thousands signed up for this type of mortgage deal with the approach that increased property prices would help them pay off the large amount they had borrowed.

However, as short-term fixed rate deals come to an end, these homeowners could struggle to get a similar deal from any of the three remaining lenders still offering 125% loans. If their applications are rejected many homeowners could be faced with repossession.

Typically a 125% home loan offers up to 95% of the value of the home like a traditional mortgage. It then offers an additional 30% as an unsecured personal loan. Many first-time buyers will use this extra amount for home improvements.

According to recent reports, the Alliance and Leicester will cease selling its PlusMortgage packages as of Wednesday. The Director of Mortgages at A & L said,

"Alliance & Leicester is a prudent and responsible lender with PlusMortgage successfully targeting high quality applicants. However, we keep our product range under constant review and given current market conditions, we will be withdrawing our PlusMortgage products at this time."

Abbey will withdraw its 125% mortgage deals on Friday and the Coventry Building Society and Godiva Mortgages will follow suit by the end of the week.

In accordance with both banks and building societies tightening up their lending criteria, this week has already seen the Bank of Scotland withdraw all of its 100% mortgages from the market.

Published on February 20, 2008

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