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Riding the credit crunch

April 10th, 2008

Like many home owners I am in the position that in a few months time my current mortgage deal ends and I will be looking for a better deal. Unfortunately, even with the announcement today that The Bank of England’s Monetary Policy Committee is to cut interest rates to 5% from 5.25%, it looks like I will be lucky if I manage to get a similar deal never mind a better one.

But I am a lot better placed then people looking for their first mortgage. Many mortgage companies have started to pull some of their products from the market. First Direct, owned by HSBC, were the first to withdraw their entire mortgage range from new customers, followed by the Co-operative Bank pulling all its two year deals and others followed suit. Bristol and West Mortgages, a subsidiary of the Bank of Ireland, has become the latest bank to take action withdrawing about 60 percent of its products.

HSBC has decided to try and cash in on the situation announcing that it will match the interest rate of any borrower who is coming to the end of their fixed rate deals. What’s the catch? Well apparently it is in the arrangement fee which can be as high as £4,999, although HSBC are quick to reassure us that they estimate that three quarters of people will pay £999 or less.

The effect has already been felt in the housing market with prices falling by 2.5% in March, the biggest monthly decline since September 1992 according to The Halifax. And who knows how much further prices will fall. Anatole Kaletsky reports for The Times Online that prices could fall by as much as 30% if we follow the United States.

At times like these it is a great opportunity to review all your finances. Make sure that you are getting the best deals from your banks and building societies, check your insurance to make sure you aren’t paying above the odds and reduce weekly shopping bills by trying more own branded products. You can find more great tips on Money Saving Expert.

Entry Filed under: advice, house and home, insurance