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In light of the changes to the housing market, homeowners are more likely to stay in their home to make renovations than purchase a new home. According to a survey by Lloyds TSB, there has been a 19% increase in the number of loan applications for house renovation compared with the previous year.

The research also revealed that 59% of homeowners who were considering selling their home have put these plans on hold. Half of these now plan on carrying out additional home improvements in order to avoid debt management problems and increase the value of their property. The top improvements which new buyers have shown the most interest in are new kitchen or bathroom.

David Wishart, director of personal loans at Lloyds TSB, commented: “In recent months we have seen a significant increase in home improvement personal loan requests. For the last decade homeowners have been able to sit back and rely on rising property prices to increase the equity in their home but sadly this is no longer possible.”

Falling house prices could be that many homes could be in negative equity.

Nationwide building society have releases figures which show that average house prices have fallen by 1.7% in September. There has been a decline for 11 months in a row, and the average house value now stands at £161,797, compared to £164,654 in August, meaning that many homeowners could now be in negative equity.

These figures reflect a drop in consumer confidence and the possibility of rising debt due to the global economic crisis, which is likely to effect the housing market for the months to come.

Nationwide’s chief economist Fionnuala Earley remarked that: “We would need to see a significant shift in consumers’ sentiment before we begin to see any real recovery in activity and subsequently house prices.”

The ongoing credit crunch means that many of us are finding less money in our pockets at the end of the month. And, for some, this drop in disposable income may mean they can no longer afford their mortgage and will need to seek mortgage arrears advice.

According to recent analysis from Standard and Poor, the number of UK mortgage arrears in the sub-prime mortgage market has increased by over 23% in the second quarter of 2008. Those who have more than three months of mortgage arrears have increased to over 12% of this total. Standard and Poor have described mortgage arrears as “a way of life” for many subprime borrowers.

Are Mortgage Arrears a “way of life” for you?

If you find yourself struggling with mortgage arrears, then it is important that you seek mortgage arrears advice and tackle this problem as soon as possible. Your mortgage is a priority debt which means that failure to make payments to your mortgage means that you are at serious risk of repossession. (more…)

The number of mortgage approvals has declined by 65% over the past year, with July figures almost matching the record low in June. The British Bankers’ Association (BBA) said the number of mortgages approved in July totalled 22,448, which represents a 10 year low of the value of mortgages approved at £3.2 billion.

The number of remortgage deals which are going through is down 21%, but this still makes up for half of all mortgage activity as more people are wishing to consolidate their debt with a remortgage.

BBA statistics director David Dooks said: “The monthly numbers of approvals for house purchases, which have fallen by some two-thirds over the last year, levelled off in July.”

Those who are at risk of repossession could end up homeless, as mortgage lenders try to recover the debt through repossession of their property and selling additional assets.

If you cannot afford to pay your utility bills then the service will be cut off, and if you cannot afford to pay your unsecured debt then you may end up with bailiffs at your home or with a CCJ. Credit Action said that in other countries, those who have mortgage arrears and are unable to pay thier secured debt may face prison. However, in the UK it is much more likely that you would end up homeless.

Chris Tapp, the charity’s director, says: “If you’re talking about mortgages and any sort of secured debt, the lender can force you to sell the property or they might repossess the property, so people could actually end up homeless.”

It looks as though more first-time buyers are going to have to take better control of their debt management, as new research suggests that it could be 15 years before a first-time buyer loan agreement is reached, due to the time it takes to save for a deposit.

A poll by the Fair Investment Company revealed that the average first-time buyer only saves £1,668 a year. House prices are now at an average of £175,000 and many mortgage lenders are now looking for a 15% deposit.

Sharon Bratley, a chartered financial planner with Fair Investment Company, said: “My advice to prospective first time buyers is to save, save, save, our research shows that it could take years, so the earlier you start the better. It is also worth shopping around for a high interest savings accounts.”

The research also found that women would normally take longer to save for a deposit than men, with the average woman saving just £121 per month. However, if a male and female couple combined their savings, they could achieve a 15% deposit in just seven years.

Many first-time buyers (FTBs) are struggling to get their foot on the property ladder as mortgage lenders require a large house deposit. It may take many months or even years to save up this amount, but you can save a little bit quicker by cutting back on unnecessary spending.

Research by the Halifax suggests that many FTBs are missing out on potential house deposit savings of £308, and have put together a “quick-fix” top six list of areas to cut back on:

1. Quit smoking  – Save £160.83
2. Cancel gym membership – Save £42.37
3. Cut out morning latte – Save £37.80
4. Cut out one takeaway per week – Save £35.96
5. Drink two less pints of beer per week – Save £22.56
6. Swap a litre of bottled water for tap water – Save £8.68

This is a total of £308.20 a month, or the equivalent of £3,698.44 a year.

Although non-smokers may not be able to save as much, by following the remaining tips FTB savers could put an additional monthly sum of almost £150 towards their house deposit.

Head of mortgage development at Halifax, Jaedon Green, said: “Our research shows that spring cleaning your finances can potentially save first time buyers thousands each year. By identifying a few simple changes to their everyday routine and saving regularly, first time buyers can make a big boost to their deposit pot.”

There are more ways to save money though, and you could save for that house deposit even quicker by swapping driving for cycling and always making sure that you use discount vouchers before you buy anything online. Renters should also look at switching their energy supplier and reading our article about How to Save for a House Deposit Whilst Renting for more ideas.

Please leave a comment if you can think of some more simple money saving ideas which may help a FTB save for their house deposit that little bit quicker…

A third of UK pensioners are facing mortgage debt, according to figures released by impartial.co.uk. Their results show that the average 55-year-old homeowner still owes £55,046 to their mortgage lender and almost eight years left of their mortgage repayments.

Worryingly 1.4 million still have at least ten years left on their mortgage when they reach retirement age, meaning that many are going to have to seek advice about how they can afford to pay of their mortgage after they are no longer earning an income from employment.

Marketing director at impartial.co.uk, Karen Barrett, said: “It is crucial that the next generation of homeowners do all that they can to be debt free earlier – as this will give them much more financial freedom to prepare for retirement.”

First time buyers are becoming more stretched as the credit crunch limits the amount of best buy mortgage deals available. According to  research published by This is Money, the average homeowner needs a deposit of £40,000 before they can get a mortgage deal at a good rate.

The figure is up 43% from the previous year where the average deposit to secure a lending rate was £20,980. This is because, although house prices are falling, lenders have scaled back their loan-to-value ratios. This means that those who are looking to purchase a home need to raise 20.75% of the asking price.

The number of homeowners seeking help with repaying their mortgage has soared by 35% in the last year. Research by the Citizens Advice Bureau suggests that more and more households are struggling to meet the basic costs of living, leading to fear over an increase in the number of repossessions.

This figure reflects recent research by The Royal Institution of Chartered Surveyors (RICS) who estimate that there will be an average of 123 homes reposed everyday as people struggle with their payments.

Increases in the cost of fuel, household bills and mortgage payments are stretching people to the limit, with 215,000 new debt problems being reported in the first two months of 2008 alone.

Mortgage Help From One Advice

If you find that you are struggling with your mortgage payments then it is important that you seek expert advice as soon as possible. One Advice can offer you free advice on your finances and try and help you get your debt in order, as there are ways to reduce your monthly outgoings without risking losing your home as a consequence of missing mortgage payments.

One in 10 homeowners are expected to pay off their mortgage debt ahead of schedule due to the current conditions in the marketplace. Many are looking to make additional payments to their mortgage in order to take advantage of record low interest rates.

A study by First Direct, has revealed that more people are looking to clear their mortgage debt as quickly as possible. Out of the 24% of homeowners who are due to pay off their mortgage debt in the next 10 years, this figure could rapidly increase to 35% if they can manage their finances intelligently.

Jimmy Kelly, spokesman for the company, comments: “The average Brit now steps on to the housing ladder at the age of 34, compared to 29 in the 1970s – the aspiration to reach freedom day as early as possible has never been stronger… By making sound financial decisions and choosing a flexible mortgage such as an offset, freedom can be closer than ever before.”

More than 23,000 people who took out 100% mortgages at the peak of the property boom could be facing a negative equity crises. New research from the Council of Mortgage Lenders (CML) says that for these homeowners, falling house prices mean that their mortgage on their home could be more than their home is worth

The figures released from the CML are only lightened by the fact that these type of mortgages only represent a very small section of the mortgage market, as they reflect just 2.5% of the total lent.

Negative equity means that the loan against the home is more than the property is worth. This only really becomes a problem when the owner wishes to move house or can no longer afford to repay their mortgage. New research shows that very few homeowners are planning to move home with the fewest transactions per estate agent since records began in 1978.

CML spokesperson, Sue Anderson adds that: “The housing market isn’t a homogenous whole – prices behave differently in different areas. And most people who bought in the past year probably won’t be looking to move yet anyway.”

Millions are risking bankruptcy as homeowners are seeking out loans in order to make mortgage and rent payments. As the cost of living is continuing to rise and £30 billion worth of fixed rate mortgages are due to expire within the next month, it is likely that many will need to seek bankruptcy advice in order to regain control of their finances.

Research from MoneySupermarket.com reveals that 1.8 million households in the UK are getting themselves into more debt by taking out unsecured loans so that they can afford their rising mortgage or rent costs. A further 2.3 million people have increased their spending on credit cards as the credit crunch begins to pinch.

Tim Moss, head of loans and debt at the website, said: “It’s a very serious situation when you have people turning to a short-term solution to fund a long-term product. Having a roof over your head has to be your top priority but to be funding that with a loan you might default on or with a credit card that will eventually charge you interest of over 15% isn’t the solution in the long term.”