A property search, house prices and mortgage rates all in one place – is this the ultimate homebuying/snooping app?

App: Halifax Home Finder

Price: Free

Available on: iOS 4.0 or later, and Android

What is it?

An app to find property for sale and compare recent sale prices in a given area. It also has mortgage calculator tools.

Is it easy to use?

The homepage is a little busy, with the Halifax logo, a search box, a scrolling demonstration section and all the usual navigation buttons making for a confusing mix. Things are clearer once you drill down into individual sections.

You can search for property – using a search powered by Findaproperty.com – by postcode or using your current location, and refine your search in the same way you can on most other property searches: ie, by type, number of bedrooms and, most importantly, price. Similarly, you can display the results by price, distance or date the property was listed.

When you select a property you can view photos, estate agents' descriptions, and local area information, and you can "favourite" the property – so far, so normal. The innovations lie in users being able to check recent sale prices for that area, using Land Registry data, and calculators telling you how much you would repay if you took out a mortgage on that property (you can tweak the deposit amount, interest rate and length of mortgage) and how much you could borrow. You can also add notes and photos and rate the rooms of your favourite properties.

To have the triumvirate of property search engine, house prices data and mortgage finance tools in one place is like having some kind of property-related Swiss army knife in your pocket.

Is it fun?

Of course it's fun. Whether you're looking to buy or are already on the ladder, it's intriguing to check out what is for sale in areas you like or, if you're like me, to see how much your friends' and neighbours' homes last sold for.

The early 2012 rebound in the housing market has run out of steam, according to Britain's surveyors, who have reported price declines and falling activity across the country in April in the latest evidence of a broader economic slowdown.

The Royal Institution of Chartered Surveyors said that 19% more surveyors reported price falls than price rises, while newly agreed sales turned negative and the number of properties on the books of surveyors rose again. RICS blamed the end of the stamp duty holiday on properties below £250,000, adding that "weak economic data has eroded confidence in the market".

Only London defied the downturn, with surveyors in the capital reporting a remarkably different picture from the rest of the UK. A total of 86% of London surveyors said prices were the same or rising, in contrast to Wales, where 36% reported price falls, and Northern Ireland, where 50% said the market was continuing its downward slide.

All the major property indices are now showing steep price falls. Halifax said prices tumbled by 2.4% in April, wiping £4,000 off the value of the average property, with the market falling at its fastest rate for 20 months.

The gap between optimism in London and pessimism elsewhere has reached extraordinary levels. Brendon Thomas, of Maitlands Acorn, who cover the Docklands area of London, said: "Some areas seem to be experiencing a mini-boom." Justin Knight, of Bective Leslie Marsh, said: "The market in W14, W6 and W12 continues to boom with no signs of a slowdown, with prices 20% ahead of the 2007 market high."

But 170 miles north in Doncaster, Mark Hunter, of Grice and Hunter, painted a very different picture. "Apart from about one year in every 15, the residential market in this area has, since the mid-1970s, rarely been one which could be described as buoyant. These are now probably around 'average' conditions."

Back in 1989 I foolishly bought my first property, a one-bed flat in a miserable part of south London. I borrowed as much as I could, stretching to 4.5 times my income, took the mortgage on an interest-only basis, and put down a deposit of just 5%. Within two years the property's value had fallen by half. As for the "repayment vehicle" I'd set up, a Pep (personal equity plan), I quit paying in after a couple of months anyway.

More than two decades later, the door is closing on interest-only mortgages, and probably rightly so. They have been one of the principal devices for homebuyers (including me in 1989) to over-borrow and feed the cycle of boom and bust.

This week the Co-operative Bank (which includes the old Britannia building society) entirely withdrew its interest-only range, while Santander and others have limited interest-only to borrowers with a minimum 50% downpayment, effectively excluding first-time buyers.

The argument over interest-only is less financial than philosophical. Should a nanny-ish state (FSA rules back the Co-op and Santander moves) forbid young adults from potentially over-borrowing? Can it not trust the young to behave sensibly and put aside enough cash, on a regular basis, to eventually repay the loan?

Maybe so. I have colleagues who sensibly put aside money every month, building up a tidy nest egg to repay their ultra-cheap interest-only tracker mortgages. They display all the rigour and discipline needed to ensure this way of financing a home succeeds. They even show me Excel spreadsheets that prove how financially advantageous it can be.

But the reality is that few people have the required self-control. A survey this week found that less than a quarter of people with interest-only loans are regularly putting money aside to pay off the capital. Most haven't a clue what to do, vaguely hoping in a fingers-crossed way that rises in house prices will rescue them.

I know of one interest-only borrower who took more and more equity out of his home during the boom years and mis-spent it on cars and holidays. Now he has a £170,000 mortgage on a property worth £130,000, and nothing put aside to repay it in 14 years' time.

But it's not just repayment that's the issue with interest-only. It's the turbo-charging effect it has on the property market.

People love to think their property has some sort of intrinsic value. In most cases it has very little. The price of a property is really just a function of how much finance can be mobilised to pay for it. In a crowded island with little space for new development, raising the amount of finance (through devices such as interest-only loans) available to buyers simply pumps up prices. Ending six-times salary mortgages, interest-only loans and zero deposit deals should help deflate the market in the longer term. Yes, young people may feel they are being denied access to property, but the tough love should, eventually, make things more affordable.

The main competitor to first-time buyers are buy-to-let speculators, who use interest-only as a tax fiddle. By all means, let's withdraw interest-only deals, but a level playing field demands that the same should apply to buy-to-let. Now that really would help prevent much of the boom and bust.

House prices fell in April at their fastest rate for 20 months according to Halifax, knocking nearly £4,000 off the value of the average property in Britain.

April's 2.4% fall follows the end of the stamp duty holiday for first-time buyers at the end of March, and Halifax said the market would remain "very challenging" for the rest of the year.

On an annual basis, prices are now 0.5% below their level a year ago. The average price in April was £159,883 compared with £163,796 in March, and remain one-fifth below the £199,612 peak of August 2007.

Halifax housing economist Martin Ellis said: "House prices continue to lack real direction with the current UK average price little different to where it was at the end of 2011. The monthly figures continue to fluctuate quite widely with a 2.4% decline in April, wiping out March's 2.2% rise.

"The ending of the stamp duty holiday for first-time buyers in late March appears to have boosted home sales early this year as buyers strove to beat the deadline, and has probably contributed to the volatility in house prices in the last few months."

The price drop brings the Halifax index in line with the Nationwide index, which showed a 1% decline in March followed by a 0.2% fall in April.

Despite its predictions of a flat market for the year ahead, Halifax said its customers are feeling more confident.

Its "housing market confidence" tracker found four in 10 people feel house prices will rise over the coming year, double the amount who believe prices will fall. "This is the most positive reading since Halifax began measuring consumer confidence in the housing market a year ago," the bank said.

But professional economists continue to believe the direction in house prices is flat or downwards. Howard Archer, chief economist at Global Insight said: "Our belief that house prices will drift lower over the coming months is reinforced by the Nationwide reporting that house prices fell 0.2% in April, while Bank of England data showed muted mortgage approvals for house purchases in March. Specifically, we expect house prices to fall by a further 3% by the end of 2012.

"Housing market activity is very low compared with long-term norms. And the economic fundamentals currently look worrying overall for the housing market, with unemployment high and likely to rise further, earnings growth muted and the outlook uncertain."

The last month has seen tightening conditions in the mortgage market, with many lenders increasing their standard variable rates. This week Co-operative Bank became the first major lender to completely withdraw from interest-only lending. Other banks have restricted interest-only loans to borrowers able to stump up a 50% deposit.

Prices dropped by 0.6% both annually and on a monthly basis in March, pushing the average house price in England and Wales to £160,372, the Land Registry said.

The figures were released on the same day that more than a million home owners saw the cost of their mortgage payments go up, following a string of rate rise announcements from lenders, who have blamed the weak economy and the increased cost of funding a mortgage.

The majority of those affected are Halifax customers, who could typically find themselves paying nearly £200 extra a year, with the Co-operative Bank, Clydesdale Bank and Yorkshire Bank also among those who have made increases.

The North East recorded the biggest monthly house price rise, with a 5.6% increase pushing average prices to £101,676, although on a year-on-year basis, prices in the region decreased by 2.8%.

London, which has recorded relatively strong increases as the rest of the market remains patchy, saw a 1.8% monthly fall, taking typical prices to £343,522, although the English capital recorded the strongest annual rise, at 0.7%.

The annual price change for London, which has had strong interest from overseas buyers, has not fallen below zero since September 2009.

Wales recorded the biggest monthly and annual house price falls, with drops of 4.1% and 5.5% respectively, taking the typical price to £113,036.

The latest figures also showed that the number of sales has increased slightly over the year.

From October 2011 to January this year there were 55,661 sales per month on average, compared with 52,363 a month during the same period a year earlier.

Analysts have suggested that a stamp duty concession for first-time buyers which recently ended encouraged a rush to complete sales at the start of this year.

The number of homes sold in England and Wales for more than £1 million in January this year, the latest month for which the figures are available, decreased by 6% year-on-year to 467.

A) Its really simple, if you are in high mortgage arrears and coming close to a repossession notice / order then we can save your mortgage by paying your lender the debt owed, saving you the stress of trying to sell your house fast on the open market which in most cases you just don’t have the time. It also saves you from the lender taking control and dragging you through the courts and auctioning your house of for a lot less making you still liable for the diffrence.

We have seen so many people talk to us after they have been repossessed or even evicted from their home. Some people still end up in arrears after the lender has sold the house to recoup some debt. This leads to county court judgements and can effect future borrowing capabilities in years to come.

What Repossession SOS do is clear your debts, stop the repossession in 2 hours by buying your house instantly.

If this is something of interest fill out the form on the right and we will get back to you straight away.

There is something Dickensian about repossession day in our courts. Recently I spent a day Clerkenwell and Shoreditch county court as part of the Guardian's Live Justice project. The court is on the fringes of the City and, unlike most of our dilapidated court network, is ultramodern, light and airy. Nonetheless the work of courts like this harks back to a different, darker era - something I had noted when I spent a day shadowing Jacqui O'Carroll who ran the desk at a Dover county court for the Observer four years ago.

"It's like something out of Charles Dickens," was how James Doleman described his shock at visiting Glasgow sheriff court when it was dealing with evictions. "They are throwing up to 70 people an hour out of their homes. It's just like bang, bang, bang ... one after the other. We want to open up the courts to public scrutiny."

Doleman was behind the Open Justice Week, a Scottish initiative that used blogging, Twitter and Facebook to "increase the transparency and accountability of the justice system". Similarly, the Guardian's Live Justice project sought to "demystify the [court] process, to make it less scary for anyone faced with court proceedings and give an insight to anyone interested in how things work".

In the morning session in courtroom 10 some 30 possession cases were listed – the same judge also sat in the afternoon. Each case is given about 5 minutes.

Upstairs at the Gee Street courthouse, the court's business is childcare cases which run at a very different pace. As Stephen Carr, a solicitor who ran the morning shift for the advice desk put it:

"It seems bizarre to me that determining whether somebody keeps a roof over their head is done in five minutes and cases with kids which are obviously important, will go on for weeks. There is a question of proportionality."

What came across was the vital service provided by the two lawyers running the legally-aided advice desks – Carr, followed by Nat Mathews from Hackney Community Law Centre in the afternoon.

Out of the 14 clients lucky enough to see them — there are no advance appointments – all but two achieved positive outcomes. These provided greater security for vulnerable people and their families and might well mean they stay in their homes in the long term. Every one of those 14 had their situation significantly improved by the brief time spent with an adviser – no more than 20 minutes, often less. Shockingly, only two had previously had any advice or seen a lawyer.

The duty solicitors made what seemed like hopeless situations appear manageable – and they mostly were. One tearful homeowner appeared to be willing to hand over her keys back to the mortgage company. She had bought her council flat under right to buy legislation 26 years ago. She had recently received an offer to buy her home for £320,000 (it fell through); her mortgage was £186,000; there was a secured loan of £17,000. She was only £4,000 in arrears.

"There is plenty of equity in this property, do you want to sell?" Mathews asked. "I cannot take the aggravation," she replied. "I am absolutely terrified of being here today."

Of the two unsuccesful cases , practical and compassionate advice was dispatched. To the last client of the day - a 28-year-old Somalian asylum seeker facing immediate eviction - Mathews said: "You need to pack your stuff. This eviction will go ahead ..." She also gave him advice and contact details for organisations that might be able to assist, what to expect and what not to expect from his local authority.

Steve Hynes and I have argued that a critical test for our legal aid system must be that homeowners should receive proper and independent advice about their legal rights before legal proceedings in which they might lose their homes. When I wrote about Dover, the Legal Services Commission (LSC) only funded 94 advice services out of 230 county courts. The LSC now tells me they fund advice in 109 courts. There is also funding from the Department for Communities and Local Government (DCLG) – apparently, only some seven courts have neither LSC or DCLG funded scheme and they have local arrangements.

But a brief 10 minutes snatched with a lawyer in a sideroom before a court hearing isn't enough. Legal aid lawyers and advisers are familiar with "problem clusters" – the idea that problems are experienced simultaneously or in sequence by the same person. The notion was one often cited as informing legal aid policy under the previous government.

You see a lot of "problem clusters" at the county court on possession day: the tenant who has fallen behind with the rent because they have lost their job, who might have an unfair dismissal claim plus benefits and debt problems.

I sat in on one client interview with a vulnerable young woman who was HIV positive and had major health issues. It transpired that she had been orphaned at 15 with no family to support her – "effectively abandoned", as the duty solicitor put it. "It sounds like the council failed you on a number of levels," he told her.

Under the legal aid bill, ministers will scrap legal aid for social welfare law: housing (except where there is risk of homelessness); welfare benefits; employment advice; and community care.

"There is a perfect storm amassing. There are so many different effects working on our economy," a former English Literature lecturer told me. "This is the sharp end." He was £2,500 behind with his rent having been made redundant two years ago from his £38,000 a year job as an academic. He now works for the Boris bikes scheme for £18,000 a year and spends much of his time travelling from central London to Leighton Buzzard to care for his ill mother.

Stephen Carr has been working as a duty solicitor for more than 20 years. His law firm is on Hackney's Mare Street, just up the road from the court. "When clients come through the door, nine out of 10 of them are on income support and jobseekers allowance." I asked why he did the duty work. He described it as "verging on voluntary work. We get paid so little. I put it down to remnants of a social conscience." What does the legal aid bill means to his firm? "It is difficult to see how it is going to be viable."

Mortgage lending for house purchases was up by 20% year-on-year in February, but lenders said the increase may have been fuelled by changes to stamp duty rules in March rather than indicating a resurgence in market activity.

A total of £5.4bn was lent for house purchases – 2% more than in January 2012 and a fifth more than in February 2011. First-time buyers took out 14,100 mortgages worth a total of £1.7bn, while 22,500 loans worth £3.7bn were advanced to home movers.

First-time buyer numbers in February were up by 8% on the previous month and by 18% on February 2011, while home mover numbers were up by 2% month-on-month and 16% year-on-year.

Estate agents and surveyors had reported an increase in interest from first-time buyers in the early part of the year as they attempted to buy a property before the end of a stamp duty holiday on properties worth between £125,000 and £250,000.

Any first-time buyer buying a home within that price bracket before 24 March stood to save up to £2,500 through not paying the tax.

Lenders have also introduced more deals at high loan-to-values, which could also have contributed to the increase in buyer numbers, although the CML's figures show the average deposit put down by a first-time buyer was 20% – just 1% less than in February 2011.

CML director general, Paul Smee, said: "It is encouraging to see the continuing year-on-year improvement in house purchase lending.

"However, it is not yet clear whether the end of the stamp duty concession will lead to a falling off in first-time buyer numbers, and how much this may be offset by the government's NewBuy scheme, available to all buying a new-build property."

Mark Hollands, director of mortgage broker London Money, said he believed the rise in first-time buyer numbers would "almost certainly fizzle out" now the stamp duty holiday deadline had passed.

"While homes are marginally more affordable for some first-time buyers, for the majority of would-be homeowners property ownership remains a pipe dream. Lending criteria are too tough; the deposits required too large," he said.

The CML figures for remortgages show the number of loans fell by 3% in February and by 13% year-on-year at 25,500. However, just after the period covered by the figures several lenders announced increases to their standard variable rates, so it will be interesting to compare these figures with those for March.

Hollands added: "Clearly there is still a degree of interest rate inertia. Borrowers need to be extremely vigilant about the vagaries of the wholesale money markets which are driving up the cost of their loans."

Meanwhile, Halifax has released details of its mortgages for buyers who want help with their purchase through the government's NewBuy scheme.

The scheme offers lenders a guarantee to incentivise them to offer 95% mortgages on new-build properties. Halifax will be offering two deals: a two-year fixed rate at 5.99% with a £999 fee, and a fee-free deal with a two-year fixed rate of 6.39%.

The deals are available through a number of house builders.

The chief executive of the UK's largest estate agent has renewed calls on the government to intervene in the housing market to prevent future generations being priced out of owning a home.

Grenville Turner, the head of Countrywide, said the UK could become a country of renters after a survey commissioned by the company found that almost half of 18- to 34-year-olds said difficulty raising a deposit was the biggest barrier to buying a property.

Turner said: "We are at a crossroads for home ownership, where we could see the next generation becoming a nation of renters without the right intervention from government.

"Based on current levels of activity, the average home owner moves house once every 25 years as opposed to [historically] once every 12 years. These levels are unsustainable and we call for further support as a strong, vibrant, housing market contributes to GDP growth and will dramatically improve the economy."

His comments came as Countrywide, which has 1,300 offices in the UK, unveiled a poll on the public's attitudes to the housing market.

The survey of 6,000 people found that of those respondents not moving home, 21% said the reason was inability to afford a deposit, 16% said they could not afford mortgage repayments, and 16% said barriers included moving costs, such as stamp duty.

Only 32% of private rental tenants said they were happy where they lived. Countrywide has claimed that a recovery of the housing market is "fundamental to economic recovery". The company has called on the chancellor, George Osborne, to introduce mortgage relief for first-time buyers, to set tough mortgage lending targets for banks and introduce incentives for development projects.

While Countrywide's position has struck a chord with many, the call has followed a tough period of business for estate agents. Profits within Countrywide's estate agency business have dropped from £79m in 2006 to £26m in 2010, the last time it published results.

Other surveys suggest there are improvements in housing affordability.

Halifax, now part of the Lloyds Banking Group, said affordability has improved for public-sector workers in the past four years. According to the lender, a study of five public-sector occupations found the average worker could afford a home in 41% of the UK's towns compared with 3% of towns when house prices peaked in September 2007.

Even so, levels of affordability – which is defined as house prices being less than four times average earnings – are still low compared with 10 years ago.

The study, using figures from the Office for National Statistics, examined the average earnings of nurses, teachers, police, firefighters and paramedics, and average house prices across Britain.

Nelson, Lancashire, was named the most affordable town for public-sector workers, followed by Bootle,Merseyside, and Darwen, Lancashire.

Martin Ellis, housing economist at Halifax, said: "The greatest concentration of this improvement [in affordability] has been in northern England, Wales and Scotland. There are still considerable affordability issues for key workers in London and the south-east."

A survey by property analysts Hometrack found affordability problems were not confined to home owners. Pressure on tenants could mean rental growth staying relatively subdued, with rents rising by 2-3% in 2012, pushing gross yields slightly higher towards 5.5% by the year-end.

Richard Donnell, the director of research at Hometrack, said: "The rise in private rents has been driven by growing tenant demand and a shortage of supply. With no major improvements in mortgage availability likely in the near future rental demand is set to remain strong. There is however a limit as to how high rents can go as affordability constraints continue to squeeze household budgets."

Mortgage rates are creeping up, and whether you are sitting on your lender's standard variable rate (SVR) or a homebuyer looking for a deal, you need to proceed with care.

A string of lenders, including Halifax, Bank of Ireland and Clydesdale and Yorkshire banks, have increased their standard variable rates despite there being no change in the Bank of England base rate. Earlier this month the Co-operative Bank's standard rate rose by 0.5% to 4.74% from 1 May.

It is thought at least a million borrowers are affected by these rises, which have been blamed on changing conditions in the mortgage market and the increased cost of funding.

Meanwhile, average rates on new two and five-year fixed-rate deals have nudged up, according to research by price comparison site Moneysupermarket.com.

It found the typical rate for two-year fixes was 3.82% in October 2011, but is now 4.15%. Similarly, five-year fixed rates averaged 4.57% in January this year, but this has crept up to 4.72%. For two-year base-rate tracker loans, the average rate now stands at 3.63% compared with 3.37% last summer.

"Anyone looking for a mortgage, or whose deal will end in the next few months, should act sooner rather than later to secure one of the current rates in case they rise further," says Clare Francis at Moneysupermarket.com.

Lenders offering best-buy two-year and five-year fixes at 90% include First Direct (4.19%) and Nottingham building society (4.74%) respectively, while those at 95% include Newcastle building society's two-year fix at 5.65% and Leeds building society's five-year fix at 5.99%, according to Moneyfacts.

Figures released by Standard and Poor’s also revealed that borrowers in Wales are more likely to be in arrears with their mortgages than those in the south east of England.

Mark Boyce, the report’s author, said arrears in Wales had increased by 15% between spring 2010 and the end of 2011, meaning a total of 4.3% of households in Wales are currently behind on their mortgage payments.

The number of Welsh families trapped by having a mortgage bigger than the value of their home also increased by more than a third over the past 18 months to 6.7%.

Mr Boyce said: “The rising arrears figures for Wales are slightly higher than the average figures for the UK.”

He added that this may be due to the high level of unemployment in Wales, which currently stands at 9%.

“This is 0.6% higher than the UK average of 8.4%. The economic variables are complex and interlinked, but trends in arrears and negative equity tend to follow patterns in unemployment and house prices,” said Mr Boyce.

“House prices in Wales are also relatively weaker than in other parts of the UK, so that would have an impact and may cause some borrowers to struggle more with their payments,” he added.

According to figures from the Land Registry, the average house price in Wales fell by 1.9% to £118,000 between February 2011 and February 2012. This was significantly lower than the current average UK house price of £160,000.

Mr Boyce said the figures may discourage people from buying houses in Wales. “The housing market is sluggish at the moment, which does put people off buying homes,” he said.

The Welsh Government said the report vividly highlighted the problems facing home owners across the UK.

A spokesman said: “While we cannot shield people in Wales entirely from the effects of the recession and cuts to welfare benefits, we and others, including local authorities, are doing what we can to help them to cope with the harsh conditions that now exist.”

The scheme provided £36.5m to assist homeowners who ran into financial problems and prevented 391 households from becoming homeless between 2008 and 2011. The spokesman added: “The scheme not only prevented these people from losing their homes but helped avoid the associated negative side effects on health, wellbeing and education.”

According to the most recent figures from the Council of Mortgage Lenders, 22,300 loans for house purchases were made in Wales in 2010. This signalled a 12% rise on the previous year, which saw the lowest number of loans since 1974.

Mr Boyce said: “The UK economy has not yet turned the corner from the recent downturn, in our view. More borrowers throughout the UK could therefore come under financial stress in 2012.”

Ceri Dunstan, communications manager for housing charity Shelter Cymru, said: “We are seeing record numbers of people in mortgage arrears or facing repossession and if they are in negative equity as well, then it makes a difficult situation even worse. Unfortunately, this trend looks likely to continue, given the current economic conditions. As always, we would urge anyone who is in difficulties with their mortgage to get independent advice as soon as possible.”

Services such as Shelter Cymru and Citizens Advice provide specialist legal advice free of charge. “These services can make the difference between someone keeping or losing their home,” said Ms Dunstan.

ARE YOU FACING

HOME REPOSSESSION?…

WE’ll BUY IT IN 2HRS!

Stop Repossession Now »

In today’s troubled economic climate the loans made by lenders generally come with some kind of security. A charge over your property allows your lender to recoup any amounts outstanding to them should you become in arrears and default on your mortgage..

There is a Repossession Law specially made to protect the mortgagor before or after any agreements are made. See: http://en.wikipedia.org/wiki/Law_of_Property_Act_1925

Firstly your lender should/will contact you to discuss your finances and to see if there is any way they can help, we would advise you should always try and pay something and come to some arrangement with your lender.

If your lender states that they wish to repossess due to missed payments or mortgage arrears, you may still be able to postpone the repossession under the Administration of Justice Act 1970, section 36, but you would have to show the court you can make and keep future payments up.

If your lender repossessses your home they generally do anything they can to recover most of the debt, this includes auctioning your house for far less than its worth, if they don’t get enough for your house are still liable for the diffrence. When its in the lenders hands you no longer have control – don’t let it get this far, turn the tables and sell your house fast not giving your lender chance.

How we can help? Read Repossession answer

So why are these fees rising, and what will it cost you?

The data, produced by Moneyfacts, pointed out that these hikes have come in three years when Bank of England interest rates have stayed at rock bottom. During that time, the average arrangement fee has risen by £321 to £1,502.

Why?

So why are fees rising? Ray Boulger, mortgage expert with broker Charcol, told AOL that typically one reason for this may be that mortgage companies are reducing rates and paying for this with increased fees. However, he says that in this instance, this is highly unlikely, as fluctuations in mortgage costs are dependent on far more variables than a balance between fees and rates.

He explains: "This is much more likely to come down to the fact that lenders are offering a wider choice, some with larger arrangement fees and some with no fees. An increase in the number of mortgages with higher fees will push the average higher."

Should you pay a fee?

According to Boulger, this means that the average figure is relatively meaningless, and that you shouldn't have to pay any more for your deal.

He highlights that large fees aren't necessarily fundamentally poor deals. He says it varies between deals and lenders, but as a very general rule of thumb, once you are borrowing around £100,000 or £120,000, it may be worth paying a larger fee. He also says that if you are borrowing over a longer period, larger fees tend to work out as a better deal.

The maths

The only way to tell if a deal is right for you, says Boulger, is to do the calculations yourself. You need to take into account the arrangement fee, valuation fee, legal fees and any exit fees. Add these to the total interest you'll pay over the term of the mortgage, and then you can compare total costs.

Fortunately you can plug there details into a mortgage calculator on any of the major comparison sites, and it will spit out a total cost for the loan.

Boulger, however, warns: "Consumers can struggle with this. We used to offer a no-advice online service and found that when a customer was offered two deals (one with a low interest rate and a high fee, and the other with a low fee and a high interest rate) in a third of cases they chose the wrong deal."

"I believe that having a wider choose is a positive thing, but only if consumers either understand how to do the calculations themselves or they get advice."

Depending on which set of data you use, house prices for Britain as a whole are down by around 10-20% on the peak in 2007.

But a lot depends on where you live. Certain parts of London are now more expensive than they were back then. And other parts of Britain are significantly cheaper.

House price falls aren’t great news for those who were living in those properties, of course. But prices haven’t dropped far enough to satisfy the bears either. Combined with tight credit, prices remain far too high for your average first-time buyer.

Will that change in 2012? A report from S&P suggests that it could – and that prices could fall further…

The north of England is facing a bigger squeeze than the south You might have thought, that around four years on from the credit crunch, the UK property market would be getting healthier. According to credit rating agency S&P, you’d be wrong.

In the last quarter of 2011, 5.6% of borrowers were in negative equity. In other words, the loans on their homes were worth more than the properties themselves. That’s deteriorated since the second quarter of 2010, when only 3.6% of homes were in negative equity.

As the FT points out, the figure is far worse in the north of England, where 8.5% - not far off one in ten – homeowners is in negative equity.

What does this mean? To S&P, it means that homeowners could come under a lot more pressure in 2012.

Lead indicators for Britain's economy

Falling home equity is “a statistically significant predictor of arrears and defaults”. In other words, the more over-leveraged people become, the more likely it is that they won’t be able to pay their mortgage.

The problem isn’t negative equity as such. As long as you can keep making your monthly payments, it doesn’t really matter what the theoretical paper value of your home is.

The real problem is that when homeowners have little or no equity in their homes, this “tends to limit their ability to refinance, or to sell the securing property, to clear the [home loan]”, says S&P.

That’s because if your loan-to-value is high (or above 100%, as someone in negative equity would be), then banks don’t want to lend you any money. So you end up being stuck on your lender's standard variable rate at best. And as we all know, these have been rising recently.

That’s bad news, because the proportion of loans “worth 90% or more of the value of the property” rose to 16.6% from 13.5% in 2010’s second quarter. As a result, “more borrowers could therefore come under financial stress in 2012”, particularly if unemployment picks up.

The interest-only timebomb

Worse still for squeezed homeowners, it looks as though rates – which have supported troubled borrowers so far – are going higher.

Unquestionably, the main thing that has propped the housing market up is the Bank of England’s interest-rate slashing. That’s what has kept repossessions relatively low during this housing downturn. Repossessions peaked at 48,300 per year in 2009, a far cry from the 75,000 seen in 1991, during the last crash.

But even though the Bank has kept its rate at 0.5% for more than three years now, lenders don’t seem to be planning a similar freeze in their rates.

According to Moneysupermarket.com, the average rate for a two-year fixed-rate mortgage fell to a low of 3.82% in October 2011. Now it’s gone up to 4.15%. That’s not a huge jump, but as we’ve noted before, it’s the direction that matters.

It’s also worth remembering that there are a lot of homeowners out there who are extremely vulnerable to any sort of rise in rates. More than a third of home loans outstanding in the UK are written on an interest-only basis.

Some of those – a minority, I’d wager – have a sensible plan backing them to repay the capital. But an awful lot of them won’t. At the peak of the market, interest-only loans accounted for about one in every three new home loans.

Rapid buildup of household debt during boom leads to deeper downturn when bubble bursts, World Economic Outlook argues.

Governments should step in to help struggling households write off part of their mortgages in the wake of a financial crisis to avoid the risk of a prolonged economic slump, according to new research by the International Monetary Fund.

In a chapter of the spring edition of its World Economic Outlook, the rest of which will be published next week, the IMF's economists find that a rapid buildup of household debt during a boom leads to a deeper downturn when the bubble bursts.

"Housing busts preceded by larger run-ups in gross household debt are associated with deeper slumps, weaker recoveries, and more pronounced household deleveraging," they find.

From Iceland to the US, Spain to the UK, a rapid increase in debt was a common characteristic across many economies in the years before 2007, as homeowners took advantage of low interest rates to borrow against the rocketing value of their properties.

When house prices crashed, many borrowers inevitably found themselves in trouble and were forced to cut back sharply, contributing to the deep recessions that followed the financial crisis.

But when they examined scores of historical property crashes, the IMF found that where consumers were battling with a heavy debt burden spending fell on average four times as fast as could be explained by the decline in house prices alone.

"The decline in economic activity is too large to be simply a reflection of a greater fall in house prices. And it is not driven by the occurrence of banking crises alone," they say. "Rather, it is the combination of the house price decline and the pre-bust leverage that seems to explain the severity of the contraction."

Because of this strong relationship between the debt burden before a crisis and consumer behaviour in the years afterwards, the IMF says governments should consider intervening to help households write off or restructure their mortgages.

It details the case of the Home Owners' Loan Corporation, which was introduced by the Roosevelt government during the Great Depression. The HOLC bought 1m distressed mortgages from troubled banks and used the government's firepower to bring down the costs for homeowners – for example by extending the term of the loan. Just a fifth of the mortgages eventually ended in default – 800,000 were paid back.

The IMF suggests recent efforts by the White House to reduce foreclosures have been disappointing by comparison.

The report also praises Iceland's recent efforts to deal with the impossible household debts run up during the housing boom, which included a temporary moratorium on repossessions and a government-backed scheme to allow struggling borrowers to reschedule their payments.

"Bold and well-designed household debt restructuring programmes, such as those implemented in the United States in the 1930s and in Iceland today, can significantly reduce the number of household defaults and disclosures. In so doing, these programmes help prevent self-reinforcing cycles of declining house prices and lower aggregate demand."

The IMF's findings offer fresh support to a warning issued recently by consultancy McKinsey, which suggested that the UK faces a tough struggle to restore growth, because the total debt burden has barely budged since before the crisis.

McKinsey said total debt, including borrowing by companies and the government, as well as households, now exceeds 500% of GDP, barely below the level in Japan, and suggested it would take until 2020 for these legacy debts to be dealt with.

However, other analysts, including Ben Broadbent of the Bank of England's monetary policy committee, have argued that the legacy of debt left over from the boom years should not hold back economic recovery, because it was largely backed by increases in the value of assets such as property. House prices have so far fallen less sharply in the UK than in many other countries.

Just 40% or 202 out of 500 towns tracked in England and Wales saw a rise in home sales in 2011, less than half the proportion found the previous year, when 82% of towns experienced an increase.

Some 59% of the towns that saw rises are in the North, compared with 41% in the South, a reversal of the previous year's figures when 53% of "property sales hotspots" were in the South.

The report suggested this is due to a lack of homes being put on the market in southern regions over the last year, which has helped to keep prices up due to the restricted choice for buyers but has meant sales have been relatively low. Property sales have halved generally since the peak of the market in 2007.

Prices rose by 0.2% annually on average across the 10 towns that saw the biggest drop in property sales, in contrast to the 4.5% fall in house prices among the 10 towns recording the biggest sales rises.

Researchers found that 61% of towns surveyed in both the North of England and East Anglia had an annual rise in sales, meaning these regions had the highest proportion of property sales hotspots, closely followed by the West Midlands which had 60%.

But London, which has frequently recorded the strongest price rises, had the lowest proportion of sales hotspots in 2011 at just 16%, having seen sales decline by 6% annually.

Suren Thiru, Lloyds TSB housing economist, said: "The overall level of housing market activity across England and Wales has weakened over the past year, reflecting the concerns over the outlook for the UK economy.

"Additionally, consumers are experiencing difficulties in raising the necessary deposit, which is preventing many potential home buyers from entering the market.

"Generally, property prices in the North continue to be weaker than in the South."The Norfolk town of Thetford recorded the biggest annual sales increase in southern England with an 18.5% rise and was the only southern town in the top 10.

Eight of the 10 towns with the largest declines in home sales in 2011 are in the South of England, with Tower Hamlets in London recording the largest fall at 22%.

But house prices rose by 1.8% annually in Tower Hamlets, while they fell by 3.2% in Bilston, reflecting the weakness in prices in towns which saw the strongest rises in sales compared with those which recorded the biggest falls.

The study used Land Registry figures.

Here are the towns with the highest annual percentage increase in property sales in 2011, with the sales percentage change followed by the price percentage change:

1. Bilston, West Midlands, 30.7%, minus 3.2%
2. Rugeley, West Midlands, 30.6%, minus 6.8%
3. Bootle, North West, 21.0%, 5.1%
4. Washington, North, 19.6%, minus 5.6%
5. Wednesbury, West Midlands, 19.4%, minus 4.1%
6. Thetford, East Anglia, 18.5%, minus 2.0%
7. Ellesmere Port, North West, 17.5%, minus 6.6%
8. South Shields, North, 17.3%, minus 4.4%
9. Macclesfield, North West, 17.2%, minus 10.2%
10. Bury, North West, 17.1%, minus 7.2%

And here are the towns with the largest percentage fall in property sales, with the sales percentage change followed by the price percentage change:

1. Tower Hamlets, London, minus 22.2%, 1.8%
2. Potters Bar, South East, minus 19.6%, 3.1%
3. Penzance, South West, minus 18.7%, minus 4.3%
4. Maidenhead, South East, minus 17.5%, 3.0%
5. West Malling, South East, minus 17.3%, 3.5%
6. Amersham, South East, minus 16.7%, 6.0%
7. Redbridge, London, minus 16.6%, 3.3%
8. Aberdare, Wales, minus 16.2%, minus 6.2%
9. Blyth, North, minus 16.1%, minus 10.8%
10. Harpenden, South East, minus 16.0%, 2.7%

Here is the percentage of towns recording an annual rise in sales per region:

• East Anglia, 61%
• East Midlands, 48%
• North, 61%
• North West, 54%
• South East, 29%
• South West, 29%
• Wales, 43%
• West Midlands, 60%
• Yorkshire and Humberside, 44%
• London, 16%

Easter is traditionally when the housing market comes out of hibernation – and if ever there were a time when it might be imagined activity would be buoyant, it would be this year. The Bank of England has pegged the official short-term interest rate at 0.5% for more than three years and is now part-way through a third round of asset purchases, which will in total boost the money supply by £325bn.

For the past four decades, cheap credit has been the catalyst for property booms. That was the case in the early 1970s, when Threadneedle Street abandoned direct controls on lending and then watched helplessly as prices rose by 50% in 1973. A second bubble followed 15 years later as a result of a toxic mix of financial deregulation, cuts in interest rates and the pre-announced abolition of double mortgage relief. In the years leading up to the financial crisis of 2007, borrowers could secure loans at high multiples of their income with few questions asked.

There will, however, be no housing boom this year. Transactions are running at half the level seen in the pre-crash period, and the pick-up in activity at the end of 2011 and in the early months of 2012 was linked to the end of special stamp duty arrangements for first-time buyers. The property market has been unusually quiet for the last couple of years, with a shortage of buyers, sellers sitting tight, and prices barely moving up or down.

This trend looks likely to continue. There is no real evidence that the Bank's quantitative easing programme is leading to mortgages becoming more freely available, and potential first-time buyers are struggling to raise the deposits demanded by lenders before they will grant a loan. Prices need to come down to make residential property more affordable but that only tends to happen during periods of sharply rising unemployment, negative equity and aggressive foreclosure. That was the case in Britain during the early 1990s, and has been the reason for the big falls in house prices seen in the United States since 2007, but does not apply to the current UK property market.

On the contrary, banks and building societies have adopted a lenient approach to those unfortunate borrowers in arrears with their mortgage payments and, as a result, repossessions are low. There are few forced sellers, so little pressure to cut prices to levels that would make them more affordable to first-time buyers.

Anybody thinking of buying a home can take their time, because prices will, at best, move sideways this year and there is currently not the remotest chance of the Bank's monetary policy committee raising interest rates. All of which means this is the perfect time to take stock and to suggest reforms, should they be deemed necessary.

It would tax even the most eloquent of advocates to make the case that 40 years of house-price inflation has been beneficial to the UK. It has certainly been good for the current crop of owner-occupiers in their 40s, 50s and 60s but not for the next generation, who are frozen out of the market by high prices. Since the early 1970s, UK house prices have tripled in real (inflation-adjusted) terms, with the biggest gainers those living in the south-east.

Germany, courtesy of ultra-low interest rates, has seen house prices rise by 10% over the past two years, but this is the exception, not the rule. The cost of residential property has barely budged in real terms in the past 40 years and, as a result, the economy has been better balanced and has been less prone to the sort of debilitating boom-busts seen in the UK, which have caused extensive collateral damage to manufacturing. Britain's labour market mobility has also been impaired by house-price inflation, because it has either encouraged or forced people to stay put. Owner-occupiers in the south fear that if they move to another part of the country, they will never be able to return. Those tempted to come south to look for jobs cannot do so because homes are so expensive.

History suggests that the current torpor will not last forever. There was a long period of stability between the end of the second world war and the start of the 1970s, but this was marked by an expansion of the housing supply and by much tighter credit conditions.

Yet, keeping demand and supply in balance is not easy. Britons are culturally wedded to the idea of owning bricks and mortar and live on a small, crowded island where the planning laws are tight and the tax treatment of property generous. The population is rising and during the recession house building fell to its lowest level since the early 1920s. The City is confident there will not be an increase in the cost of borrowing from the Bank of England this year, and some analysts think there may not be one in 2013 either. Most of the conditions are already in place for the next boom, although the fact that property is still expensive and lenders are still hunkered down means it may not happen for some while.

Preventing a future housing bubble is, rightly, a priority for the Bank, and it has been mulling over how to prevent one. Three boom-busts in 40 years are testimony to the abject failure of trying to control the property market through interest rates alone, and – not before time – there is now an acceptance that tougher curbs on credit will be required.

The Bank's financial policy committee has been looking at two possible instruments – loan to value ratios and loan to income ratios – that it might deploy if it thought the housing market was getting too hot. The first would prevent lenders from offering loans above a certain percentage of the property's value; the second would limit the extension of credit to a certain multiple of a borrower's income.

Make no mistake, these would be powerful weapons and even the threat that they might be deployed would have an impact. It would probably only require Sir Mervyn King to make a speech in which he said that the Bank was mulling the possibility of imposing a loan to value ratio of, say, 80% on all new mortgages for the market to be killed stone dead. Activity would dry up and prices would fall.

The Bank has two big concerns about the use of these tools: that their use might damage the economy and that they may prevent people buying their own home. But the benefits of long-term stability outweigh the sugar rush from a housing boom, while the best way to encourage owner-occupation is to reduce prices. There is an opportunity to wean the UK off its addiction with house-price inflation and it should not be squandered.

Matthew Price, 24, has been forced to sell his property after losing his job and defaulting on his mortgage payments.

And if he fails to find a buyer in the next two months, his three-bedroom home in Garsdale Road, Brookfield, Preston, could be repossessed.

The former warehouseman lost his job at the end of 2009 and has been relying on the Department for Work and Pensions to help with his £55,000 mortgage repayments.

But when his lender took him to court last month he was shocked to learn he would have to sell up.

He said: “I feel awful. I was very fortunate in having a small inheritance to help me buy the house and it’s really important to me because I have no family and nowhere else to live.

“I didn’t realise I would have to sell.”

Matthew’s story is one of the thousands behind statistics due to be released today by the Council for Mortgage Lenders.

These reveal another side to the recession, showing the number of repossessions and mortgage arrears around the UK.

In Preston, people in a similar situation to Matthew turn to Preston Council’s Housing Advisory Service for help.

John Cameron, senior housing advisory officer, said the service dealt with between 15 and 30 inquiries from homeowners each month, a figure that has risen in the past two years.

He said: “The stage at which they come to us varies tremendously.

“Sometimes we see them as soon as they realise they can’t make a payment. Others turn up, literally, on the day the baillifs are due to arrive.”

Mr Cameron said that lenders were now obliged to inform the local authority when they intended to begin repossession procedings.

This allowed the service to contact the homeowner to offer support.

He said: “The earlier we intervene, the more chance we have of resolving any issues.

“We talk to the lenders and, by and large, they are co-operative in trying to keep people in the property.”

For those where there is not easy answer, Mr Cameron said they may be added to waiting list for a housing association property.

But with the list growing steadily longer, this is not a quick fix: there were 2,700 waiting for rehoming in June 2011 and that figure is now 3,019.

Statistics show that Preston was one of the more fortunate areas in the North West last year, with a 3% fall in the number of mortgage possession claims compared with the previous 12 months.

For Matthew Price, however, the figures are no consolation.

He said: “It’s tough.

“If I manage to sell I can pay off the lender, then I’ll have to go on the waiting list for a house.”

I am planning to pay £10,000 off the interest-only portion, which is backed with an endowment, and £10,000 off the repayment portion. The mortgage is fixed at 5.9%. The current rate ends on 30 April 2013 and if I pay it off after 30 April 2012 I will have a £600 repayment charge. How much would the monthly mortgage payments be if I paid £20,000 in as a lump sum? They are currently £439.

A I don't understand why you want to pay £10,000 off the repayment part and £10,000 off the interest-only part, as you would be better off clearing £20,000 off the interest-only portion of your loan. That is because none of the money you pay on the interest-only loan goes to clearing your debt, unlike the repayment part.

Also, it is easy to work out how much interest you save. If you were to pay off £20,000 of the interest-only loan you would be paying £1,180 less in interest each year (ie 20,000 multiplied by 5.9%), so your monthly payments would go down by nearly £100. So you should be better off even after paying the £600 early repayment charge.

Talk to us, fill in the form on the right and if your houses passes we will contact you straight away.

Demand for housing in Manchester is higher than ever before; as the city's economy, job opportunities and population continue to grow, so does the need for new, affordable homes. Finding a 25% deposit for a £100,000 house with an income of just £20,000 means that, for many first-time buyers, the first rung of the property ladder is out of reach. In response to these difficulties, the Manchester Mortgage has been developed.

The scheme is specifically aimed at first-time buyers who can afford mortgage payments, but do not have the deposit to access affordable mortgage finance.

Under the scheme, each local authority in the Greater Manchester area is able to specify the criteria for those who should qualify for a mortgage under the scheme. If the applicant also meets the lenders' strict criteria, the council will underwrite up to 20% of the mortgage. The process allows the buyer to obtain a 95% mortgage on similar terms to a 75% mortgage – but without the need to provide the substantial deposit usually required.

Affordable homes for Manchester

"The reduction in the levels of available development and mortgage finance is currently having a serious impact on the pace of house delivery and housing supply is at an all-time low," a council report into mortgage lending found.

The Manchester Independent Economic Review, conducted by leading economists from Harvard, the London School of Economics and Goldman Sachs, concluded that "outside London, the Manchester city region is the area which, given its scale and potential for improvement productivity, is best-placed to take advantage of the benefits of agglomeration and increase growth".

However, the continuing financial crisis and subsequent reduction in the levels of available development and mortgage finance, together with major reductions in regeneration funding, has had a serious impact on the pace of construction.

The Greater Manchester region has witnessed a dramatic fall in housing completions. The number of new completions has dropped from a high of more than 13,300 in 2007-8 to just over 3,000 in 2010-11 – equivalent to a 76% reduction.

"The previous housing delivery strategies, which involved encouragement of home ownership based on borrow, build and sell models, have not been replaced by any convincing alternative," the report says. "As development finance and mortgage finance continue to be squeezed, there is little prospect of a quick return to the old model."

The concept of combining publicly owned land assets with development finance from an institutional investor to provide new homes has been discussed in detail with the Greater Manchester Pension Fund. The government's national housing strategy cited the proposed housing investment model as an example of positive emerging practice.

Early discussions with the Co-operative Bank and the Manchester Building Society have been fruitful, and both lenders are interested in developing the concept further.

It is hoped the scheme will not only assist Manchester residents but also support a national project –and the national housing market. But in a regional review, estate agents have discovered that young people are questioning the model of home ownership. The number choosing to rent could eventually overtake homeowners.

Sir Richard Leese, leader of Manchester city council, explained: "We are developing the Manchester Mortgage and are in discussions with the Co-operative Bank. It is about how we address the issue of first-time buyers who can't afford a deposit. We are finding a way of the council underpinning a first-time buyer mortgage.

"Without being imprudent, there is no risk to council tax payers. We will work at providing affordable properties."

A spokesperson for the Co-operative Bank, which is based in Manchester, said the lender was "very supportive of anything that helps first-time buyers to own their first home".

Both Liverpool and Oldham have launched similar mortgage schemes this year. Liverpool city council's cabinet approved a £3m plan for a local authority mortgage scheme to help 200 people into their first homes. The council agreed to underwrite top-ups of up to 20% on loans so buyers can obtain a 95% mortgage. The indemnity would only be called upon if a loss is made by the mortgage lender. Liverpool's housing plan will see 2,000 homes built and empty properties brought back into use over the next three years.

New developments

The second feature of Manchester's initiative is building new houses on land identified over five sites across the city.

Estate agents have been warning for some time that the city centre will run low on housing stock, and the forecasts are now becoming a reality. Manchester needs an estimated 1,000 new properties a year for the next decade to cope with continuing demand for housing.

Across the wider region, the shortfall is 10,000 new homes a year. But in 2011, only a fraction of the new homes required were built. The council has land available and access to funding, thanks to the Greater Manchester Pension Fund. Manchester has agreed to form a partnership with the fund, which represents 10 local authorities and other public sector bodies in the region.

Paul Beardmore, Manchester's director of housing, says the council wants to demonstrate that institutional investment in development can make a return and help bring forward viable schemes. He wants others to follow Manchester's lead, and it seems that other cities and towns are already following suit. In Kent, a similar scheme will be launched that is worth £24m, aiming to help 800 first time buyers get onto the property ladder.

Further announcements are expected later this year on the Manchester Mortgage. For many first-time buyers, it will be the boost they need to achieve their ambition of owning a home.

He is maintaining that if I am getting 55% then I have to pay 55% of the remaining mortgage and the estate agent's commission. My position is that the mortgage, which is a joint one, and the commission, are expenses taken off first and that the proceeds are then divided 55/45. Looking at the original agreement it says the property is "to be held in joint names in the following percentages over the following years". I am reluctant to pay solicitors again to battle this out.

A I'm assuming you agreed a 55/45 split in your favour because you contributed the deposit for the purchase of the house and your ex-partner didn't. And I also assume that over the 23 years you were together you each paid half the monthly mortgage payment. If that is the case then you should receive 55% of the sale proceeds after deducting the estate agent's commission and paying off the remainder of the mortgage.

You should only have to pay more than half of the mortgage if you have been paying 55% of the monthly mortgage payment, which I very much doubt.

If your ex-partner's only contribution to the purchase of the property was to take on half the mortgage, which represented 45% of the value of the property at the time you bought it, he cannot expect to receive more than 45% of the proceeds when you sell.

A If you still want the mortgage, then yes I am afraid you do have to pay the bank. The charge is ostensibly to cover the cost to the bank of getting their solicitor to check your solicitor's work. The only way of avoiding the fee is either to use the lender's appointed solicitor or apply for a mortgage with a lender that does not insist you use one of their preferred legal firms to do the conveyancing.

The Co-operative Bank has become the latest lender to increase the standard variable rate (SVR) it charges mortgage customers, in a move that will affect more than 54,000 households.

The bank, which will increase its SVR by 0.5 percentage points to 4.74% from 1 May 2012, blamed changing conditions in the mortgage market and the increased cost of funding for the rise, which will add £42 a year to the cost of a £100,000 mortgage on an interest-only basis.

In a statement it said the average increase for customers would be £15. "Our SVR mortgages continue to offer customers a range of features and benefits, including the ability to make unlimited overpayments and to switch to another mortgage deal with us without penalty.

"These products are increasingly popular due to the flexibility they afford and the uncertainty about the direction of interest rates."

The Co-op follows a string of lenders including Halifax, Bank of Ireland and Clydesdale and Yorkshire banks who have increased their SVRs despite there being no change in the Bank of England base rate.

The moves have led to warnings that some borrowers may be unable to avoid higher monthly payments as tightened lending criteria and/or a change in their circumstances mean they are unable to remortgage to better deals.

The Co-op said it recognised that customers with high loan-to-value (LTV) mortgages may be "particularly concerned" about the price rise, and said it would be launching a five-year fixed-rate deal specifically for existing customers with a LTV of 90% or above who wanted to switch away from the SVR. This deal, which has no fees, will be fixed at 4.24%.

Lenders expect to reduce the amount of credit they give to households in the second quarter of the year in a move that economists warn is likely to curb any economic recovery.

As the Bank of England's quarterly credit conditions survey showed that lenders intended to cut credit to households in the next three months, there was also an unexpected fall in mortgage approvals.

Home loan approvals fell to 48,986, their lowest in eight months, in February. This was analysts' expectations and prompted warnings from mortgage brokers that conditions resembled the "dark days" of the banking crisis in 2008.

For small, medium and large companies, the total amount of credit available to them was unchanged in the three months to March – in contrast to the predictions of lenders, who had expected it to rise.

Businesses repaid £4bn more than was granted in new loans, according to the Bank of England's latest lending data, which showed a three-month annualised contraction of 7.9% for February – the weakest figure since September 2009. Commercial property lending is also expected to fall in the next three months.

Lord Oakeshott, the former Lib Dem Treasury spokesman, said: "There will be no green shoots in our economic garden while banks are blocking the hosepipe."

Lenders reported that they were expecting to reduce home loans for the first time since the second quarter of 2010 and were also pushing up the cost of these loans, despite the base rate having remained at the historically low level of 0.5% for three years.

The Bank of England said lenders' forecasts for a reduction in lending "reflected the tightening in wholesale funding conditions since mid-2011 and bank balance sheet pressures".

"Other factors such as changing risk appetite, market share objectives and expectations of house prices were also expected to pull down on credit availability," the Bank said, warning that lending criteria were also being tightened.

The Bank of England data coincided with the Nationwide house price index showing a 1% drop in house prices in March on the previous month. It was the biggest fall in two years, marking the end of the stamp duty holiday.

The drop indicates that most first-time buyers, keen to take advantage of the stamp-duty holiday before it ended on 24 March, made offers for homes in January to make sure there was sufficient time to complete their purchase before the deadline.

Robert Gardner, Nationwide's chief economist, said a slowdown was to be expected given the expiry of the holiday on properties costing up to £250,000.

About 180,000 buyers benefited from not paying stamp duty since introduction of the exemption in March 2010, and mortgage brokers, solicitors and mortgage lenders reported a rush by buyers to complete before its withdrawal last week.

Such buyers are likely to have agreed prices and started the conveyancing process in January, leading to a fall-off in prospective buyers in February and March.

Gardner added: "This dampening effect on housing market activity and prices may fade over the course of the summer, especially if the wider economic outlook begins to improve and other policy measures, such as the government's NewBuy scheme, are successful in supporting buyer demand."

Dominic Hennessy, director of independent mortgage broker, Just Us Mortgages, said: "As a mortgage broker, right now it feels like we've been whisked back to the dark days of 2008."

Economists said the restricted credit to households would do little to help the economy, which Paris-based thinktank the OECD claimed was already in recession.

"The overall message from the data was that weak bank lending is likely to remain a significant constraint on the economic recovery," said Vicky Redwood, chief UK economist at Capital Economics.

Nationwide building society has slashed the maximum loan-to-value (LTV) ratio on its interest-only mortgages from 75% to 50%, leading to fears that interest-only deals will eventually disappear, and leaving thousands of "mortgage prisoners" unable to switch to new deals.

The rule change means borrowers will have to stump up a deposit of £80,773 to afford an average home in England and Wales on an interest-only basis.

The lender, which lowered the LTV for interest-only borrowers from 85% to 75% in April 2011, said the policy was a response to similar changes by other lenders.

Industry insiders said Santander's decision in February 2012 to reduce its maximum lending on an interest-only basis to 50% LTV led to borrowers flocking to Nationwide for interest-only deals.

Martyn Dyson, head of mortgages at Nationwide, said: "A number of major lenders have recently restricted their criteria for interest-only mortgages, and Nationwide needs to be able to manage application levels in a prudent and sustainable manner. The group is therefore amending its policy to a maximum of 50% LTV."

As well as slashing the LTV on interest-only products, high street lenders have also begun introducing stricter rules regarding which savings and investment vehicles can be used to repay interest-only mortgages.

In February 2012 Lloyds Banking Group announced it would no longer accept cash savings, including Isas, as an acceptable way to fund the repayment of an interest-only mortgage. Instead, Lloyds – which includes Lloyds TSB, Bank of Scotland, Halifax and Cheltenham & Gloucester – views investment products such as endowments and equity Isas as better longer-term vehicles for settling an interest-only mortgage.

Barclays also requires interest-only borrowers to use only approved investment vehicles such as endowments, mutual funds or equities, while Royal Bank of Scotland, which has a 75% LTV for interest-only mortgages, will not allow first-time buyers to take out a mortgage of this type at all.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "It's like a pack of cards – one lender folds and the others inevitably follow. It is a shame for borrowers, but no real surprise.

"Interest-only borrowing is not necessarily reckless borrowing, as long as there is a repayment strategy in place. However, we are getting closer and closer to seeing it disappear, making mortgage prisoners of those who have an interest-only mortgage unless they can switch to repayment."

David Hollingworth of London & Country Mortgages said: "This is the latest nail in the coffin of interest-only mortgages. Those with interest-only mortgages will need to think about the ramifications of these changes. It is likely to force a rethink of how to repay the mortgage, simply because of the level of equity in the home rather than the existence of a prudent repayment strategy."

A Nationwide spokeswoman said existing customers would not be affected, even if they want to remortgage. However, if they need to take on additional borrowing the lender would "need to talk about affordability". If that additional borrowing breaks the 50% LTV ratio Nationwide would talk about switching customers to a repayment mortgage.

The news comes just days after Martin Wheatley, a director of the Financial Services Authority, told the Treasury Select Committee about the "ticking timebomb that exists today": hundreds of thousands of people in their late-50s unable to repay one of the 1.5m interest-only mortgages due to expire in the next 10 years.

Fears of a widespread rise in mortgage interest rates are growing after a decision by Clydesdale and Yorkshire banks to follow Halifax and raise their basic lending rate from 4.59% to 4.95%.

The move will hit around 30,000 customers, with the average borrower with a £100,000 mortgage expected to pay an extra £20.73 a month. Customers with interest-only mortgages will see an even bigger rise, with the cost of servicing a £100,000 loan rising by £30 a month. The increase will take effect from 1 May.

The shock rise in rates by Halifax a week ago was swiftly followed by a rate increase by Bank of Ireland, and with Clydesdale and Yorkshire now hiking rates, other lenders are expected to follow suit or withdraw "best buy" products.

Woolwich, part of the Barclays group, has already warned mortgage brokers that it will reduce funding for its deals. Since Halifax and other banks repriced upwards, Woolwich says it has seen "huge demand" for its deals. But the bank said it had no current plans to increase rates.

Clydesdale and Yorkshire, part of National Australia Bank group, blamed the increase on the rising cost of providing mortgages at a time when they are having to pay higher rates to attract savers.

Retail director Steve Reid said: "You only have to look at the narrow gap between longer-term savings rates and mortgage borrowing rates to see how things have changed. For instance, on our market-leading five-year savings account we are offering interest rates that are just 0.7% below the new standard variable rate (SVR). With significantly more savers than borrowers, it is important that we balance the needs of all of our customers."

Reid added that Clydesdale and Yorkshire banks are among just a handful of lenders that offer 95% loans, and that they are committed to remaining in the market.

But David Hollingworth of mortgage broker London & Country called the move "another lender taking opportunity to alter its SVR". He added: "What is different here is that rather than rising from a relatively low rate to a more average level, it's just adding a touch to a SVR that is not at the cheapest end."

Before the Bank of England base rate fell to its record low in 2009, few were tied to a lenders' SVR, with most borrowers opting for cheaper fixed-rate and discount deals instead. But in recent years relatively low SVRs have attracted borrowers coming to the end of a fixed-rate deal and have become costly for lenders to offer.

It is unclear how many borrowers are on SVRs, but at the end of 2010, the Council of Mortgage Lenders said that about 1.8 million people had come to the end of a fixed-rate deal and moved on to their lenders' SVR.

In the past, borrowers who faced high SVRs were free to remortgage elsewhere to better deals. But first-time buyers who bought during the boom are finding it difficult to remortgage as they have no equity and can't meet minimum deposits required for most loans today.

The result is that banks can now raise SVRs with little fear that they will lose customers to rivals. "Anyone on their lenders' SVR is at risk of a hike in payments," warned Mark Harris of broker SPF Private Clients.

The "bad bank" owned by the UK taxpayer repossessed almost 9,000 homes last year, as profits shot up by 145%.

UK Asset Resolution (UKAR), which is winding down the mortgage books of Northern Rock and Bradford & Bingley, said repossessions rose to 8,847, up 10% on 2010.

Richard Banks, the chief executive of UKAR, said: "One is absolutely not happy with repossessing anyone's property. But it is not fair to the customer to create a situation where they are incurring more and more debt. It is also not in the benefit of the taxpayer. And it's not fair on the 90% of customers who are paying their mortgages on time."

At the same time, underlying pre-tax profits more than doubled to £1.1bn. The boost allowed UKAR to repay £2.1bn of its government loan, although it still owes a whopping £46.6bn to the UK taxpayer.

Profits rose because of a sharp reduction in loans going bad. UKAR revealed a 14% decline in mortgages that were more than three months in arrears.

That still represents some 5% of the group's mortgage book, compared with a national average of just under 2%.

UKAR chief Banks admitted that arrears were likely to rise this year despite record low interest rates, which he expects to remain in place at least until the end of 2013.

"What benefits us is definitely a low interest rate environment. From my customers' point of view that is good news. But disposable incomes are under significant pressure, as a result of increases in fuel and food costs."

He said unemployment was a concern, but the high proportion of young people out of work had less of an impact on UKAR's business, as they did not tend to be homeowners.

Northern Rock Asset Management delivered a particularly stellar financial performance. Underlying pre-tax profits more than quadrupled to £790m. It repaid £2bn to the government, bringing total repayments to £3.1bn. B&B, on the other hand, only started repayments this year, with an initial amount of £150m.

The government raised the interest due on B&B's loans from 1.5% to 5%. Northern Rock continues to pay 0.25% on its loan, but expects that to be increased at any moment.

Banks said: "Both [B&B and Northern Rock] have sufficient capital to sustain an increase in the interest rates. The government is both the provider of loans and provider of equity, so it doesn't really matter if it gets it as an interest charge or repayment of equity."

He said UKAR would pay back the majority of the loan within the next 10 years. He added that he would consider selling bundles of loans to speed up the process. Hedge funds and private equity groups have shown interest in buying them, he said, but no-one has offered a suitable price.

UKFI — the body looking after the government's bank investments — recently said ownership of Northern Rock should generate a profit of between £9bn and £11bn for the government over the next 10 to 15 years.

The announcement infuriated former investors in Northern Rock, who say the bank should never have been nationalised. A group of investors is appealing to the European court of human rights for compensation, after its claim was rebuffed by the high court. It is led by hedge fund manager Jon Wood, whose SRM Global fund bought an 11.5% stake in the bank for £50m after its funding difficulties were revealed in 2007.

Northern Rock was nationalised in 2008 after suffering the first run on a British bank in more than 100 years.

It was split into a "bad bank", which took on the troubled mortgage portfolios, and a "good bank", which got the retail deposits, a mortgage book and 75 branches.

The government sold the "good bank" to Virgin Money late last year, at an estimated loss of £400m.

B&B was also nationalised in 2008 and its branch network was sold to Santander.

Father-of-three Peter Levenson is struggling desperately to hold on to his home. The former owner of a successful plumbing business, he began to fall behind with his mortgage when some of his customers defaulted on their payments. The resulting cash flow problems caused his business to fold in 2009 and since then his arrears have spiralled. Just last month, Peter was in court where he managed to fight off repossession by agreeing a payment plan that, for now, will keep him and his family in their home.

Behind Thursday's figures showing a fall in the number of repossessions – down by 9% to 8,500 last quarter – are thousands more people like Peter who are living on a knife-edge, facing a constant battle to keep a roof over their head. The same figures published by the Council of Mortgage Lenders show there are 54,000 households who have been in mortgage arrears for more than a year. Meanwhile, Shelter has seen a 38% increase over the past year in the number of calls to our helpline for advice on mortgage arrears.

We know from the people we see every day that living with the constant threat of losing your home puts enormous pressure on family life. Research has shown that the threat of homelessness is seen as more severe than being assaulted, burgled or going through a divorce involving a custody dispute. As Peter himself puts it: "The stress is dreadful. I wake up every day not able to turn off the worry. I don't want my children to end up homeless." Other figures show people are taking desperate measures like taking out payday loans or cutting back on heating and food for the family.

Some lifelines are available. Despite devastating cuts to the government's support for mortgage interest (SMI) scheme, it is still helping hundreds of thousands of struggling homeowners to stay afloat. That's why it's a real concern that the government is considering increasing the waiting period for SMI, making it harder for households to access support and stave off the bailiffs. Now is simply the wrong time to make people fighting for their homes wait nine and a half months before they can get help. For many, it will be too late to prevent them from getting into arrears, which could end in repossession. Cutting back the mortgage rescue scheme, which allows families who would otherwise be homeless to sell their home to the council and rent it back at affordable rates, was also a huge blow.

But with so many people languishing in arrears for longer, it's time more lenders considered other options to help those for whom, sadly, homeownership is simply no longer sustainable. When all other options have been exhausted, lenders could do more to support and help homeowners to sell up rather than dragging them through the costly and stressful eviction process. Research by the University of York found that assisted voluntary sales (AVS), where some lenders help struggling homeowners to sell their properties rather than repossess, has had positive results both for lenders and homeowners. Unfortunately not all lenders offer such a scheme and borrowers are naturally concerned about finding alternative accommodation, which is why we need lenders, councils and advice providers to work together to help those households out of an unsustainable situation where it's clear that all other options have been exhausted.

With wages flatlining and people from all walks of life feeling the squeeze, more and more people are going to struggle to make ends meet in the months ahead. Already, research by Shelter shows that every two minutes someone somewhere in the country faces the nightmare of losing their home, and as the director general of CML said only yesterday: "We are concerned that there will be a higher number of people facing more serious problems in 2012."

We need to make sure proper advice and support is there for those at risk of losing their homes.

The Council of Mortgage Lenders (CML) said 45,000 homes could be repossessed during the year, up 20% from an estimated 37,000 in 2011, as job losses took their toll on family finances. The number of property sales and total mortgage lending are also expected to fall.

An increase in repossessions would reverse much of the fall seen over the past couple of years, but the CML stressed numbers would remain far lower than in the downturn of the 1990s, when unemployment was at a similar level, as low interest rates had weakened the link between job loss and mortgage arrears.

The number of borrowers falling behind on mortgage repayments is also expected to increase following two years in which arrears levels were lower than lenders had expected.

"Some of our earlier pessimism stemmed from the emphasis we gave to the likely cumulative pressure on household finances from the higher cost of living and modest growth in incomes. But this appears only now to be emerging as a driver of fresh arrears," the CML's chief economist Bob Pannell said in his report.

"We foresee a deterioration in the number of borrowers behind on their mortgages, and a more difficult and protracted period of adjustment for households seeking to reorder their finances."

The homelessness charity Shelter said the forecasts should make the government reconsider plans to make homeowners wait 39 weeks before they can claim support for mortgage interest (SMI), a benefit that pays mortgage interest on behalf of unemployed borrowers.

"We have been warning that increasing numbers of homeowners are straining under the combined pressures of sky-high living costs and rising unemployment. Today's prediction from the CML shows this continued squeeze on the finances of struggling families is about to hit home," said Campbell Robb, chief executive of Shelter.

"Clearly this is the worst possible time to make people wait longer before getting SMI, a vital lifeline that helps thousands of struggling homeowners keep their homes. In light of the CML's prediction we hope the government recognises just how disastrous this would be and scraps this proposal immediately."

The CML said the main impact of the current uncertainty in the economy would be a continued fall in the number of properties bought and sold. While an estimated 852,000 transactions are likely to have taken place in 2011, it said its forecast for 2012 was that 825,000 sales would be completed.

At least some of this fall could be down to lenders becoming increasingly picky about who they offer mortgages to, the forecast said. "As a by-product of sovereign debt worries, lenders face challenging conditions in wholesale funding markets, and these could have negative effects on the cost and availability of UK residential mortgages through some or all of next year," Pannell said.

The forecast comes as the Financial Services Authority (FSA) prepares to publish its long-awaited review of the mortgage market, which will set out its proposals for a major reform of lending practice.

It has been reported the FSA will call on lenders to consider the way they assesses loans to borrowers who wish to move home, but due to falling house prices and tightened lending criteria no longer have enough equity to secure a mortgage.

It is understood lenders could be encouraged to consider allowing these so-called "mortgage prisoners", who have kept up with mortgage repayments and are in work, to raise a loan on a new home even without a large deposit. Lenders could even consider letting buyers port over any negative equity they have to a new property.

This could in turn free up homes for would-be first-time buyers to purchase, although other proposals could include a crack down on interest-only mortgages and tougher affordability checks, which might make life harder for new borrowers.

The FSA would not comment ahead of the publication of the review on 19 December.

Mortgage experts warn of lenders losing patience and threat of an interest rate increase

Mortgage directive

Leaders of the former steelworking town of Corby hope it can build its way to prosperity, but many who moved there are trapped in negative equity

"You could own this home for as little as £451 a month," yells the advert for a four-bedroom townhouse set in rolling green fields little more than an hour's train journey from London.

Welcome to Corby, Northamptonshire – or "North Londonshire", as the marketers would rather have you call it.

This rather nondescript former steelworking town may not have much in common with Bond Street or Brick Lane, but the local council believes it can tempt city-weary Londoners into relocating from the capital – and reviving the region.

But the town has another moniker – one Chris Mallender, chief executive of the borough council, is a little less keen on: repossession capital of England. "Can you stop saying that to everyone," he says as he gives the Observer a guided tour of the town. "There's a lot more to it than that."

But Mallender can't argue with the figures: 155 households in Corby were issued with possession orders by the courts in the last financial year. That works out at 7.6 out of every 1,000 privately owned homes, compared to 0.8 in west Dorset and the royal borough of Kensington and Chelsea, in central London.

And Corby is streets ahead of the second most repossession-blighted local authority in the country, Barking and Dagenham, with 6.6 per 1,000.

"People expect us to be horrified, but I have to say we're not," says Mallender. "It's a consequence of the rapid growth we've achieved. The most dynamic economies are the ones most exposed to failure."

Mallender, who was drafted in to spearhead Corby's regeneration eight years ago, says the town's turnaround strategy has been, and continues to be, build, build, build.

"Our strategy is based on increasing the population to generate wealth to increase prosperity," he says. "We're now the fastest growing borough in the country."

More than £500m has been invested in the 60,000-person town over the past six to eight years, Mallender says. And it shows: almost every lamppost is adorned with yellow signs pointing the way to new developments.

One of the more established developments, Oakley Vale, is mostly occupied, but roads and roundabouts jutting out into empty fields clearly show plans for more.

Working in the front garden of one house is Anthony Dady, 36. It isn't his, but he owns a four-bedroom detached house in a nearby development.

At first glance Dady appears to be one of Corby's success stories. He relocated from Hampshire after seeing the town's "room to breathe" adverts. "I saw what I could get for my money and thought it would be silly not to," he says. So he sold his three-bed semi in Hampshire and bought the Corby four-bed for £160,000 just before the 2007-8 property crash.

Dady, a local councillor, is now one of millions across the country sitting on negative equity, as his house was last year revalued at £135,000. Dady, who took out a 90% £140,000 mortgage to buy the property, reckons it might have crept up to even by now.

He is also one of thousands of Corby homeowners struggling to keep up with his mortgage repayments. "I haven't had much work for the last few years, which is making it tricky," he says. "At the moment I'm phoning my mum up every month to borrow slightly less than £1,000, but eventually she'll run out too."

Although Dady acknowledges he is probably sitting on negative equity, he says it would be "silly" to hand back the keys. "Because where would I be then? I'd have to move into a bedsit ... I like my four-bedroom house."

When Dady moved to Corby he had planned to buy a second home to rent out for income, but failed to find one he liked. "No, I wouldn't say it was a lucky escape," he says. "I'm still a believer in making money from property. Other people may not think its a good economic decision but I think it is."

The estate agents that line Corby's recently redeveloped, yet already neglected high street, are united in agreement that it is people like Dady who account for most of the town's "repos".

"They get the idea from property programmes on the telly that there's loads of fast money to be made from property," says an estate agent at WH Brown, which takes one or two new repossessions every week. "They clearly haven't got enough money, but the banks were happy to offer more than 100% mortgages – even today you can get a 95% mortgage."

A quick walk around the corner past two pawnbrokers, Richard Sharp, a valuer at rival estate agent Yates Walker, tells the same story.

"A lot of the repos are from investment buyers who are stretching themselves too much," Sharp says. "They've flooded into Corby, attracted by the cheap property and good rents.

"The problem is that as the cost of living has gone up, lots of the tenants – often Polish and eastern European – have gone home. So owners are struggling to pay the mortgage as their rental income is nose-diving."

According to Sharp, three-quarters of the repossessions are not, as one might expect, the "really nasty ones" from the sink estates in the centre of Corby but "lovely ones" in the new purpose-built estates.

"Homes that people bought for £220,000 are being sold by their banks for £160,000," he says. "You would never know that they were repos, some of them are only two or three years old.

"The really worrying thing is all these modern developments are still going up and people are buying them at peak prices because they think they're so much cheaper than in Bedford or Luton or Milton Keynes," he says. "They're not worth it and when interest rates go up – which is only a matter of time – I dread to think what will happen."

Sharp says lots of homeowners are only making their repayments at the moment from juggling credit cards; and he predicts that when interest rates go up they will be tipped into repossession.

Campbell Robb, chief executive of Shelter, the housing charity that published the research that gave Corby its unwelcome title, predicts that a further 2.5 million will struggle to pay their mortgage if the base rate goes up by 1% from the current record low of 0.5%.

The Bank for International Settlements (BIS), the international bank regulator, last week said keeping rates as they are was unsustainable ,and experts are predicting a rise in the next few months.

Richard Banks, chief executive of UK Asset Resolution, the body that runs the £80bn of Northern Rock and Bradford & Bingley mortgages that were bailed out by the taxpayer during the banking crisis, has warned that there will be a "tsunami" of repossessions.

The wave will hit Corby hardest just as the town's army of builders gears up construction at the town's biggest development.

Where once Corby hoped to build a WonderWorld theme park to rival Alton Towers, it is now creating Priors Hall, "a new destination development that strikes a perfect balance between contemporary and countryside living".

This 5,100-home, 600-hectare (1,500- acre) development is at the centre of the region's multimillion-pound advertising campaign to attract Londoners, with houses named Marylebone, Islington and Knightsbridge. However only seven of the 102 homes built so far have been reserved by Londoners.

It clearly takes more than a gimmicky name. Something the developers of Possession, the estate with the £451-a-month home, might need to take on board.

UKAR chief presiding over £80bn of bailed-out mortgages says 'tough love' would be fairer on those struggling with payments

Britain is facing a 'tsunami' of house repossessions as soon as interest rates start to rise, one of the country's leading bankers has warned.

Richard Banks, the chief executive of UK Asset Resolution (UKAR), the body that runs the £80bn of mortgages bailed out by the taxpayer during the banking crisis, also said in an interview with the Guardian that the Labour government's pleas at the start of the crisis for lenders to keep families in their homes was forcing some homeowners further into debt.

In a warning that the industry may have been too lenient with some of its customers, he said he believed a policy of "tough love" would be fairer to people facing long-term difficulty in keeping up payments on loans taken out when house prices were at their peak and personal incomes on the rise.

His warning came the day after the international bank regulator said the Bank of England, which has kept rates at 0.5% for more than two years, would have to raise rates shortly to curb inflation.

The Bank of International Settlements said the policy of the Bank of England, whose rate-setting committee is split over whether or not to increase borrowing costs, was "unsustainable".

With 750,000 customers, UK Asset Resolution, set up to run the nationalised mortgages of Bradford & Bingley and parts of Northern Rock, is the country's fifth largest mortgage lender. But 23,000 of those mortgage holders are more than six months behind with payments and Banks admitted the projections for the number of people falling behind on payments could get "scary" if lenders did nothing to prepare for higher rates.

"You can see if you don't do something about it, you can see a tsunami," he said. "If you don't get into the hills you could get drowned by this. If you don't manage this properly it could get very messy."

He regards it is an industry-wide problem, albeit one that might be concentrated at UKAR as its customers include buy-to-let landlords and so-called self-certified borrowers – those without salaried income. UKAR, through three calls centres in Crossflatts, West Yorkshire, Gosforth, Newcastle, and Doxford, Sunderland, has begun cold-calling customers it believes are at risk of falling behind on payments in an attempt to keep their mortgage payments on schedule.

The bank is also trying to tackle customers behind with payments for six months or more and at risk of repossession.

His concern about a surge in repossessions is partly the result of moves by the industry early in the 2008 crisis to grant so-called forbearance to help customers stay in homes by, for example, reducing monthly interest payments. "We as an industry, as a kneejerk reaction in the emergence of the crisis, and because the government asked us to be forbearing to customers in the hope it would all go away, we have been too lenient with some customers.

"It's a tough love approach," he said. "It's treating customers fairly, not nicely, because if you can't afford your mortgage you are only increasing your indebtedness. If we allow you to increase your indebtedness, that's not really fair to you."

This month the Council of Mortgage Lenders forecast a rise in repossessions from 40,000 this year to 45,000 next. This figure would still remain well below the 75,500 peak of 1991. The remarks by Banks follow a warning last week from the new regulator set up to spot financial risks in the system – the Financial Policy Committee (FPC) inside the Bank of England – that warned banks may be providing a "misleading picture of their financial health" if they were not making big enough provisions for borrowers in difficulty.

Forbearance has been brought into play in up to 12% of mortgages, the FPC said.

It also noted that the most "vulnerable" households were concentrated in a few banks. It did not scrutinise UKAR but noted that the two other bailed-out banks, Lloyds Banking Group and Royal Bank of Scotland, had the largest exposure to customers whose mortgages were bigger than their value of their homes.

Last month, the Financial Services Authority issued a guide to handling forbearance in which it warned: "Arrears and forbearance support provided with due care by firms has a beneficial impact for both the firm and the customer … However, where such support is provided without due care or any knowledge or understanding of the impacts, it has potentially adverse implications for the customer, for the firm's understanding of the risks inherent within its lending book, and in turn for the regulators and the market."

Race is on to help homeowners most at risk if interest rates rise

The 75-metre-high tower of Lister's Mill symbolised the power and status of Bradford during the city's industrial heyday. It was the largest silk factory in the world, churning out the velvet for King George V's coronation. But now the former mill has come to symbolise all that is wrong with the British economy in the wake of the banking crisis: the heavy machinery has been replaced by pristine bathrooms and kitchens in luxury flats whose value has almost halved in five years.

It is just visible from a light and airy office that sits at the foot of the Aire Valley and houses £80bn of taxpayer-controlled mortgages, including the Bradford & Bingley Mortgage Express operation. One of its loans, to a London-based buy-to-let landlord to acquire flats "off plan" in the Bradford mill in the heady days before the 2008 crisis, illustrates the scale of its task. Sharon Lambert, an adviser at Mortgage Express, says the landlord never visited the properties: he paid £200,000 apiece for flats now valued at £110,000, and is receiving half the rent he was promised.

With interest rates at record lows and on a mortgage that tracks 1.75 percentage points above base rate, the landlord can keep his head above water – in part subsided by four properties in Liverpool. But a half percentage point rise in interest rates from the record low of 0.5% would tip him over the edge, says Lambert, who is one of a growing workforce employed by the taxpayer-owned Bradford & Bingley to discuss with customers the impact of a rate rise on their ability to repay their mortgages.

The problem is particularly acute for UK Asset Resolution (UKAR), which owns Mortgage Express, other mortgages from B&B and some £44bn of "bad" mortgages from Northern Rock. Although the taxpayer-owned UKAR reported a profit for last year, customers of B&B and Northern Rock Asset Management (NRAM) – the part of the lender not up for sale – mortgaged themselves up to the hilt just as the housing bubble burst and are potentially the most vulnerable to a rate rise.

Buried deep in the West Yorkshire countryside in Crossflatts, UKAR is facing the dual challenge of tracking down those customers who it thinks could get into difficulty once rates go up, and helping the 23,000 customers who are already six months in arrears – even at the current rock-bottom rates.

Tim Newman, head of marketing at UKAR, spells it out: "My job over the next 12 months is to get people aware what is going to happen when interest rates go up." Online calculators are being created to match a telephone charm offensive

But UKAR is also tackling the "forbearance" offered to 44,000 customers last year by, perhaps, reducing monthly repayments to help them stay in their homes. The chief executive, Richard Banks, a former Alliance & Leicester banker, is blunt: "As a kneejerk reaction in the emergence of the crisis and because the government asked us to be forbearing to customers in the hope it would all go away – we as an industry have been too lenient with some customers."

He added: "It's a tough love approach. It's treating customers fairly, not nicely ... because if you can't afford your mortgage you are only increasing your indebtedness. If we allow you to increase your indebtedness, that's not really fair to you."

By calling customers in distress – or even before the alarm bells start ringing – Banks hopes to avoid the repossession rates that haunted the Thatcher government (the keys were taken from 95,000 homeowners in 1991 alone). Official industry forecasts are for 40,000 repossessions this year.

"You can see that if you don't do something about it, there will be a tsunami. If you don't get into the hills, you could get drowned by this. If you don't manage this properly, it could get very messy," he said.

A small rate rise is manageable for most customers; fast rises are of more concern. Action is already being taken. Erika Swales, operations director, said Northern Rock had been waiting 31 days after a missed mortgage payment before contacting customers. Since January, however, the calls have been made just a day or two later and the impact is already being felt in holding arrears flat. Even so, repossession numbers are expected to rise – B&B had 623 homes in possession and NRAM 1,984.

Calls are made from three centres, in Crossflats, between Bradford and Bingley; Gosforth, home to Northern Rock, and Doxford in Sunderland. In Crossflats, Mohammed Ali leads a team responsible for cold-calling customers to talk about interest rates and budgeting. "A lot of people are worried. They think 'if I tell [the bank] they'll take my house', which is far from what we want to do," he said.

Ali also needs to keep his team motivated, a tough task given that UKAR has a limited lifespan as it can no longer sell new mortgages. Others talk about the training they and their colleagues are receiving to ensure they can find employment after UKAR. Although the last mortgage will not be paid off until 2049, it should be a smaller operation by 2021. "It's our responsibility to get them ready for their next job," said commercial director Andy Wiggans

All monies that come in are used to pay off a £47.8bn taxpayer loan or feed the securitisation vehicles Granite and Aire Valley, which were used by Northern Rock and B&B to fuel their mortgage lending.

Just over £1bn was paid back last year and UKAR is urging wealthier customers to do so quickly: Lambert has just come off the phone with a buy-to-let customer who can take advantage of the low rates by overpaying £1,000 a month.

Banks notes that job prospects at UKAR are better than he first expected. Last month he rewrote the business plan presented in November, when UKAR was created to explain the early assessments of interest rates to customers. The previous plan assumed that arrears would peak three years after 2009 and then decline but the new one shows arrears have yet to peak before dropping off again and then rising in 2015 – when George Osborne hopes his plan A will be delivering economic growth, but when interest rates could be reaching 5%.

But Banks refuses to agree that the outlook is all grim. "It's solvable," he said. "This is something that will be a great success."

Pressed in Corby

Corby in the east Midlands is the place where homeowners are most vulnerable to repossession, according to the housing charity Shelter. Its map of repossession hotspots in England and Wales shows a "red ribbon" running across the north of England following analysis of Ministry of Justice figures for repossession orders in the first three months of 2011. The charity warned that homeowners need to be prepared for a rise in interest rates – which could put even more at risk of losing their homes.

At UK Asset Resolution (UKAR), the taxpayer-owned body that looks after Bradford & Bingley mortgages and £44bn of Northern Rock mortgages, staff are on alert for signs of customers struggling to keep up repayments on their home.

A cancelled direct debit can be an early warning sign, as can the informationdata provided by the Callcredit Information Group, a company thatwhich collects data about customers' finances.

UKAR's advisers try to discuss budgeting with customers in difficulty. Dropping a subscription to Sky, for instance, might be suggested, along with cutting up a credit card.

Temporary solutions can be found, such as reducing payments for a month or two, but eventually the lender will need proof that customer can keep repayments going. A non-executive director suggested to UKAR that one way to tackle the impending rate rise would be to put all customers on a 3% fixed rate. While that would help those in difficulty, it would prevent the bank getting in income from those who can afford to pay.

]]> http://www.repossessionsos.com/crisis-looms-in-repossessions-hotspots/feed/ 0 http://www.repossessionsos.com/repossession-is-neither-nice-nor-fair/ http://www.repossessionsos.com/repossession-is-neither-nice-nor-fair/#comments Mon, 27 Jun 2011 20:30:07 +0000 stop-repossession http://www.guardian.co.uk/business/2011/jun/27/repossession-neither-nice-nor-fair

Rising interest rates could lead to 'tsunami' of home repossessions, warns man running Northern Rock's bad bank

The man running the bad banks of Northern Rock and Bradford & Bingley has warned that rising interest rates could result in a "tsunami" of repossessions that could revive memories of the 1990s when the courts were clogged with repossession orders forcing families out of their homes.

Richard Banks says the policy of forbearance might be "nice" for homeowners who are behind with the mortgage but it is not "fair" to let them fall further into debt.

The director of UK Asset Resolution (UKAR) has a point but it is not going to be nice or fair for those families who are likely to lose their homes if the cost of borrowing rises next year, as is widely expected.

Some 40,000 homebuyers are expected to forfeit their homes this year. Northern Rock alone offered forbearance to 44,000 last year. Officials reckon one in eight homebuyers has been offered special terms to fend off foreclosure.

Debate over whether these families are victims of reckless lending will continue.

What is sure is that the Labour government's policy of encouraging forbearance did nothing but kick the can down the road.

]]> http://www.repossessionsos.com/repossession-is-neither-nice-nor-fair/feed/ 0 http://www.repossessionsos.com/home-repossessions-jump-by-17/ http://www.repossessionsos.com/home-repossessions-jump-by-17/#comments Tue, 21 Jun 2011 14:21:36 +0000 stop-repossession http://www.guardian.co.uk/money/2011/jun/21/home-repossessions-jump-fsa FSA data shows a rise in repossessions for the first time in more than a year

Home repossessions have risen for the first time in more than a year, jumping 17% in the first three months of 2011, according to official figures.

The data, issued by the Financial Services Authority, shows that after falling in each quarter since late 2009, the number of new home repossessions increased by 17% in the first three months of this year to 9,613. The equivalent figure in the last quarter of 2010 was 8,246 – though in mid-2009 it was above 13,000.

The FSA said: "An increase was also seen in the first quarters of 2008 and 2009." The stock of repossessed homes remaining unsold rose for the first time in two years to 16,025.

Meanwhile, the proportion of new lending at a high loan-to-value (LTV) – more than 90% – has averaged at about 2% over the past year, but fell back in the first three months of 2011 to 1.7%. Within that, loans of more than 95% of a property's value accounted for just 0.47% of all lending. At the start of 2007, mortgages for more than 90% LTV made up 14.1% of total lending.

The share of new lending done at a combination of high LTV and high income multiples (more than 3.5 times single or 2.75 times joint income) has reduced in the last two quarters, and is now back to below 1%, as it was at the start of last year, the FSA said.

Shelter report shows link between house repossessions and unemployment

Latest news: Repossessions jump by 17%

More than 60 areas have been dubbed "repossession hotspots" in a report by housing charity Shelter, with Corby in the east Midlands named the place with the highest proportion of homeowners at serious risk of losing the roof over their head.

The research shows the local authority areas in England with the highest proportion of homeowners issued with a possession order, and therefore at serious risk of repossession. Rising unemployment during the recession has led to a steep increase in repossession orders against homeowners this year.

Shelter said the blackspot for repossessions was in Corby, which had the highest rate of "at risk" homeowners – 7.56 per 1,000, nine times higher than the lowest rate in West Dorset of 0.83.

It was closely followed by Barking and Dagenham (6.62 per 1,000), Thurrock in Essex (6.16 per 1,000), Knowsley in Merseyside (5.68 per 1,000), and Newham in London (5.57 per 1,000).

Shelter warned that the figures reflected a need for homeowners across the country to prepare for higher mortgage repayments if interest rates rise as expected later this year.

Repossessions rocketed by 15% in the first quarter of the year, and the charity has found that unemployment rose by 3.3% on average in local authority areas with the highest levels of repossession orders. In comparison, unemployment rose by an average of 1.4% in areas with the lowest rates of repossession.

Shelter analysed Ministry of Justice figures for repossession orders in the first three months of the year to identify the hotspots, with most grouped across the north of England, around the Wash, and the east of London leading out to the north Kent and Essex coast.

Other hotspots include:

• Fenland, next to the Wash (5.04 at-risk homeowners per 1,000)
• Harlow in Essex (4.85 per 1,000)
• Manchester (4.63 per 1,000)
• Peterborough (4.57 per 1,000).