Latest news with #mortgages
Bloomberg
20 hours ago
- Business
- Bloomberg
Privatization Would Make Housing More Unaffordable: DoubleLine
DoubleLine Deputy CIO Jeffrey Sherman speaks with Katie Greifeld and Scarlet Fu on "Bloomberg ETF IQ." Privatizing Fannie Mae and Freddie Mac risks a return to the kind of perilous mortgages that helped cause the global financial crisis unless regulatory safeguards are kept in place, an affordable housing nonprofit said in a paper in June. (Source: Bloomberg)
Yahoo
4 days ago
- Business
- Yahoo
Should You Use Crypto To Purchase a Home? 4 Methods and Their Risks
If you're a fan of crypto, perhaps you've been thinking about the various ways to incorporate it into your financial life. Perhaps you've seen headlines claiming crypto mortgages are on the rise as the new way to buy some homes. Learn More: Read Next: However, before you set out to grab your next house with crypto, there are some precautions to keep in mind. Here's what financial experts told GOBankingRates about certain methods and their risks when using crypto to purchase a home. Convert-To-Cash Method Andrew Lokenauth, a money expert from Be Fluent in Finance, said the most straightforward method he's used with clients is converting crypto to cash first. 'I just helped a client last March sell $600,000 in bitcoin for their dream house in the suburbs,' he said. 'The thing is, most sellers still want good old-fashioned dollars, and this approach causes the least headaches with lenders.' Trending Now: Crypto-Backed Loans 'Let me tell you about a client who tried using a crypto-backed loan,' Lokenauth said. 'The market tanked right before closing, and they got hit with a massive margin call — lost about $75,000 in collateral. Not fun explaining that one to their partner.' Smart-Contract Escrows You may also want to take a look at escrow and mortgage opportunities that use crypto in the purchase of a home, but may offer some risk protection. 'It's possible to leverage your crypto for real estate purchases by using smart-contract escrows or stablecoin-pegged mortgages, which automate payments and reduce counterparty risk,' according to Chad Willardson, founder and president of Pacific Capital and City Treasurer of Corona, California. 'Tokenized property platforms allow fractional ownership, softening volatility by spreading exposure across multiple investors.' However, per Willardson, crypto's price swings remain a major risk — buyers should hedge with stablecoins or convert to fiat at closing. Blended Financing According to Willardson, regulatory ambiguity can slow or derail transactions, so work with title companies experienced in digital assets. 'As an alternative, consider blended financing: part traditional mortgage and part crypto loan to balance innovation with stability,' Willardson said. More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 The 10 Most Reliable SUVs of 2025 The New Retirement Problem Boomers Are Facing This article originally appeared on Should You Use Crypto To Purchase a Home? 4 Methods and Their Risks Sign in to access your portfolio
Yahoo
4 days ago
- Business
- Yahoo
Should You Use Crypto To Purchase a Home? 4 Methods and Their Risks
If you're a fan of crypto, perhaps you've been thinking about the various ways to incorporate it into your financial life. Perhaps you've seen headlines claiming crypto mortgages are on the rise as the new way to buy some homes. Learn More: Read Next: However, before you set out to grab your next house with crypto, there are some precautions to keep in mind. Here's what financial experts told GOBankingRates about certain methods and their risks when using crypto to purchase a home. Convert-To-Cash Method Andrew Lokenauth, a money expert from Be Fluent in Finance, said the most straightforward method he's used with clients is converting crypto to cash first. 'I just helped a client last March sell $600,000 in bitcoin for their dream house in the suburbs,' he said. 'The thing is, most sellers still want good old-fashioned dollars, and this approach causes the least headaches with lenders.' Trending Now: Crypto-Backed Loans 'Let me tell you about a client who tried using a crypto-backed loan,' Lokenauth said. 'The market tanked right before closing, and they got hit with a massive margin call — lost about $75,000 in collateral. Not fun explaining that one to their partner.' Smart-Contract Escrows You may also want to take a look at escrow and mortgage opportunities that use crypto in the purchase of a home, but may offer some risk protection. 'It's possible to leverage your crypto for real estate purchases by using smart-contract escrows or stablecoin-pegged mortgages, which automate payments and reduce counterparty risk,' according to Chad Willardson, founder and president of Pacific Capital and City Treasurer of Corona, California. 'Tokenized property platforms allow fractional ownership, softening volatility by spreading exposure across multiple investors.' However, per Willardson, crypto's price swings remain a major risk — buyers should hedge with stablecoins or convert to fiat at closing. Blended Financing According to Willardson, regulatory ambiguity can slow or derail transactions, so work with title companies experienced in digital assets. 'As an alternative, consider blended financing: part traditional mortgage and part crypto loan to balance innovation with stability,' Willardson said. More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth How Much Money Is Needed To Be Considered Middle Class in Your State? This article originally appeared on Should You Use Crypto To Purchase a Home? 4 Methods and Their Risks
Daily Mail
4 days ago
- Business
- Daily Mail
Dishing out super-sized mortgages won't solve the problem of high house prices: SIMON LAMBERT
'Up, up, up go the house prices.' That was the TV news reporter's opening line the first time I was invited to go on the television. It was November 2006 and the reason that a much younger version of your correspondent had got ITV's call to comment was that I had reported on a plan by a major lender to offer bumper mortgages. Abbey, at the time the UK's second biggest mortgage lender, had decided first-time buyers and home movers should be allowed to borrow up to five times their joint salary. The early 2000s property market boom was about to hit its peak and an Abbey spokesman said: 'Lending five times salary may sound high but really is something we have to do given what is happening with house prices.' You can read the This is Money article on Abbey's five times salary mortgages here. It noted that while Abbey had made a fanfare about extending its lending, it wasn't alone - some other banks and building societies including RBS and Cheltenham & Gloucester were also offering supersized loans. We had written: 'Some lenders go even higher - Northern Rock said its maximum loan was 5.9 times salary but added that it rarely allows borrowers to stretch that far.' Almost 19 years later, the big financial news this week was that Chancellor Rachel Reeves is planning to allow mortgage borrowers to stretch that far. Rules put in place to protect borrowers in the aftermath of the financial crisis will be swept aside to usher in a new era of bigger mortgages. Banks and building societies will no longer be bound by rules that say only 15 per cent of their mortgage lending can be at more than 4.5 times income. Instead, individuals and couples will be able to borrow up to six times their salary. For a couple on a combined £80,000, this means potential borrowing would rise from £360,000 to £480,000. Understandably, there are some deep concerns about the impact of allowing a pair of near average earners to take on an extra £120,000 of mortgage debt. The ratio of house prices to earnings has fallen from its recent peak, as wages have risen faster than home values - but it remains far higher than the long-term average Stretching your mortgage to the limit in this way dramatically increases the risk of discovering you have overextended your finances, particularly if you come off a fixed rate mortgage term at a time when interest rates have jumped. First-time buyers and those moving up the property ladder also have a habit of discovering that the cost of running their new home comes in at more than they budgeted for. Many of us who are lucky enough to be homeowners will have been there. You take an optimistic view of what your bills and running costs will be to justify thinking: 'Yes, we can afford that home we really want'. Reality bites about six months in. Something that was especially true for those of us who bought in the pandemic and then got whacked by bills soaring in the cost-of-living crisis. When it comes to mortgages, we are in a very different financial world to 2006. It was a lot easier to borrow and overstretch back then and banks were eager to dish out interest-only loans. The eagle-eyed will notice all the banking brands named above didn't make it through the credit crunch-driven financial crisis that arrived in 2008. The banks that are around now are much more robust. Meanwhile, the rules may say six times salary is possible, but that doesn't mean you will get a mortgage that big. Lenders assess now on affordability and if your incomings and outgoings don't tick the boxes, they won't lend you that much. It's also very easy to criticise this from both the comfortable position of being a homeowner and from a top-down zoomed out viewpoint. Whereas, on an individual level, if a prospective borrower is already paying more per month in rent, then who can blame them for being very happy to take on a mortgage instead and at least be working towards owning the property. Nonetheless, I can't help but think this mortgage bonanza is a bad idea, as it will only serve to drive house prices up further. You don't need to be an economic genius to work out that if you lend people more money to buy homes, the price of homes will rise. And this is unfortunate timing, as homes have got more affordable in recent years. The house price to earnings ratio has fallen from its pandemic boom peak, as wages have risen faster than home values. Looked at from a broader perspective, homes are still very expensive though, at about 5.7 times earnings compared to the long-term average of 4.6. Albeit, this long-term average itself has been pulled up by the very high levels over the past 20 years. Ideally, we need a prolonged period of wages rising faster than house prices to correct the market not a short-term fix of bunging people bigger mortgages, Extending borrowing on the demand end also undermines the benefit of building more homes on the supply end. I would argue too high house prices are a root cause of much of Britain's economic ills over the past 20 years. Bumper mortgages only make things worse.
Daily Mail
5 days ago
- Business
- Daily Mail
Best mortgage rates edge down AGAIN as more lenders make cuts: How much lower will they go?
The cheapest fixed rate mortgages have edged lower once again thanks to another wave of rate cuts by lenders this week. Barclays, Santander, Halifax and Lloyds Bank are the latest to slash rates, taking the cheapest deals as low as 3.7 per cent. Santander and Halifax are offering two-year fixes at 3.79 per cent for those moving home with at least a 40 per cent deposit. However, Lloyds Bank goes one better than all the rest offering the chance to get a rate as low as 3.69 per cent on a two-year fix, with a £999 fee. The catch? Buyers will need to have a Club Lloyds bank account to get it. On a £200,000 mortgage being repaid over 25 years, it would mean paying £1,021 a month. In terms of five-year fixes, Lloyds Bank is offering 3.84 per cent to borrowers with a Club Lloyds account. For those who don't have Club Lloyds account, the bank is offering a 3.79 per cent two-year deal or a five-year fix at 3.94 per cent. From tomorrow Barclays will also get in on the action with a 3.79 per cent two-year fix and a five-year deal at 3.91 per cent, both with an £899 fee. Barclays has also undercut some of its competitors by launching a 3.75 per cent two-year fix for property purchases if they are a premier banking customer. For those buying or remortgaging with smaller deposits or equity, rates are not that much higher. For example, someone remortgaging with 25 per cent equity in their home can now bag a 3.94 per cent two-year fix with TSB or a 3.96 per cent five-year fix with Santander. And someone buying with a 15 per cent deposit can get a 4.04 per cent two-year fix with Santander with just a £749 fee. On a £200,000 mortgage being repaid over 25 years, that would equate to paying £1,061 a month. Will mortgage rates fall further? Inflation is one the most important metrics that people should keen an eye on as that will have a major impact on the future direction of interest rates. The Bank of England sets interest rates to try to keep consumer prices inflation at the Bank and Government's 2 per cent target. At present, inflation is above that target. It rose to 3.6 per cent in the 12 months to June, rising from from 3.4 per cent in the 12 months to May. However, the Bank of England will also closely monitor other aspects of the economy and take that into account when making its rate decisions. The UK economy contracted in May by 0.1 per cent and the jobless rate rose to 4.7 per cent. Payrolls in the private sector contracted for the thirteenth straight month. If inflation is deemed the biggest threat, then the Bank of England is more likely to The theory is that raising interest rates lifts the cost of borrowing for individuals and businesses and thus reduces demand for it, slowing the flow of new money into the economy and applying the brakes. In contrast, cutting interest rates lowers the cost of mortgage rates and other borrowing and increases demand, pushing the accelerator on the economy. Mortgage broker Aaron Strutt of Trinity Financial thinks there is still room for rates to fall a little from here. 'Mortgage lenders are still cutting their rates despite the higher inflation figures,' said Strutt. 'Even with everything that's going on with the economy and global affairs it still seems like rates are heading down. 'I would not bet against rates being closer to 3.5 per cent over the coming months, but as we have seen so many times before almost anything can happen. 'If you get the chance to take a rate anywhere near 3.75 per cent you are doing very well.' What about for households remortgaging? An estimated 900,000 borrowers will reach the end of their mortgage deal during the second half of this year, according to UK Finance, the trade association for the banking and finance industry. Many households will be coming off rates between 1 and 2 per cent, locked in prior to interest rates rocketing upwards in 2022 and 2023. While they face far higher rates today, the blow will somewhat be softened by recent cuts. Currently the lowest remortgage rates for someone fixing for five years are with Barclays and HSBC, both offering deals at 3.86 per cent. Those prepared to fix for two-years can do slightly better with HSBC offering a 3.83 per cent deal. How to find a new mortgage Borrowers who need a mortgage because their current fixed rate deal is ending, or they are buying a home, should explore their options as soon as possible. Buy-to-let landlords should also act as soon as they can. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you What if I need to remortgage? Borrowers should compare rates, speak to a mortgage broker and be prepared to act. Homeowners can lock in to a new deal six to nine months in advance, often with no obligation to take it. Most mortgage deals allow fees to be added to the loan and only be charged when it is taken out. This means borrowers can secure a rate without paying expensive arrangement fees. Keep in mind that by doing this and not clearing the fee on completion, interest will be paid on the fee amount over the entire term of the loan, so this may not be the best option for everyone. What if I am buying a home? Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. Buyers should avoid overstretching and be aware that house prices may fall, as higher mortgage rates limit people's borrowing ability and buying power. What about buy-to-let landlords Buy-to-let landlords with interest-only mortgages will see a greater jump in monthly costs than homeowners on residential mortgages. This makes remortgaging in plenty of time essential and our partner L&C can help with buy-to-let mortgages too. How to compare mortgage costs The best way to compare mortgage costs and find the right deal for you is to speak to a broker. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with fee-free expert mortgage advice. Interested in seeing today's best mortgage rates? Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs. If you're ready to find your next mortgage, why not use L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you. > Find your best mortgage deal with This is Money and L&C Be aware that rates can change quickly, however, and so if you need a mortgage or want to compare rates, speak to L&C as soon as possible, so they can help you find the right mortgage for you.
