Mortgage applications at pre-recession levels

Mortgage applications have returned to pre-recession levels according to Countrywide, the mortgage broker and property services group.

Last month was the third consecutive monthly rise in mortgage application, up 112pc from the same time last year.

Grenville Turner, group chief executive of Countrywide, said: "Widespread uncertainty surrounding the economy and election does not appear to have deterred mortgage customers, which might partly be due to the number people who have sat tight during the recession and are now ready to move regardless.

"While the longer term outlook is unknown, the forthcoming election is not deterring buyers at present and mortgage applications always provide a good indication of consumer confidence."

The research also revealed that a growing number of mortgage customers are opting for fixed rate products, which made up 61pc of applications in March.

The average interest rate for borrowers stands at 4.65pc, while fixed rates remained the most popular type of remortgage product.

Melanie Bien, director of mortgage broker Savills Private Finance, said: "The housing market has certainly picked up since the start of the year with vendors getting off their hands and putting their homes up for sale, while borrowers continue to hunt for a bargain."

Ms Bien pointed out that mortgage availability has had a significant impact for borrowers, with a greater number of loans available at more competitive rates.

She said: "While those with a 25pc deposit have the pick of the rates, there are more options for those with a more modest 10pc deposit as well. However, election uncertainty and the fact that there is more of a balance between the number of buyers and sellers than in the past couple of years mean there could be a halt to the rise in property prices in coming months."

Posted at 07:22PM Apr 14, 2010 by Kelly Board in Mortgages & Housing Market  |  Comments[0]

Cash Being Used Less and Less

Cash payments will account for less than half of all transactions in five years' time, according to research.

The Payments Council, which oversees the strategy on payments systems, said that 80% of cash transactions made at present were for less than £10.

It claimed that "cash is king no more" as card payments accelerate and notes, coin and cheque usage declines.

But a recent poll for the BBC reflected opposition among pensioners to the phasing out of cheques.

The survey by ICM for the BBC suggested that three-quarters of pensioners were against the phasing out of cheques, which has been planned for October 2018.

The Payments Council, which set the deadline should alternative payment systems be developed, has published a report giving its vision of the future of how UK consumers spend.

It suggested that by 2018, one in 50 people would be paid their wages in cash, compared with one in eight in 1999.

It predicted that cash would account for 45% of transactions by 2018, compared with 73% in 1999, whereas debit card spending would increase from £65bn to £490bn over the same period.

"Although cash will not disappear in our lifetime, the continuing payments revolution will make it an ever smaller part of our spending," said Mike Bowman of the Payments Council.

"The noughties have been the decade of the debit card. Especially since chip and pin, which has speeded up transactions, it has become socially acceptable to buy small items by card now too, for example in a sandwich shop or a pub."

The Council also said that cheques accounted for 0.8% of spending in shops.

However, representatives from the Council faced some persistent questioning from the House of Commons Treasury Committee in March about the proposed winding down of the cheque system by 2018.

Committee chairman John McFall questioned whether the "terminal decline" of cheques was in fact a "fudged, managed decline".

Michelle Mitchell, charity director of Age UK - previously Age Concern, said: "Despite growing evidence that the use of debit and credit cards is replacing more traditional payment methods, many older people still rely on cash and cheques to shop and pay their bills.

"The withdrawal of cheques would cause serious difficulties to some older people who do not feel comfortable with the Chip and Pin system and do not like carrying around big amounts of cash.

"We urge the next government to ensure the use of cheques is guaranteed until alternative payment methods are in place which older people feel comfortable with."

Online shopping and internet banking had become more convenient with cards, according to Paul Smee, chief executive of the Payments Council.

However, he added that cash had "survived the fall of the Roman Empire" and so would continue.

But Dave Birch, a payments expert and director of Consult Hyperion, said that the development of mobile phones to receive payments was a "critical step" in the move towards automated payments systems.

"The issue of anonymity is one of the key reasons why people like cash," he added.

Recent figures showed that traditional card fraud had dropped, but phishing attacks over the internet had risen.

Posted at 02:32PM Apr 14, 2010 by Marc Stenton in The Economy  |  Comments[0]