In some good news for house-hunters in the new year, the Nationwide building society has cut its fixed rate mortgage deals by between 0.09 and one percentage point.  

The move will affect its two, three, and five-year deals and will come in from 21 January. The Nationwide had already decided to cut its standard variable rate by 0.5% to 3.5%, following the recent cut in the official Bank Rate.  

The society has claimed that its latest move had been prompted by a cut in the cost of borrowing on the financial markets.  

As their website says, “recent reductions in swap rates have enabled us to cut the price of our fixed rate mortgage deals.” 

“The financial climate remains volatile so we will continue to monitor market conditions, offering lower mortgage rates and deals where it is prudent to do so,” it continued.  

The changes mean the interest charged on the Nationwide’s fixed rate deals will range from 4.39% to 7.09%, depending on how big the loan is in relation to the value of the property, and the length of the loan.  

However, the financial information service Moneyfacts has said that most lenders have, so far, failed to pass on the full effect of the recent bank rate cuts to their new mortgage deals.  

In recent months, lenders have been quick to point out that the increased margins are as a result of the increased risk that they faced. Now that the government has stepped in to reduce that risk, borrowers will be hoping that not only will the banks start to lend again, but that the reduced risk is passed on with lower rates being offered. Moneyfacts said the difference between the average two-year fixed rate mortgage, and two-year swap rates, had widened from 1.02% in October to 2.84%.  

Also, the average two-year tracker mortgage is now 2.6% above Bank Rate, compared to a differential of just 1.29% at the beginning of October, before the four consecutive rate cuts by the Bank of England.  

This is in effect a single piece of good news in a sea of troubles and something only a blindly optimistic junior minister would describe as ‘the green shoots of recovery.’ However, for those seeking to find a mortgage and secure a house, this could mean the difference between success and failure.

Under a new scheme designed to help people stay in their homes, Not-for-profit housing associations will buy homes from people struggling to pay their mortgage and then allow them to continue living there. The government says the £200m scheme could help up to 6,000 households which might otherwise face repossession.

The English scheme is one of several initiatives launched or expanded to help homeowners in the downturn. The programme was devised last year by the National Housing Federation, which represents
England’s housing associations, and the Council of Mortgage Lenders.

It was already in place across 80 local authorities in England, but will be rolled out across the country from thjis week.

Northern Ireland, Wales and Scotland have, or soon will have, their own seperate initiatives in place.

Scotland has had a similar scheme since 2003, from which more than 700 households have already benefited. The Scottish government has said it plans to extend its existing mortgage-to-rent scheme, as well as developing a new mortgage-to-equity programme, which will help some owners keep full possession of their homes while substantially reducing their debt.

Wales also has a mortgage rescue scheme in place, involving housing associations registered with the Welsh Assembly government. Northern Ireland’s department for social development has issued a consultation document on setting up such a scheme, but has still to launch it formally.

Under the English scheme, the housing associations will buy homes at an independently assessed market price. Successful applicants will remain in their property either as tenants on “affordable” rent, or as owners after receiving a loan from a housing association.

It is intended that once their financial situation improved, the householder could pay back the loan in part or full. The scheme is targeted at families with small children, households with a disabled member, pensioners or those deemed “vulnerable” in another way.

People wanting help will apply to their local authority, and will have their finances assessed by a designated agency. The property will then be valued and the housing association will step in to buy it.

The government and lenders have been under pressure to offer help to homeowners who have hit hard times during the downturn and risk repossession. The government has expanded the Income Support for Mortgage Interest (ISMI) scheme, which means that the time before homeowners who lose their jobs receive financial help with the interest payments on their mortgage has been cut from 39 weeks to 13 weeks.

Another initiative, the Homeowner Mortgage Support Scheme, will allow households that see their income fall unexpectedly to defer part of their payments for up to two years. And under the Mortgage Pre-Action Protocol, lenders will be legally compelled to use repossession only as a last resort, having looked at other alternatives with the borrower, such as reducing monthly payments.

There can be no doubt that this scheme will have a positive impact, saving people from eviction from their homes is always good after all. But there is a real feeling of myself and many people I have spoken to that this scheme is too little too late.