| Now families face £1,300 a year mortgage increase
Families face a �1,300 annual increase in their mortgage payments after the country's biggest building society announced a rise in its lending rates. The Nationwide will today hit homeowners with its fifth increase in mortgage rates since the start of the year. Experts said homowners are paying the price for the global credit crunch, which is squeezing the amount banks and building societies have to lend. On January 1, a typical repayment mortgage of �158,000 would have cost �968 a month with a Nationwide two-year tracker at 5.48 per cent. Today, the rate will rise by a further 0.57 of a percentage point, to 6.6 per cent. The increases since the start of the year adds an extra �109 a month, or �1,308 a year to mortgage payments.
Mortgage Applications Spike
(RTTNews) - The Mortgage Bankers Association reported Wednesday that mortgage application volume spiked for last week, increasing about 46% from the week before. The jump takes the level to the highest pint since early February. At the same time, an 82% jump in refinancing applications overshadowed the 10.6% rise in home purchase loan requests. "The Federal Reserve acted last week to bring some stability to the mortgage-backed securities market and we saw an immediate impact with a drop in mortgage rates," said Jay Brinkmann, MBA's Vice President of Research and Economics. He continued, noting, "With a drop in the 30-year fixed rate of at least a quarter of a point, we saw a sharp increase in refinance applications, but applications for home purchases also increased over where they have been the last few weeks, although still below where they were this time last year." Last week, the Fed cut rates by 0.75% and brought the federal funds rate down to 2.25%.
RBA backs banks in pushing up rates
The Reserve Bank of Australia has defended the major banks for increasing lending rates beyond official cash rate moves. The central bank said Australia's financial sector was likely to withstand the global credit turmoil which has forced up borrowing costs. RBA governor Glenn Stevens told a financial markets conference in Sydney on Thursday it was unrealistic to expect the banks to move their lending rates only in line with the official cash rate because international borrowing costs had climbed. "The presumption that their lending rates would and should move only in line with the cash rate, which had arisen in an earlier period when all these rates were much more closely related, has not been a realistic one in the recent environment," he said. The major banks raised their variable mortgage rates during March by between 30 and 38 basis points.
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