Cars the latest perk in the fight for home loans
Sunday 30 July 1995
TMB claims to have received 500 inquiries already in response to its offer of the use of a Renault Clio - taxed, insured and serviced for 12 months - to anyone who takes out a mortgage or remortgage of at least pounds 45,000. TMB's standard variable rate is 8.29 per cent, and it also offers a pounds 250 cashback to help with mortgage fees.
But there is a completion fee of pounds 299 in addition to survey and legal fees, and borrowers will be charged a substantial penalty - four months' gross interest - if they redeem within four years, and one month's interest after that.
Chase de Vere and National Counties Building Society also claim to have had a good response to their offer of a free Mini, worth pounds 6,381 on the road, for borrowers who remortgage with them for at least pounds 100,000. The current mortgage rate is 8.39 per cent, but there is a five-year penalty "tail" on the offer. If it is paid off in full or in part within that time, a fee equal to 6 per cent of the loan will be required.
The car's invoice value could also be liable to capital gains tax if other gains are made during the year. The offers have been criticised by consumer lobbies, increasingly worried at the impact of cashback and discount offers on the mortgage lending business.
Most offers now represent between 3 and 6 per cent off the value off a loan and subsidised loans must be averaging at least 10-15 per cent of the value of most lenders' loan portfolios. Although most mortgage lenders have made good margins on mortgage business in the past, the volume of business is little more than half the peak levels in the late 1980s. The upturn in house repossessions in the first half of 1995 and the sharp downward revision in house price forecasts from analysts at UBS this week add to the generally gloomy outlook. They now expect a 3 per cent average drop in prices.
Business could grow in the next two months, as buyers rush through deals to beat the deadline of 1 October, after which borrowers taking out new mortgages and remortages will have to wait nine months for income support to start paying their mortgage interest.
But any artificial surge in business will be balanced by a likely drop in demand for mortgages after the deadline has passed.
- 3 The enemy within: People who hear voices in their heads are being encouraged to talk back
- 4 Phil Neville backtracks on Tomas Rosicky 'I'd smash him' comments from Match of the Day 2
- 5 SAG Awards: Fake applause track interrupts Reese Witherspoon
Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
Asteroid narrowly scrapes past Earth: how to watch the closest space rock for decades as it flies by
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...