In a landmark decision that signals a determined stepping-up of its campaign to end recession and bring about a recovery, the Bank confirmed it is beginning a strategy to pump £75 billion of newly created money into the economy over three months.

The ground-breaking step came as the Bank’s rate-setting Monetary Policy Committee also pushed interest rates to yet another historic low.

The MPC ordered another half-point cut in base rate from an existing 1 per cent that was already the lowest in the Bank’s 314-year history to a new all-time low of 0.5 per cent.

But the focus of interest on today’s crucial decisions from the Bank was on the move to press ahead with the measures of so-called “quantitative easing”, or “QE”.

These have become necessary in part because with interest rates having been cut so sharply in recent months, the Bank is close to the zero limit below which rates cannot fall.

The green light for today’s drastic action was given by the Chancellor in a letter to Mervyn King, the Bank’s Governor, released today alongside the MPC’s announcement that it will immediately put to work its new powers to pump up the amount of cash and credit flowing in the economy in an attempt to jump-start growth.

The MPC’s decision to press on rapidly with QE, signalled a fortnight ago in minutes of its last meeting, means that it will now begin buying from commercial banks a range of corporate bonds (businesses’ IOUs) and Treasury gilt-edged stock or “gilts” (Government IOUs).

The Bank will pay for these assets by creating new money, electronically, in a modern-day version of running its printing presses.

The freshly-created cash paid to the banks for these assets will be credited to their Bank of England accounts. In turn, the banks should be able to make new loans to businesses and consumers backed by this increased funding.

Michael Cooke, mortgage specialist at The Money Helper, commented “Consumers who are in a position to remortgage but have been watching the base rate movements carefully to pick their moment should really be thinking about acting now, as SVRs are still not moving and the BBR has almost nowhere further to fall. From here on the likelihood is for future rate movements to be upwards, so there’s no better time to lock in a fixed rate deal to ensure a good & stable rate is in place before rates increase again.”

To find out what mortgage deals you may be eligible for, fixed or otherwise, request a free mortgage quote from The Money Helper online or by phone on 0845 003 0065.

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75,000 repossessions forecast for 2009 remains unchanged.

Around 10,400 properties were taken into possession by first charge mortgage lenders in the fourth quarter of 2008, down from 11,100 in the previous quarter but up from 6,900 in the fourth quarter of 2007, according to the Council of Mortgage Lenders. The total number of first-charge repossessions in the year was an estimated 40,000. This was 5,000 lower than the CML’s original forecast for the year.

The fact that there were 11% fewer repossessions than expected, despite a worsening economy and rising unemployment, demonstrates that mortgage lenders are making strenuous efforts to ensure that repossession really is a last resort. It is important to recognise that repossessions include a proportion of abandoned properties and property fraud. They also include buy-to-let repossessions, as well as home-owner repossessions. In the vast majority of cases where home-owners are committed to working with their lender to keep their home, this outcome is successfully achieved.

At the end of 2008, around 182,600 mortgages - or 1.57% of the total - had accumulated arrears equivalent to 2.5% or more of the outstanding balance - for example, £2,500 or more on a £100,000 balance (a £97,500 mortgage plus £2,500 arrears). This compares with 1.29% at the end of the third quarter of 2008, and 1.08% at the end of 2007.

On a “number of months” basis, 219,100 mortgages were in arrears of more than three months at the end of 2008, up from 166,600 at the end of the third quarter of the year, and up from 127,500 at the end of 2007. However, the big reduction in mortgage rates experienced in 2008 was a significant influence on the rise in the number of arrears cases measured on a “number of months” basis - as the same given sum of arrears represents a higher number of months payments as interest rates fall (see note to editors).

The vast majority of people who face temporary difficulties successfully work with their lender to stay in their homes, and get their mortgage back on track over time. Where borrowers contact their lender early, maintain good communication and are committed to paying what they can and resolving their arrears, lenders work hard to help wherever the household’s future prospects look feasible.

CML director general Michael Coogan commented:

“Despite the upward pressure on mortgage arrears and repossessions arising from the problems in the economy and rising unemployment, both lenders and government are continuing to find more ways to help more people stay in their homes.

“But there seems to be a sharp rise in cases where borrowers are handing back their keys or abandoning their properties. We strongly urge borrowers to contact their lender and work with them before taking this step, as there may be other solutions. Borrowers are still liable for their debt, even if they leave the property, so working through their problems is much more likely to be in their best interests.”

Given this stark reminder of the state of the economy, smart borrowers are reviewing their insurance cover to ensure they are properly protected against losing their homes in the event that their income is lost or reduced through sickness, accident or unemployment.

Michael Cooke, of insurance specialist ‘The Money Helper‘, commented “Borrowers are suffering a double-whammy regarding unemployment insurance at present, with job losses by the thousand being announced on a weekly basis consumers are understandably rushing to buy unemployment cover, but so many insurers and products that were previously in this space have pulled out of the market in recent months that most advisers have been left without a solution to offer. Fortunately our status and relationships with insurers mean that we still have several products to offer clients needing their income insured against unemployment and also against incapacity both short and long-term.”

Consumers considering getting this vital insurance are warned to act quickly while there are still a few insurers offering this cover, as it may disappear altogether if the economy continues to decline further. To request a free quote from The Money Helper visit www.themoneyhelper.co.uk

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It says many lenders stil appear reluctant to pass the latest cuts on to borrowers, resulting in the average rates barely moving.
Michelle Slade, analyst at Moneyfacts.co.uk, says: “Those already on or about to move on to their lender’s standard variable rate have been hardest hit of late, seeing just a third of the latest two cuts passed on.
“Many lenders seem to be actively trying to discourage borrowers using SVR as a product option, maintaining their SVR in line with average mortgage rates. Just one in four lenders have announced a cut in SVR this month and many of these passed on no cut last month.”
It also says new tracker mortgage rates may have seen the biggest cuts passed on over the last two months, but the margin taken by the lenders still continues to widen, today standing at three times base rate.
Slade adds: “Fixed rate mortgages are not faring much better with pricing more than double the cost of funding on the swap rate market.
“Lenders will only pass on cuts to a level they are happy to lend at, and for most this seems to have been reached.
“Anyone coming to the end of an existing mortgage deal in the coming months without substantial equity in their property will find it very hard to find a competitive new deal. Rates are still falling, but at a much slower level than borrowers would have hoped.
“Rates for new borrowers need to fall much further to motivate borrowers on a SVR to remortgage onto a new deal or even to trade up the property ladder.
“As time passes each base rate cut seems to have less of an impact for borrowers and continuing impact on savers. It begs the question; will the Monetary Policy Committee now say, enough is enough?”

With cutting edge sourcing software and daily updates of all newly added, changed or withdrawn mortgage deals across the whole mortgage market, The Money Helper remains a sure bet for ensuring your mortgage enquiry will yield the best available deal on any given day, click for a free quote or call on 0845 003 0065.

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The ratings agency has downgraded the long-term bank deposit and senior debt ratings of Lloyds TSB Bank plc to Aa3 from Aaa and the senior debt rating of Lloyds Banking Group plc to A1 from Aa1.
The bank financial strength rating of Lloyds TSB was downgraded to C+ from B+, with a negative outlook.
Elisabeth Rudman, vice president and senior credit officer in Moody’s Financial Institutions Group, says: “The downgrades reflect the high level of troubled and higher risk exposures within HBOS.
“Moody’s considers these exposures will weaken the profitability and capital adequacy of the overall group, as well as the very significant operational challenge of integrating a larger and weaker bank into the group.”
Moody’s says the lower risk appetite of Lloyds TSB will stand HBOS in good stead but will not translate across to the group’s asset quality indicators for some time due to the size of the HBOS loan book.
The task of merging the two groups represents a substantial challenge for the management team particularly in the midst of a recession, the ratings agency claims.
Rudman adds: “At Lloyds TSB’s current bank financial strength rating of C+ we consider the tolerance for further impairment charges and losses to be around £16bn (beyond what the bank has already indicated is expected to be reported by Lloyds and HBOS in 2008).
“Losses above this level would increase the downward rating pressure on the bank financial strength rating of Lloyds TSB and Bank of Scotland.”

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It’s reduced its two-year fix and track mortgage from 4.39% to 3.89%, a reduction of 0.5%
It’s also reduced its three year fixed rates have been by 0.7% points from 4.69 per cent to 3.99%.
At the end of the fixed period all fixed rate mortgages revert to a tracker rate of 1.49% above base for the remaining life of the mortgage.
The Woolwich has also launched a new range of four year fixed rate mortgages designed purely for home purchase.
For buyers with a 20% deposit, the rate will be fixed at 4.99% for four years with the same follow-on rate of 1.49% above base for the remaining term of the mortgage. The rate is fixed at 3.99% for borrowers with a 40% deposit.
Chris Keane, head of mortgage products for Barclays, says: “While a large percentage of our customers are remortgagers, we have acknowledged the needs of buyers at this time with the dedicated purchase-only deal designed specifically to meet the requirements of this group.
“The rate is fixed for four years to match the average term of tenure in a first property and, at under 5% for up to 80% LTV, looks very attractive.”

These deals and all others currently available in the UK mortgage market are available via The Money Helper at www.themoneyhelper.co.uk or 0845 003 0065

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At their lowest, the bank’s share fell by 32% on Friday after HBOS announced losses of over £10bn for 2008.

Friday’s news sparked fears that the government would be forced to pump even more money into the bank, or possibly nationalise it.

Lloyds has also been criticised in the past week for planning to pay up to £150m in staff bonuses, despite being 43% owned by the government.

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Lloyds says since HBOS’s last trading update in December 2008, trading has been further impacted by increasingly difficult market conditions, an acceleration in the deterioration of credit quality and falls in estimated asset values.

The key elements of the loss are the £4bn impact of market dislocation and approximately £7bn of impairments in the HBOS corporate division.

The market dislocation has been driven by deterioration in asset quality and falling market valuations.

While the group says Lloyds TSB traded profitably and satisfactorily in 2008 and expects to report a profit before tax from its continuing businesses, including the impact of approximately £1.3bn from market dislocation, of some £2.4bn.

On the back of the news Lloyds Banking Group’s share price fell a whopping 21% to 62p per share.
Eric Daniels, group chief executive of Lloyds Banking Group, says: “HBOS’ 2008 results have been adversely affected by the impact of market dislocation, which accelerated significantly in the last quarter of 2008, and the additional impairments required on the HBOS corporate lending portfolios.
These impairments primarily reflect the application of a more conservative recognition of risk and the further deterioration in the economic environment.
Whilst we recognise that the short term outlook is more challenging, Lloyds Banking Group has the largest UK financial services franchise, with excellent long-term earnings potential. The Group will provide an update to the market on 27 February 2009, and is already making good progress in integrating the two businesses.”

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Many are borrowing up to 125%, giving them cash for furnishing and decorating but leaving them facing instant negative equity.

Banks and building societies are now rushing to offer such mortgages, which help people get on the property ladder even if they have no savings.

Brokers London & Country said the number taking out 100% mortgages had ‘more than doubled’ in the last year. For mortgages over 100% there had been a 95% rise.

Another broker, Mortgage Advice Bureau, said 50% more people had taken out 100%-plus loans.

There are now a record 155 such mortgages on offer, according to the research firm Moneyfacts.

Last week Alliance & Leicester said it plans to launch a ‘Plus Mortgage’, of up to 125%. Other lenders include Birmingham Midshires, owned by the Halifax, Northern Rock and Coventry Building Society.

The massive mortgages are popular not only with first-time buyers but also with divorcees who have left the family home and have no savings to buy a new one.

They let people escape the cycle of trying to save while paying for rented accommodation. But if prices began to fall, they would face disaster.

The high mortgages usually have an interest rate at least one percentage point higher than other loans, while some lenders add an extra charge of £2,000 or £3,000. But experts said such mortgages should become cheaper as more lenders offer them.

The Council of Mortgage Lenders said about 22,000 people took out a mortgage of 100 per cent or more last year, around two per cent of all home loans.

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The latest house price report, released last week by Halifax, revealed a 1.3% increase in the cost of a home last month to £188,623.

compared to a year ago, the average house is now 9.9% more expensive.

But despite the strong increase, Halifax said that signs had emerged that the property market was slowing, including reports from the Bank of England of a fall in the number of mortgage approvals and the Royal Institution reporting that new buyer enquiries declined from November to December.

Halifax added that the 1.3% rise in January followed a 1% drop in December, which supported evidence that rampant house price growth could wane.

Martin Ellis, chief economist at Halifax, said: “The mixed pattern of monthly price rises and falls in December and January is consistent with a slowing market.

Negative real average earnings growth for only the second time in over ten years, combined with higher interest rates and slower economic growth will squeeze householders’ finances, causing potential homebuyers to be more cautious and constraining housing demand.”

It has been said by some industry commentators that the strong house price growth seen over the past year could grind to a halt over the coming months, as affordability pressures bite first-time buyers and homemovers.

Howard Archer, chief economist at analysts Global Insight, said: ‘Even before January’s shock interest rate hike, first time buyers were finding it ever more difficult and costly to break into the housing market, while a growing number of people were missing mortgage payments. There were also signs that many people were finding it harder to move up the property ladder.

Whilst the Bank of England decided in February not to raise the base rate any further, there are plenty of commentators speculating that further rises are likely, and if these are to be believed then now is the time to nail down a fixed or capped rate deal. If you have expensive unsecured credit and are concerned about it becoming unaffordable with future rate rises then consider consolidating it at a lower rate to keep your outgoings at an affordable level. If you already have a mortgage at a good rate that you don’t want to interfere with, a great alternative solution is to use the equity in your home to reduce the cost of your unsecured debts by consolidating them into a low rate secured loan - there are plenty of fixed rate deals to be benefitted from to reduce your repayments now and keep them low no matter what the MPC decide to do with the base rate in the future. To find out what savings you could make request a personalised loan quotation from The Loan Helper, with hundreds of deals to choose between from a panel of the UK’s biggest lenders they guarantee to get you the best deal possible. Your personalised loan quotation is free and with no obligation so request one today.

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Mr Smailes said that the market would be stable throughout the year, although areas with pronounced housing shortages could see a rise in property prices. FDA Home Page | CDER Home Page | CDER Site Info | Contact CDER | What’s New @ CDER FDA/Center for Drug Evaluation and Research; FDA Logo links to FDA home pageLooking for LEVITRA. Rx required. Levitra Levitra is a new ED drug with unique benefits. Rx required.

He said that price rises would be more prevalent in London and the south-east, where available housing is in short supply.

Mr Smailes added: “If you take the country as a whole, I think it will be a small level of possibly five per cent or less across the board, unless of course there are unknown economic factors which may come into play.”

However, he stressed that the NAEA is “certainly not expecting a crash market”.

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