Christopher Farrell thought he could become Alan Sugar’s next apprentice but instead he stands charged with four counts of mortgage fraud.

Farrell, who is 29, used to work as a mortgage and insurance adviser until August 2009 when he was fired. His next foray into the world of work was as a contestant on the UK hit TV show, The Apprentice.

Whilst working as an adviser he manipulated payslips and created fake documents to support mortgage applications for members of his family.

His solicitor explained that Farrell’s salary was just £1,600 per month but he earned commission if he made sales in excess of £5,000 a month. He had a wife and young family to support and in desperation he started inflating incomes so that mortgage applications would be successful and he would get his commission.

Meanwhile, it looks like house buyers are in for a difficult 2011 as the CML predicts that net mortgage lending will drop to just £6bn, its lowest level since 1980.

The CML has estimated net mortgage lending of £9bn for 2010, a far cry from the £110bn seen in 2006. If, as it predicts, 2011’s figure drops to £6bn, that represents a massive 33% decrease and is bound to cause concern among people looking for their first IT contractor mortgage.

Despite the low amount of money being advanced for home purchases, there are now 2,500 different products for house buyers to choose from, up from 1,600 at the start of this year.

Mortgage rates have also fallen this year with the average two year fixed rate mortgage finishing the year at 4.37%, down from 4.88% whilst two year tracker mortgages have dropped from 3.77% to 3.36% in the last 12 months.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Barclays Bank recently launched a ‘Great Escape’ remortgage deal that could reduce interest rates for home borrowers.

Andy Gray, the head of mortgages at the bank explained that people who are still on a standard variable rate mortgage are paying over the odds because of the current low Bank of England base rate.

The Great Escape allows home buyers the chance to obtain a tracker mortgage at 2.18% above base at up to 70% LTV, which could save on monthly repayments. Customers also receive £300 cashback, which could pay the opt-out fee to their existing mortgage provider.

Gray said that the product was specifically aimed at the 700,000 people who feel they are trapped by their current lender’s standard variable rate.

Meanwhile, the supermarket chain Tesco is busy planning its IT contractor mortgage offerings in advance of next summer’s launch. Tesco Bank, along with new partner Vertex, intends to put forward its proposals to the FSA next month. Last week Tesco agreed a five year deal with Vertex, a move that will create 200 jobs in Glasgow’s Atlantic Quay.

Benny Higgins, the chief executive of Tesco Bank, explained that they were designing simple, transparent mortgage products that would reward customer loyalty. The first home loan products will be introduced early next summer.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Mortgage lending companies have expressed concerns that regulatory interference could prevent 50% of people who have got an IT contractor mortgage in recent years from obtaining one on the future.

The Financial Services Authority wants to ensure that the lax lending that contributed to the economic crisis does not happen again. But the danger is that tighter regulations will deter the banks from lending at a time when the housing market is already in dire straits.

Between 2005 and 2009, we saw the amount of mortgage lending cut in half. Confidence in the housing market is now low and any further credit restrictions will accelerate the trend in falling house prices.

There is no doubt that the income self-certification mortgage scheme was abused by some people and this could have contributed to house price inflation in previous years. And it is just this sort of behaviour that the FSA is determined to stamp out.

However, the director general of the CML, Michael Coogan, says that far too many potential first-time buyers will have to sacrifice their dream of becoming home owners if the FSA lays down stricter lending criteria.

We have already reached a stage whereby first-time buyers are being charged higher interest rates on their mortgage than people who are moving home. By increasing regulation further, young people are being condemned to many more years of renting, or relying on parental support. And of course if there is less mortgage finance available, fewer people will enter the housing market and those who want to move into a larger property will find it impossible to sell.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

According to recently released figures by the CML, Scotland is the place to go if you want to take out an IT contractor mortgage.

In the second quarter of 2010 the number of first time buyer mortgages leapt by 18% to 4,700 compared to the previous quarter. The value of the new mortgages equalled £419m, up 27% on Q1 and 36% more loans were granted to Scots moving home in Q2. Overall, new mortgages rose by 2,900 to 12,700, the highest percentage increase in the UK.

Scottish home movers also used less of their income (9.3%) to pay off their mortgage interest in Q2 compared to other areas of the UK.

First time buyer deposits shrank slightly from 23% to 21% in Q2 showing that some financial institutions are relaxing lending criteria. But, as in the rest of the UK, remortgage activity in Scotland remains very subdued.

Kennedy Foster, policy consultant for CML Scotland, said that recent months have shown positive signs for the Scottish housing market. However, the upward trend might not continue as regulatory and austerity pressures will affect Scotland just the same as other areas of the UK.

The chief executive of Homes for Scotland, Jonathan Fair, was slightly more cautious saying that although the latest figures are encouraging, it must be remembered that the base rate is currently at an all time low and normalised lending is still a distant dream.

The director of research at Savills, Jacqui Daly, says that the housing market in the UK will start to slow down for the rest of the year with the mortgage arena the least profitable. Her comment came after research by Santander found that nearly twice as many attempts by property owners to sell their house have failed than succeeded in the last year.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Flag Scotland, Ecosse by erjkprunczyk

First Direct, a division of HSBC, have seen an enormous increase in IT contractor mortgage related enquiries since it reduced the cost of applying to £99. The move was so popular that customers now have to wait about a month for an interview to apply for a mortgage.

Not only is the application fee an enticement to customers, but the bank also offers one of the best tracker mortgages on the market. The interest rates on its popular lifetime tracker are set on a sliding scale dependant on the deposit placed. For borrowers wanting a 65% LTV, the rate is 1.79% above base, increasing to 3.49% for people who only have 15% to put down as a deposit.

In September, First Direct is likely to be changing the rates on its mortgage products but people who have already rung up to arrange an interview will get the initial rate providing they meet the qualifying criteria. HSBC staff have now been drafted in to help with the deluge of new business so that the callback queue does not grow any further.

Wednesday’s quarterly inflation report from the Bank of England could also encourage people to go mortgage shopping. The report hinted that the Bank is in no hurry to increase interest rates and in fact some experts believe they will remain at their historic low for most of the next 12 months.

Although the lifetime tracker deal looks appealing, mortgage seekers should heed the advice of experts and work out how much they will be paying when interest rates do eventually rise. Borrowers on a tight budget especially could find that a fixed rate mortgage would be a better bet in the long run.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Binoculars portrait by gerlos

More and more people between the ages of 20 and 34 are still living with their parents, according to data from the HBF.

33% of men and 20% of women are not rushing to leave the family home as the average age for first time buyers without financial assistance reaches 37. Many of these cannot obtain anIT contractor mortgage due to the high deposit requirements laid down by mortgage lenders.

In June, Grant Shapps, the housing minister, said that the government would help first time buyers to enter the housing market. The HBF is now asking the coalition to stick to its word and not remove funding for the HomeBuy Direct scheme when the Comprehensive Spending Review is undertaken next month.

HomeBuy Direct is a government sponsored, equity loan scheme. The purchaser buys at least 70% of the house price and the balance is funded equally by the house builder and the Homes and Communities Agency. 10,000 people have already benefited from this scheme in the last 2 years, according to the HBF.

It’s not only first time buyers who are having problems purchasing property. The buy to let market is also suffering with only 28% of landlords looking to buy more investment property in the near future. The lack of finance for both new purchases and remortgages are cited as the primary reasons why residential landlords are now sitting tight.

Meanwhile news that the value of housing stock in the UK has more than doubled over the past 10 years is causing experts to speculate whether we might see more older people [55 years and above] taking advantage of lifetime mortgage equity release schemes to boost their income.

Equity release schemes are becoming an increasingly popular way to repay existing mortgages, consolidate debt and supplement low pensions.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Home Sweet Home Personalized Moving Announcements by jcbonbon

For first time buyers looking for an IT contractor mortgage, raising the money for the deposit is the biggest hurdle they have to face. And the situation could get worse according to the Newcastle Building Society.

They suggested this week that first time buyers who cannot get funds from their parents will have to rent or stay with their parents for 10 years longer than middle class first timers. Not only do first time buyers have to find more in the way of a deposit, they now face more stringent credit checks.

Of course all of these new requirements are designed to reduce the risk of borrowers defaulting, which according to many played a bit part in the downfall of worldwide economies. The FSA has been forced into a situation whereby these strict measures are necessary but that will come as no comfort to first time buyers. UK house prices are already under pressure and the short term outlook for the housing market is not good.

It’s not only first time buyers who are struggling either. According to Spareroom.co.uk, thousands of buy to let landlords are having problems meeting their mortgage payments. The Bank of England’s decision to hold interest rates at 0.5% was welcomed by home owners, but this may just be a stay of execution.

41% of landlords admit that the rents they receive barely cover the mortgage repayments and over 22% say that if interest rates rise by 1%, the rents will no longer be enough to cover their mortgages. 10% of landlords are in an even worse situation, saying that a 0.5% rise will result in a shortfall.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Free Dirty Forgotten Sad Child by Pink Sherbet Photography

The Bank of England had some bad news at the end of last week for freelancers hoping to secure an IT Contractor Mortgage.

The Bank expects the supply of mortgages to shrink over the next three months. It also notes that demand has declined during the 2nd quarter of the year.

Prior to the economic downturn, more than £8bn per month in net funds was being advanced to house buyers. That figure dropped down to £1.2bn in May. This slowdown was confirmed by the Nationwide house price index which rose by a minimal 0.1% in June.

Mortgage lending companies had hoped to see an increased demand once winter and the effect of the end of the stamp duty holiday waned. For many, this has not happened. Uncertainty about interest rates, job security and the economy as a whole are amongst the factors blamed for this lack of demand.

For the first time since the end of 2008, demand for secured remortgaging increased during the 2nd quarter. But lenders do not anticipate any further increases as a lot of existing customers are borrowing at standard variable rates that are currently low.

The chief economist from the RICS, Simon Rubinsohn, said that there will be a shortage of finance for the housing market for some time to come and the construction industry is likely to be badly affected.

Whilst the supply of mortgages is expected to shrink, the amount of credit available for businesses is expected to slowly improve over the next quarter.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Labour’s last joke: ‘there’s no money’ by HowardLake