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.

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In a sign that the mortgage market may be picking up at last, Mortgage Brain reports that there are now more contractor mortgages available to intermediaries than at any time in the last two years.

Mortgage Brain runs a mortgage sourcing system and each month runs a product analysis. As at the first of November, there were 7,654 live mortgage schemes listed on their system. 65% of these are fixed rate deals, 20% are tracker mortgages and the remaining 15% are variable rate products.

Between October and November there was a 13% rise in the number of variable rate products introduced to intermediaries. The amount of fixed rate mortgages increased by 7%, but tracker deals fell by 7%.

The chief executive of Mortgage Brain, Mark Lofthouse, said the results of this month’s analysis are encouraging and show the market is heading in the right direction. The availability of fixed rate products is starting to increase and if the amount of variable rate mortgage deals continues to rise they could soon achieve 12 months of consecutive increases.

Over the last 12 months, the amount of new mortgage products has increased by 138% to 4,432.
Some of the members of the Bank of England monetary committee are now calling for an increase to the base interest rate of 0.5%. Once this happens, it is widely believed that a lot of people on tracker and variable rate mortgages could have problems making their repayments. Maybe that explains why nearly 2/3rds of all the mortgage products on the market at the moment are fixed rate deals!

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Interest rates have been kept low over recent months, thanks to the Bank of England setting the base rate at 0.5%. We all know this rate will not remain with us forever but could the base rate actually go lower?

The central bank in Japan has now set a 0% interest rate. OK, so lenders still need to make a profit, so they’ll be charging a premium, but it still means it’s cheap to borrow money in Japan.

The UK’s mortgage lending companies have been introducing new cheaper remortgage deals recently. There’s now a good choice of contractor mortgage products on the market, with interest rates of less than 3%, that can help save you money.

When shopping around for a new remortgage deal, it’s also worth taking valuation and legal fee costs into consideration as some of the new mortgage products throw these services in as free additional extras.

Tracker mortgages are becoming increasingly popular and one of the best deals around comes from HSBC. They have launched a lifetime tracker at 1.69% above base, giving a current rate of 2.19%. There is a booking charge of £99.00 and you do need to pay the valuation and legal fees yourself but this could be a good option for somebody with a deposit of at least 40% who is looking to remortgage.

NatWest has a tracker deal with no arrangement, booking or legal fees, and a free valuation. This mortgage is a 2 year tracker at 2.15% above base. In 2012, borrowers will revert to the standard variable rate, currently standing at 4%. Again this mortgage is only available to people with at least 40% deposit.

People who are concerned about the prospect of higher interest rates may be looking for a fixed rate remortgage deal. ING Direct is currently offering a 2 year fix at 2.84% for people wanting to borrow up to £1,000,000.

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More than 100,000 home owners’ current mortgage term will expire before the end of the year. When their current deals ends, they will be transferred to standard variable rates which are a lot less attractive than they are on at the moment. A lot of these borrowers are obviously already shopping around for an alternative deal.

Many people are now opting for fixed rate mortgages due to the historically low base interest rate. But there is another option that could be worth exploring, according to some experts.

Tracker mortgages used to be available on a short-term basis; usually between 2 and 5 years. However, the major banks are now offering a new tracker product that lasts for the length of the loan.

HSBC and sister company First Direct are currently the largest provider of these loans, but other institutions such as the post office, ING direct and Barclays Woolwich have launched their own life time trackers.

A life time tracker is not suitable for everyone. The best deals are only available to people with huge deposits or existing home equity. They are therefore most suited to borrowers who already have a contractor mortgage and have paid off a reasonable amount of their debt.

The best tracker from HSBC is 1.69% over base making the current rate 2.19%. It has an application fee of just £99 but the LTV is 40%.

Of course, the problem with trackers is that they are dependant on the Bank of England’s base rate. As soon as that rises, so will the monthly repayments. But the base rate would have to rise by between 3.5 and 4.5% to make them more expensive than current fixed rate products. And an added bonus of life time trackers is they normally don’t include early redemption fees so it’s still possible to fix at a later date.

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Although fixed rate contractor mortgages have been receiving a lot of attention recently, the interest rate on tracker mortgages has been dropping steadily since the start of the recession.

Back in 2007, the average rate charged on a tracker mortgage was 6.3%. Today you can get one for just 3.55%. Of course, whilst trackers are good deals at present, a lot of borrowers want the security of fixed rate monthly repayments in case interest rates rise.

Nearly 50% of all new mortgages are fixed rate deals and the average rate on a 5 year fix is 5.06%. Although this is over 1.5% higher than a tracker, less than a third of new mortgages are tracker deals.

Borrowers realise that interest rates will not stay at their current historic low forever and are hedging their bets by opting for a fixed rate deal.

The housing market is on a knife edge, according to some estate agents. The Halifax recently informed us that £6,000 has been wiped from the value of an average home due to falling house prices. More than 40% of the UK’s estate agents are now predicting further falls, a rise of 2% compared to last month.

The RICS also expects values to drop as more properties come onto the market. Demand has all but dried up recently and yet there is an increasing supply. Maybe understandably, potential buyers are holding back until we know the results of the government’s comprehensive spending review. But there can be no doubt that it’s definitely a buyer’s market for anybody brave enough to enter into it.

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As if people aren’t struggling enough to balance their finances, some 18,000 customers who took out variable rate and tracker mortgages with the Yorkshire and Clydesdale Bank have now been informed that the bank miscalculated their repayments and they have a shortfall on their account.

The National Australia Bank owned institutions said the mistake was exacerbated by the unprecedented falls in interest rates last year. All of the affected customers have received a letter from the banks apologising for the mistake and suggesting ways to make up the shortfall.

For about 50% of those affected, a monthly repayment increase of less than £25 will make up the shortfall. However, for other people, including freelancers with a contractor mortgage, the monthly increase is as large as £300 and this is understandably causing them great concern. The banks have offered other repayment options to customers such as extending their mortgage term or making a one-off payment to cover the arrears.

Not surprisingly many business bank account customers are extremely angry and don’t see why they should have to pay for the bank’s mistake. About 10,000 of those affected bank with the Clydesdale in Scotland and many are already demanding compensation. Nominal compensation has already been offered in some cases but the bank is coming under increased pressure to make greater concessions, especially in cases where the increased payments will force customers into financial difficulties.

Meanwhile, homeowners who are struggling to meet their mortgage repayments will receive less assistance from the government. The Mortgage Support Scheme is going to be scrapped in 2011 and the Mortgage Rescue Scheme is going to be scaled back.

The Mortgage Support Scheme was introduced by the Labour government in April 2009 to fund reductions in interest repayments but since its launch only 34 people have received help.

The Mortgage Rescue Scheme, on the other hand, has helped 629 people sell all or part of their property to their local council or housing association and remain in it as a tenant. The government intends to reduce the portion of funding per house from 65% to 55%.

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