Apache is functioning normally

As we near the end of year, it’s a good time to take stock of our credit cards and review which ones have benefits, requirements, or limits that reset at year-end. We’ll also examine which cards give you a quick double-dip credit when applying at year-end, and take a look at which cards to apply for now.

I’ve been doing this write-up with updates each year for the past number of years (2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015). This year again there were many changes. I updated what came to mind, and there are probably some we missed. Please drop a comment below if you notice any changes or inaccuracies changes and we’ll update accordingly.

Calendar Year Spend Limits

  • Blue Business Plus and Blue Business Cash cards earn 2x/2% everywhere on up to $50,000 in purchases per calendar year. (A report indicates this resets on January 1st, not the December statement close.)
  • Amex Gold card earns 4x points at US grocery stores up to $25,000 per calendar year. (Resets with December statement or December 31?)
  • Amex SimplyCash Plus earns 5% at office/wireless and 3% on your chosen category, up to $50,000 per calendar year for each of those. This resets on January 1st each year.
  • Amex Everyday Preferred $6,000 limit on the 3x grocery store category per calendar year. (Resets with December statement or December 31?)
  • Amex Everyday $6,000 limit on the 2x grocery store category per calendar year. (Resets with December statement or December 31?)
  • Blue Cash Preferred $6,000 limit on the 6% grocery store category per calendar year. This resets January 1 each year, not on the December close date.
  • Blue Cash Everyday $6,000 limit on the 3% grocery store category per calendar year. This resets January 1 each year, not on the December close date.
  • The Old Blue Cash card does not reset with the calendar year, it goes with your card anniversary.
  • The INK Plus/Cash and the INK Preferred years do not reset with the calendar year, it goes with the card anniversary.
  • Also, remember that the annual limits on points earned for credit card referrals by Chase (50,000-100,000 points, depending on the card) and AmEx (55,000 points/$550) will reset on January 1st. If you’re someone who does a lot of referrals, be sure to max out what you can before December 31 and then start referring again on January 1st.
  • Q4 Categories: Chase Freedom, Discover, Citi Dividend, and U.S. Bank Cash+ and a few other cards have quarterly categories. The current categories for Q4 will end on December 31. More details here. Likewise, the quarterly $2,500 limit on the Bank of America Cash Rewards card will renew on January 1. There are also some spend offers from Chase, notably the 10x Gas offer, which ends on December 31st.
  • You have until December 31st to max out your I Bonds purchases which are limited to $10,000 each calendar year.
  • List of all deals ending on December 31st can be found on our Deals Calendar.

Calendar Year Spend Requirements

  • Amex Hilton Surpass gets a free weekend night with $15,000 in spend within the calendar year, and gets Diamond status with $40,000 in spend within the calendar year.
  • Amex Hilton Honors business card gets a free weekend night with $15,000 in spend within the calendar year, it gets a second weekend night with a total of $60,000 in spend within the calendar year. It also gets Diamond status with $40,000 in spend within the calendar year.
  • Amex Hilton Honors gets Gold status with $20,000 in spend within the calendar year.
  • Amex Hilton Aspire gets a second free weekend night with $60,000 in spend within the calendar year. (First weekend night comes as a card benefit, and is based on card anniversary, not calendar year.
  • Amex Delta Reserve – both personal and business versions – earn 15,000 MQMs (18,750 MGMs for 2021 due to temporary bonus) and 15,000 bonus miles $30,000 in spend within the calendar year, and an additional 15,000 MQMs and 15,000 bonus miles if you spend a total of $60,000 within the calendar year.
  • Amex Delta Platinum – both personal and business versions- earn 10,000 MQMs and 10,000 bonus miles when you spent $25,000 in a calendar year, and an additional 10,000 MQMs and 10,000 bonus miles if you spend a total of $50,000 within the calendar year.
  • Amex Platinum consumer and business cards – spend $75,000 or more during a calendar year and receive complimentary Centurion lounge access for up to two guests per visit.
  • Barclay Jetblue Plus card earns Mosaic status with $50,000 in spend per calendar year.
  • Chase British Airways card gets the Travel Together Ticket benefit when spending $30,000 in a calendar year.
  • Chase Hyatt card gets an additional night if you spend $15,000 in the past year. This one has now changed to go based on the calendar year. Finish up your spending now if you’re trying to get the additional night and begin your spending for next year on January 1st.
  • Chase Hyatt cards offer elite nights with spend: the Hyatt consumer card gets 2 nights for every $5,000 spent; this does not reset at all. The Hyatt business card gets 5 nights for every $10,000 spent; this resets with the calendar year.
  • Citi American Airlines AAdvantage Platinum Select card gets $125 flight discount certificate after spending $20,000 or more – this goes with the cardmember year (based on 12 billing statements), not based on calendar year.

American Express Cards 

Airline Credit

Amex Platinum personal, Platinum business, and Hilton Aspire cards have an airline incidental credit each year: $250 for the Hilton Aspire and $200 for the Platinum cards (see what counts here). Unfortunately, gift cards no longer trigger the airline incidental credits.

With these cards, the airline credit is based on the calendar year, not on the statement closing. You can put the airline incidental charges anytime until December 31 and have it count toward the current year. It might have to actually post before year’s end, though; give a few days for that to happen.

The Amex airline credit is different than the others in this list in that you only get reimbursed for incidental spend on your designated airline. Be sure to designate that before putting the charge on the card.

If you’re looking to apply, there is still time to do so and get the airline credit for the current year. The annual fee usually hits around a month after card approval – useful to keep in mind for maximizing the travel credits without annual fees and for triple-dipping. (For those applying in the final few days of the year, see this tip.)

Related: Opening a Schwab Brokerage, Checking, and Amex Platinum Credit Card before Year’s End

Platinum Hotel Credit

The Platinum personal card comes with a $200 annual hotel credit on  select prepaid bookings with American Express Travel. Be sure to book before December 31st. You don’t need to complete your travel by that date.

Platinum Uber Credit

The Platinum personal card also comes with a monthly $15 credit, remember that it gets increased to $35 during the month of December.

Platinum Saks Credit

The Platinum personal card also comes with a $50 Saks Fifth Avenue credit twice per year: one from January to June and one from July to December. Be sure to use that up before the end of December. They only charge you after the item ships, so give some leeway here.

Platinum Business Dell Credit

The business Platinum card comes with a $200 Dell credit twice per year: one from January to June and one from July to December. Be sure to use that up before the end of December (along with the Amex Offer at Dell which expires then). Give some leeway for the charge to post by December 31.

Hilton Aspire

The Hilton Aspire card also comes with a $250 Hilton Resort Credit and a free weekend night. Those are based on the cardmember year, not calendar year.

2024 Changes:

  • The Hilton Aspire $250 resort credit is changing on 1/1/24 to become a $200 resort credit twice per year. This goes based on the calendar year – once for January through June and once for July through December.
  • The $200 airline incidental credit is also changing to become a $50 airline flight credit each quarter – this goes by the calendar quarter.
  • The Hilton Surpass card also now has a quarterly $50 credit purchases made directly with a property in the Hilton this goes based on the calendar quarter.

Amex Green

The Green personal card comes with an annual $189 CLEAR credit and annual $100 LoungeBuddy credit. These reset each calendar year, so you should be able to use the credit for this year anytime until December 31.

Other Credits

Bank of America

Premium Rewards

The Bank of America Premium Rewards card comes with $100 airline incidental credit (see what counts here). This resets based on the calendar year. Finish up your statement credit with this one by December 31 (buying AA gift card or United Travel Bank credit is easiest), and start using your new credit on January 1. I’ll buy a gift card right away in case they close that loophole. (Note, the airline incidental meter seems to take a few days/weeks until it shows the reset. While it should be internally reset on January 1st, you might want to wait until you see it reset to zero for the avoidance of doubt.)

Premium Rewards Elite

The Bank of America Premium Rewards Elite Visa card comes with an annual $300 airline incidental credit and $150 lifestyle convenience credit (including streaming services, food delivery, fitness subscriptions and rideshare services). These reset with the calendar year.

Be sure to use up your credits from this year now, and begin using next year’s credits after the new year begins. It can also make sense to apply now and try for a triple dip on the card benefits.

Barclay JetBlue

The Barclay JetBlue Plus card gets $100 calendar year credit for JetBlue Vacations bookings.

Capital One Venture X

The Capital One Venture X personal card offers a $300 credit for bookings made on Capital One Travel. This renews each cardmember year, it’s not based on the calendar year. Same on the Venture X Business card.

Chase Cards

Southwest

Earning 135,000 Southwest points earns you the Southwest Companion Pass. Credit cardholders only need to earn 125,000 miles. The best way to time yourself is to earn the miles at the beginning of the calendar year since Companion Pass continues for the next entire calendar year. For example, if you earn 125,000 Southwest miles during January 2024, you’ll have the Companion Pass for the rest of 2024 and the entire 2025.

The easiest strategy to earn the Companion Pass has always been by getting a credit card signup bonus on the Southwest credit card. In our case, you’ll want to apply sometime in the next couple of months, taking care to ensure NOT to meet the spend requirement until after January 1st. (Technically, you can meet the spend requirement during December, so long as the statement won’t close until after the 1st.) The signup bonus points on the two cards will post after you complete the spend in early 2024, and you’ll have a Companion Pass for nearly two years.

Southwest is currently offering a signup bonus of 75,000 points with $3,000 spend. You can also signup for a Chase Southwest business card and get 80,000 points after $5,000 spend. Or you can earn points by referring friends to the Southwest card, doing category spend, shopping portal spend, or an actual flight. Again, be careful with the timing on ALL points earned.

Many of us are not eligible for any of the Southwest cards at all due to the 5/24 rule, or because you’re a current Southwest cardholder of any version or because you got a bonus within the past 24 months.

$75 Southwest Priority Credit

The new Southwest Priority card comes with a $75 annual Southwest travel credit which runs on the cardmember year, not the calendar year. No need to use it up now, specifically.

Sapphire Reserve


The Chase Sapphire Reserve card comes with a $300 travel credit (see what counts here). This used to be based on the calendar year, but now it’s based on the cardmember year – no specific need to use this now.

And if you’re applying for a new CSR card, there’s no special reason to apply before year’s end. Whenever you apply, you’ll get just one travel credit during the first year (maybe you can squeeze a second credit in right after the year renews).

Those who got the CSR before May 21, 2017, are grandfathered into the old system where the travel credit renewal goes with the calendar year. (It’s based on the December statement closing, not December 31.) Be sure you’ve already used up your credit for this year, and remember that you’ll soon be able to begin using 2020’s credit.

The Chase PYB 1.25 redemption categories ends on December 31, though they are likely to get extended.

Also, remember each quarter to use up your $15 in DoorDash credits.

Sapphire Preferred

The Chase Sapphire Preferred card comes with a $50 annual hotel credit via the Chase travel portal. This resets based on the cardmember year, not the calendar year.

Ritz-Carlton

The Chase Ritz-Carlton card offers up to $300 reimbursements for airline incidental charges (see what counts here). Chase counts the benefit based on the calendar year, not cardmember year. (It goes based on the actual calendar year, not based on your statements.) Use the credits before December 31 and begin using next year’s credit on January 1.

IHG Cards

The Chase IHG card gets a free night each year. This does not reset with the calendar year, it goes with your card anniversary.

IHG cards also have spending thresholds of $10,000, $20,000, or $40,000 to earn Gold/Diamond status for the following year and to earn 10,000 bonus points (and on the Premier $100 credit). These spend requirements go by the calendar year.

The IHG Premier personal and business cards get $25 in United TravelBank credit twice per year: one $25 United TravelBank gets deposited around January 5, and another $25 around July 5. Requires registration first.

Hyatt

The Chase Hyatt cards get a free night each year. These do not reset with the calendar year, it goes with your card anniversary.

The Hyatt Business card gets $100 in Hyatt credits each year. This is based on card anniversary.

United Quest

The United Quest card gets up to $125 in statement credits as reimbursement for United purchases. This goes based on the card anniversary year, not calendar year. The card also offers up to 10,000 miles back for award flight bookings. Again, this goes with the cardmember year, not calendar year.

Citi

Prestige

The Citi Prestige card comes with a $250 travel credit (see what counts here). The year resets on January 1st. Be sure to give a few days leeway for the charges to go from pending to settled.

If you have a Prestige card, use up the credit now, there’s only a few weeks remaining. The Prestige card is not available for new cardmember signups at this time. 

Rewards+

The Citi Rewards+ card comes with a 10% rebate on redemptions, up to 10,000 points bonus per year. This is based on your December statement close. Be sure to max out your 100,000 points redemption before your December statement closes so as to get the full 10k bonus. Redemptions that post on your January statement will count toward next year’s allotment.

Expedia+ Voyager

Those who have the Citi Expedia+ Voyager card get $100 annual credit toward airline incidentals on qualified airlines, Wi-Fi carriers, or for the Global Entry application fee. This credit resets each calendar year; be sure to use it up before your December statement closes as any purchases on your January statement will count toward next year’s benefit.

AAdvantage Platinum Select

The Citi American Airlines AAdvantage Platinum Select card gets $125 American Airlines Flight Discount certificate after spending $20,000 or more during your credit cardmembership year (every 12 months from the billing cycle after your anniversary month through the billing cycle of your next anniversary month).

Citigold

Those with Citigold relationship status with Citibank get an annual credit of either $200 or $400 toward subscriptions for Amazon prime, Spotify, Hulu, TSApre/GE, and Costco membership. This credit renews at the end of the calendar year. Be sure to use up your allotment before December 30th.

US Bank Altitude Reserve

The US Bank Altitude Reserve card comes with a $325 annual travel and dining credit. In this case, the travel credit goes based on the cardmember year, not the calendar year. No specific reason to use this now.

Wells Fargo Propel World

The Wells Fargo Propel World card has a $100 airline incidental credit (see what counts here).This credit goes based on the cardmember year, not the calendar year. Check when you applied and be sure to use it up by your anniversary date.

Smaller Banks

CNB Crystal

The CNB Crystal card offers a $350 annual incidental charges (see what counts here). CNB counts this based on the calendar year. Any spend until December 31 will count as part of the current year, and January 1 begins the next year. Be sure to complete your spend before December 31. Give a few days for the charge to settle before year’s end (though it reportedly works on the last day too).

HSBC Premier

The HSBC Premier World Elite comes with $120 annual Lyft credit which is based on the calendar year. Be sure to use these up before December 31.

PenFed Pathfinder

The PenFed Pathfinder comes with $100 annual air travel ancillary credit (see what counts here). The credit is based on the calendar year, be sure to use yours before the year is up.

Also check out these useful posts:


Source: doctorofcredit.com

Apache is functioning normally

Apache is functioning normally

Mortgage credit quality remained “relatively steady” over the past six months, with 94 percent of loans held by nine key national banks current and performing, according to the OCC Mortgage Metrics Report released today.

The comprehensive data set includes more than 23 million first mortgage loans valued at $3.8 trillion, or approximately 40 percent of all home loans outstanding.

Per the report, the 30-59 day delinquency rate fell to 2.37 percent as of the end of March from 2.61 percent in October, while 90+ day mortgage lates increased to 0.98 percent from 0.82 percent.

Along with late mortgage payments, there were a total of 283,988 foreclosures in process as of the end of March, representing 1.23 percent of the total portfolio, up from 0.90 percent, or 205,248 total in October.

Nearly 10 percent (9.64%) of subprime mortgages were deemed seriously delinquent (60+ day lates or bankrupt borrowers 30+ days late), compared to 4.38 percent of Alt-A mortgages and just 0.74 percent of prime loans.

The delinquency rate for subprime loans actually fell three basis points from last October, while it increased 30 bps for Alt-A loans and 14 bps for prime loans.

Unsurprisingly, while subprime mortgages only accounted for less than nine percent of the total loan portfolio, they were involved in 43 of all loss mitigation efforts as of the end of March.

They also accounted for nearly 33 percent of total foreclosures in process, while prime loans representing 62 percent of the portfolio accounted for just 30 percent of foreclosures in process.

With regard to loss mitigation, prepayment plans outnumbered loan modifications by four to one, but increased at a faster rate in the past six months.

Alt-A mortgages made up about nine percent of the total loan portfolio and accounted for 19 percent of all loss mit action.

The report includes data from mortgage lenders like Bank of America, Citibank, First Horizon, HSBC, JPMorgan Chase, National City, USBank, Wachovia, and Wells Fargo.

Check out the whole report here, it’s full of more data.

(photo: johncohen)

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

The so-called “Independent Foreclosure Review” was tweaked Monday to allow borrowers to receive compensation for loan servicing wrongdoings in a more expeditious manner.

As a result of the latest agreement between the Treasury, OCC, and 10 mortgage servicing companies, the Independent Foreclosure Review will be replaced with a “broader framework.”

The new system will ensure that affected borrowers receive compensation regardless of whether they filed a “request for review form,” which was a key component of the original process.

In fact, borrowers don’t need to take any additional action to be eligible for compensation, and should expect to be contacted by a payment agent by the end of March to discuss payment details.

Additionally, receiving compensation doesn’t waive any legal claims borrowers may have against their loan servicers. And each servicer’s internal complaint process will still remain available to affected borrowers.

The following servicers are part of the Independent Foreclosure Review 2.0:

– Aurora
– Bank of America
– Citibank
– JPMorgan Chase
– MetLife Bank
– PNC
– Sovereign
– SunTrust
– U.S. Bank
– Wells Fargo

They have agreed to provide $3.3 billion in direct payments to eligible borrowers, and another $5.2 billion via loan modifications and forgiveness of deficiency judgments.

Of course, the amount of compensation is expected to vary widely, from as little as a few hundred dollars to as much as $125,000, depending on the magnitude of the “error.”

Eligible borrowers include those with loans serviced by the aforementioned companies whose primary homes were in foreclosure in 2009 and 2010.

The original agreement included several more companies, including Countrywide, EMC, HSBC, IndyMac, National City, Wachovia, and Washington Mutual.

As you can see, many of these names are now obsolete, pushed to the brink thanks to high-risk lending that led up to the now infamous mortgage crisis.

Other Loan Servicers May Soon Join

The OCC and Treasury said it is continuing to work with other major servicers involved in shoddy foreclosure practices, such as robosigning, to reach similar agreements.

Under the previous Independent Foreclosure Review, which was announced all the way back in 2011, borrowers had to submit a complaint to their lender or loan servicer on a case-by-case basis.

A review would then be conducted by an independent consultant to determine any financial injury related to foreclosure proceedings.

Examples of financial injury include dual tracking, where servicers continued to pursue foreclosure even while borrowers attempted to modify their loans, or where fees and/or mortgage balances were higher than what was actually owed.

In hindsight, it wasn’t the most effective way of serving the millions who experienced foreclosure during those years, and clearly wasn’t the most cost efficient method.

Bank of America Cleans Up Countrywide Mess

Could 2013 be the year of the great mortgage cleanup? So far it looks that way.

Bank of America also announced yesterday an agreement with Fannie Mae to resolve any issues with bad loans it sold to the government-sponsored entity.

The Charlotte-based bank said it would make a cash payment of $3.6 billion to Fannie while also repurchasing $6.75 billion in residential mortgage loans sold to the company.

The agreement covers pretty much all loans originated and sold to Fannie from 2000 to 2008, including those from now-defunct Countrywide.

Bank of America will also make a cash payment to Fannie to settle future claims for compensation arising out of past foreclosure delays.

And the bank announced the sale of servicing rights of roughly two million mortgages with an aggregate unpaid balance of $306 billion to Nationstar and Walter Investment Management Corp.

The sale includes 232,000 first mortgages classified as 60+ days delinquent.

Bank of America said it held 775,000 such loans as of December 31, 2012, down from 936,000 loans at September 30, 2012.

Once these sales are complete, those numbers will fall dramatically and the Bank may finally be able to look forward.

(photo: Kevan)

Source: thetruthaboutmortgage.com

Apache is functioning normally

HSBC and NatWest cut mortgage rates again as rivals tipped to follow

Decision will ease some pressure on UK homebuyers and people seeking remortgage deals

HSBC and NatWest have announced a fresh round of mortgage rate cuts and Britain’s remaining large lenders are expected to follow suit in a move that will ease some of the pressure on hard-pressed Britons.

HSBC said it was cutting rates across many of its new fixed products – including some of its first-time buyer, home mover and remortgage deals – with effect from Tuesday, when full details of the reductions will be published.

Third of UK mortgage holders ‘do not think they will pay it off by 65’Read more

Fellow high street lender NatWest said it would also be cutting rates from Tuesday.

The latest reductions will improve conditions for homebuyers and those looking to remortgage on to a new deal.

NatWest announced reductions of up to 0.35 percentage points on selected fixed deals. A five-year fixed rate deal aimed at homebuyers with a 5% deposit that is currently priced at 6.39% will result in its rate being cut to 6.04% at the bank.

Mortgage costs had been rising relentlessly for months but UK lenders have been reducing their rates since the second half of July after it emerged that UK inflation fell further than expected in June, prompting speculation that the Bank of England would not raise interest rates by as much as previously expected. The Bank’s base rate is 5.25% after an increase from 5% in August.

Nicholas Mendes​, a mortgage technical manager at the broker John Charcol, said HSBC had “laid down the gauntlet and shown they mean business … This is their second rate reduction in a week, along with criteria changes which extend terms to 40 years.”

Accord Mortgages, part of Yorkshire Building Society, also said that all of its fixed rates were being cut by 0.20 percentage points from Tuesday.

Last week, Nationwide Building Society reduced some of its fixed and tracker rates by up to 0.15 percentage points.

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Stephen Perkins, the managing director of the broker firm Yellow Brick Mortgages, said: “All these rate reductions are starting to feel like an avalanche … No doubt there will be more of these reductions over the week, as all lenders follow in a conga line.”

Lewis Shaw, the owner of the broker Shaw Financial Services, said that with NatWest following hot on the heels of HSBC, “There’s every chance we could see the remaining big four [Lloyds Banking Group, Barclays, Nationwide and Santander] come to the party this week, too.

“It would appear that lenders are struggling to get new business, and the rate tap is the only tool they can turn to.”

Explore more on these topics

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Source: theguardian.com

Apache is functioning normally

Apache is functioning normally

Fixed rate mortgages have dipped below 5 per cent for the first time since early July, offering some hope to struggling homeowners. 

Yorkshire Building Society has launched a 4.99 per cent fixed-rate deal which is available to both home buyers and those remortgaging.

It’s available at 75 per cent loan-to-value, meaning eligible customers can apply as long as they either have at least a 25 per cent deposit or 25 per cent equity within their home.

Best rate: Yorkshire Building Society has launched a 4.99 per cent fixed rate deal aimed at both homebuyers and those remortgaging

Someone with a £200,000 mortgage could expect to pay £1,168 a month if repaying over a 25-year term, compared to the market average of £1,249 a month.

The five-year deal comes with a £1,495 fee, however, and a mortgage with a higher rate but a lower fee may be a better deal for some customers. 

You can compare rates and fees and work out the true cost of a mortgage using our calculator.  

After Yorkshire BS, the next best deal is Virgin Money which has a five-year fix at 5.07 per cent and is available to home buyers purchasing with at least a 35 per cent deposit (65 per cent loan-to-value).

HSBC has a five-year fix at 5.09 per cent for home buyers with at least a 40 per cent deposit (loan-to-value of 60 per cent).

Nationwide also has a 10-year fix available at 5.04 per cent which is available to home buyers with a deposit of 15 per cent or more (85 per cent loan-to-value).

The average five-year fixed mortgage rate is now 5.67 per cent, according to Rightmove.

Rachel Springall, finance expert at Moneyfacts said: ‘It’s great to see such competitive deals launched by Yorkshire Building Society.

‘Borrowers looking for a new low-rate mortgage will find the sub-5 per cent five-year fixed deal is the lowest rate available in its sector.

‘The incentive packages available across all the new deals today may also be popular with borrowers looking to save on the upfront cost of their mortgage.’

Why are mortgage rates going down? 

Yorkshire BS’ decision to cut rates, which includes shaving off up to 0.46 percentage points from its 95 per cent loan-to-value deals, is partly due to competition between lenders.

HSBC has also slashed mortgage rates by 0.15 percentage points on average today, alongside rate cuts across its buy-to-let range of up to 0.3 percentage points.

Last week there were also cuts from Coventry BS, Nationwide BS, Accord, Generation Home, Barclays, and Clydesdale Bank.

Past the peak? Fixed mortgage rates appear to be falling back somewhat after a barrage of rate hikes in recent months

Rate cuts have also been encouraged by future market expectations over where interest rates are heading.

Market expectations are reflected in swap rates. These are agreements in which two counter parties, for example banks, agree to exchange a stream of future fixed interest payments for a stream of future variable payments, based on a set amount.

Mortgage lenders enter into these agreements to shield themselves against the interest rate risk involved with lending fixed rate mortgages.

Put more simply, swap rates show what financial institutions think the future holds concerning interest rates.

Five-year swaps are currently at around 4.56 per cent, which is down from 4.74 per cent at the start of this month.

Only as recently as July, five year swaps were above 5 per cent. Similarly, the two-year swap rate is now 5.21 per cent. In July early this was around 6 per cent.

Ben Merritt, director of mortgages at Yorkshire Building Society, said: ‘This week, favourable market swap rates presented just such a window to reduce our mortgage costs, and offer the greatest incentive to those people who typically struggle the most, those with the lowest deposits to put down, including first-time buyers.’

Nicholas Mendes, mortgage technical manager at broker, John Charcol says he wouldn’t rule out a five-year fix at 4.5% by the end of the year

Will mortgages be hiked again if base rate rises?

The Bank of England is widely expected to increase the base rate from 5.25 per cent to 5.5 per cent on Thursday, though some economists are betting on it remaining the same.

The decision will come the day after we learn August’s inflation reading, which many are expecting may go up as a result of higher fuel prices. This may have some bearing on what the Bank of England decides to do with base rate.

If base rate does go up, this will likely increase costs for those on variable rate mortgage deals.

However, it is unlikely to have the same impact on fixed rate products, according to Nicholas Mendes, mortgage technical manager at broker John Charcol. In fact, he expects fixed rate deals to continue falling.

‘The MPC meeting is expected to either hold or rise by 0.25 per cent which will no doubt be the last [rate rise],’ says Mendes.

‘Even in the event there is a rate rise this has already been caked into fixed rate pricing.

‘As a result I expect to see fixed rate pricing on two and five year fixes continue to reduce.

‘While no one can accurately be confident, I wouldn’t rule out a five year fixed at 4.5 per cent by the end of the year based on current pricing trajectory.’

How are mortgage rates affecting the housing market?

While it is good news that mortgage rates are falling, we remain a long way from the low rates enjoyed in previous years.

This time last year, it was possible to secure a fixed rate at 3 per cent and the year before that borrowers were able to secure deals at less than 1 per cent.

The change in mortgage rates has unsurprisingly had an impact on the housing market. Transactions are down by almost 20 per cent, while house prices are also falling.

Last week it was reported that mortgage arrears had hit their highest level for nearly seven years.

The value of outstanding home loans with arrears climbed by 13 per cent to £16.9billion in the second quarter of this year, according to Bank of England figures.

It was the highest level since the third quarter of 2016, and 29 per cent higher than the same period a year ago.

Although there may be less activity across the housing market, Mendes says he isn’t expecting to see a sudden surge in forced sales.

‘Fixed rate mortgages around 5 per cent may dampen purchase demand as prospective home movers postpone their plans, but I still expect to see first-time buyers to continue purchasing,’ he says. 

‘With rents continuing to increase, fixed rates at 5 per cent or less could encourage more first time buyers and those in rented accommodation to purchase as a cost-effective alternative.

‘A significant increase in arrears was down to landlords which is understandable in this climate over the past year.

Downwards: Over the past few weeks, mortgages rates have continued to trickle downwards due to competition between lenders and market expectations about interest rates in the future

‘For residential homeowners there are more options to avoid falling into arrears – unless they decide to bury their head in the sand. 

‘There is more support from lenders and the Mortgage Charter which allows a grace period of six months which would allow mortgage holders to sell a property before things start to escalate downwards.’  

Mark Harris, chief executive of mortgage broker SPF Private Clients, says that falling mortgage rates will result in buyers being able to afford bigger mortgages which should lead to an increase in transactions.

Harris adds: ‘Falling interest may encourage more borrowers to take the plunge and take on a mortgage. However, it is not just about falling mortgage rates but affordability and the underwriting of the loan.

‘Lenders are still required to stress test the borrowing at a minimum of 1 per cent above the reversion rate, with some lenders utilising different lower rates for long/longer term fixes.

‘When these stress rates also start to fall, borrowers will be able to take on bigger mortgages, which may lead to an uptick in transactions and mortgage lending.’

Source: thisismoney.co.uk

Apache is functioning normally

With uncertainties clouding global growth, especially in powerhouse economies like China, the US real estate market may become an even more attractive proposition for foreign investors. According to Rai, economic pressures could particularly affect China’s primary trading partners, including Germany and Australia. Additionally, the analysts pointed out potential liquidity challenges in the US financial system, … [Read more…]