Government fails to honour student loan promise

It was announced today that those who took their loans out from 1998-onwards will pay a 0% interest rate on their outstanding balances during the next academic year, whilst those who took out a loan pre-1998 will see interest rates reduced to a minus 0.4% rate.

The Government has always said that the student loan rate for each academic year will follow the previous March’s Retail Prices Index (RPI) inflation figures (or be cheaper). This March it stood at minus 0.4%, yet Westminster has now invoked invoked a law allowing a 0% interest rate to be set for 1998-onward loans! This represents a massive U-turn by the goverment, and breaks one of the founding principles set out in the contracts of around 2.35 million students.

The Student Loans Company has made the following statement (...and they seem to be forgetting that the 2.35 million people this affects are tax payers themselves):
"The decision (on 1998-onward loans) has been taken because loans are already well subsidised, and it would be difficult to justify to taxpayers a situation whereby students take out loans in 2009/10 and their balances are immediately reduced."

A petition has been set-up in order to give the goverment the chance to do the right thing before these changes take effect in September. Please sign it here: DecreaseLoans

Mortgage approvals up by almost 30%

It has just been reported by the Council of Mortgage Lenders that more than 30000 mortgages were approved for purchases in March. However, this news comes as buyers with small deposits are still very much facing an uphill struggle, with the hill being incredibly steep and made from loose sand!

The number of first time buyers taking out loans was up by 36%, and this accounts for the largest share of the market since April 2005 with 40% of approvals. Despite this, the absolute number of first-time buyers remains low and is well down on the 17800 who took out mortgages in March last year.

So, what does this mean for me? Well, given the falling interest rates and house prices the cost of repaying a mortgage would be at its lowest level since 2004, at around 15.1% of my monthly income needed to make the monthly payments, if I could raise a big enough deposit to get a Mortgage in the first place. Time to call in the big guns I think.... my rich uncles! Well, desperate times call for desperate measures... begging relatives for cash.

One thing I haven't mentioned is that I am currently renting a small house from my uncle, so I am essentially paying off his mortgage for him. On the one hand its nice keeping the money in the family, but on the other it's quite sickening!

I believe that if I can pull a big deposit together within the next 12-18 months, I'll be able to lock in on a fixed rate mortgage before everything starts going up again. Wish me luck.

Grey area

The housing market seems to be a very grey area at the moment. Conflicting articles have been popping up over the last few weeks, some saying prices are on the rise again and some saying prices are still on the decrease.

Those articles saying house prices are on the increase are surely being written as some hopeless attempt to pull the wool over our eyes, and can't actually be true. The only question on my mind right now is 'How much will they fall?'.

I saw a housing programme last night on BBC2, where a couple were looking to buy their first home, and the presenters managed to find 5 properties, all quite spacious with 3 bedrooms and a garden, and all in the region of £60'000. Quite sickening really, and I was waiting for the blurb to appear, which it did, that announced "House Prices correct as of Winter 2002". If only.

Luckily I am from a big family, so I probably will be able to scrape a deposit together in the next 12 months with which to get my first Mortgage. However, like the couple mentioned earlier I really need a 3 bedroom house with a garden, but unfortunately £100'000+ seems way outside my budget at this moment in time, yet that is the average price in my area...