LEEDS, UK; and GLASGOW, Scotland – The British Financial Services Authority (FSA), which regulates UK credit unions, took over the regulation of mortgages on November 1, and for the first time credit unions have been given the right to offer 25-year mortgage loans. Prior to the new regulations the repayment time was 15 years, making credit union mortgages less competitive with other lenders. Four UK credit unions are already in various stages of preparation for the new mortgage products. Their increased ability to offer the new products comes at a time of an uncertain housing market in the country. House prices in the UK and Scotland are declining after several years. In October housing prices fell .04% and the lowest number of new mortgages were recorded since February 2001. Analysts Capital Economics, a British organization, is predicting UK house prices may fall up to 20% over the next three years. Scotwest Credit Union in Glasgow is in the most advanced stage of the four credit unions planning 25-year mortgages and has three choices for its members. All have rates that will vary annually and will be controlled by the board of directors. The first 30,000(US$54982) pounds of the mortgage will be covered by free life insurance, but members must buy additional coverage up to the amount of the loan. The first mortgage product will lend up to 75% of the property value at 8.3%APR with a maximum of 75,000 (US$137,418). The second mortgage will loan up to 90% of the value at 6.2% APR with no limit on the amount. Scotwest calls the third mortgage product "a second charge mortgage," and it says it's similar to a U.S. second mortgage. Both the first and second mortgages cannot exceed 80% of the total value of the property. The APR is 8.3%. Scotwest has 19,000 members all working in the public sector including in education. Glasgow Council Credit Union will loan up to 95% of the value of the property and is promoting the loan by allowing borrowers to make prepayments without penalty. It has 17,000 members. Leeds City Credit Union of Leeds UK and Capital Credit Union, also of Glasgow still have not posted their mortgage programs, but expect to do so soon. The average house price in Scotland is around 105,000(US$192,000). In Leeds it is around 114,000 ($US208,000). The average price includes all housing sold detached, semi-detached and apartments. The FSA wants all mortgage documents for all financial institutions to present the information on the mortgage in the same way to allow the homebuyer to make comparisons between different lenders. Documents must carry the Keyfacts logo they have developed. The FSA is also promoting the new logo. The FSA has a 337-page document with all the Conduct of Business Rules and is open to consumer complaints that may arise with the new regulations if lenders do not comply. -

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