Something to ponder..

I start this week’s column with a brief look back at 2009!
January saw UK plc officially reach recession with house prices in steep decline. BBR dropped in February and has remained at 0.5% ever since. In March, many banks announced dramatic losses. Stamp Duty relief was extended in April for properties under £175k until the end of 09. May confirmed hundreds of mortgage brokers had left the market! In June AToM opened new premises in the Carfax (Hooray)! July’s mortgage business hinted small signs of recovery. August saw a renewed call for Estate Agent regulation and in September Lloyds completed the first mortgage asset backed securitisation in Europe for over a year! In October the FSA circulated their Mortgage Market Review proposals including the removal of self certification mortgages. November saw news of a number of lenders ready to join or re-enter the UK mortgage market and December bought the pre budget report - Oh joy! Overall, not a great business year for mortgages! It can’t get any worse, can it?

So, something to ponder - BBR will increase at some point soon. Some pundits suggest late 2010. We think it will be sooner. Tracker rates remain attractive but if you are waiting on a tracker and planning to move to a fixed rate when BBR moves, then beware….we can almost guarantee that the cost of fixed rates will quickly rise too. So, if you are sitting on a good tracker, is it worth taking a gamble on where fixed rates will be when the uplift in BBR comes? If you are keen on stability, have you thought about the possible advantage of taking a small hit at the front end knowing you are well placed with rate protection when BBR rises? A conundrum to consider during the festivities?

Thank you for reading my column throughout 2009. Please let me know any burning issues you would like me to cover in 2010. You can email me at dale.jannels@atomltd.co.uk or give me a call on the above number.

The directors and staff at AToM wish you, family and friends a very Happy Christmas and relaxing New Year. We look forward to being of assistance to you during 2010. Let’s hope it will be a good year for everyone…

AToM launch 'Complex Prime'

Despite the decade drawing to a close, there is still time to look at a new mortgage! Many lenders offer ‘product transfers’ or ‘retention products’ to existing customers. These are not generally advertised to the general public or offered unless you ask for them. If your current incentive rate has come to an end and you have been transferred to the lenders standard variable rate, you will often have the option to choose a new product from an internal range available to existing clients. Some lenders have a good range of retention products. Others, particularly in the current climate, may not and expect that you will simply pay the new rate or move lenders. When moving lender, you release the original funds back to the current lender to advance to someone else, probably on a higher rate of interest and with an attractive new arrangement fee. Basically, some will make more money if you switch lenders, than if you remain on their books! Most retention products can be arranged within a matter of days. Speak to an independent mortgage brokerage to see what’s available and see whether this is the right option for you.

I rarely promote AToM product offerings in my column. However, this week is an exception! With most lenders, a mortgage is initially agreed using a tick box computer system. If you tick all the boxes, you normally get offered a mortgage. However, if you are not on the voters roll: have too much credit: have too little credit: require something a little more complex…. you may find it difficult to get past the first hurdle. Don’t give up! AToM have launched ‘complex prime’ to cater for such examples. We have an arrangement with three lenders who will ‘manually’ underwrite your application and, if the deal fits, they will look ‘outside the box’ and lend. This is a superb alternative to the current “computer says no” mentality and is a positive step forward by the lenders we are working with. It is refreshing and harks back to the days of real underwriting! Call AToM now to find out more.

Trackers remain the product of choice.

4/12/09 - We are suddenly well into the Christmas season and as such, I should really look to be upbeat and not announce anything other than glad tidings. So, I won’t be able to let you know that the Citizens Advice Bureaux have reported an increase in debt problem queries and are now handling an estimated 9,300 new enquiries every day. I certainly won’t mention that 1,000 people are seeking some sort of formal debt rescheduling every working day. And, lastly, I will definitely refuse to write about the 386 people who will be declared insolvent or bankrupt today or that it is equivalent to one person every 3.72 minutes. Stark facts indeed as released by ‘creditaction’. What these disturbing numbers signify is that, even though it is the season to be jolly, reality determines that this Christmas may prove to be a financial burden too far for many and the price people will be prepared to spend on it may well receive much more thought than in previous times. It could go two ways - firstly, people will put their cares to one side, forget the 2009 trials and tribulations and the credit cards will be flexed with any spends being forgotten until later. Or secondly, the purse strings will be drawn and funds will be tightly managed. Whichever applies to you, just make sure you’re happy and don’t regret it later!
Other news - House prices have increased for the seventh month in a row according to the Nationwide. Rising by 0.5%, the average house price is now at a similar level to that of 2006 and 2.7% higher than in November 2008. Mortgage product availability is also increasing. As lenders fight for market share, great new products and innovations are being sought. One lender has launched a very attractive 10% deposit product that tracks the Bank of England base rate plus 4.29% (so 4.79% - APR 4.4%). Trackers still remain the product of choice as experts predict that base rate will remain static for some time. So, if you are in the market for a 90% mortgage, and your income can stand scrutiny, this is a product well worth further investigation.

"bedside manner" counts, even from Brokers!

Mixed messages from lenders this week! One major high street lender is apparently 10% below its projected business target. This is great news as, shortly, we should see some highly competitive rates launched to attract new business, as we move towards the year end. Another lender who suspended lending last year is back, albeit with a limited product offering. But again, this is great news.
Conversely, some lenders are experiencing severe service issues and, despite being low on intake, have tightened criteria which curtails new business whilst offering a better service to customers. What you can get today, may not be available tomorrow.

As I reported recently, the last remaining self cert (no proof of income) lender withdrew from the mortgage market. They also took with them some great adverse product offerings. This has resulted in just a handful of lenders offering products to those who have incurred CCJ’s, defaults, bankruptcies/IVAs or who have poor payment profiles. The volume of business submitted to the remaining lenders has increased their exposure in this sector and one lender has already suspended certain products in order to stem the intake of new applications.

It really is becoming tougher to get a mortgage in the current climate and now, more than ever, you should do your homework and speak to a ‘whole of market’ mortgage adviser and compare all mortgages available. Even Martin Lewis, of moneysavingexpert.com, writes on his website “Ask ‘em – Are you Whole of Market”. If the person you are speaking to is not offering “whole of market” advice, i.e. they just review a panel of selected lenders, you may not be getting the best product for your needs and/or requirements. And remember, you can place your mortgage with whoever you like. You are under no obligation to anyone, despite what some may say! Everyone covets your business and there appears to be some underhand (and not necessarily compliant) tactics going on. Again, to quote Martin Lewis – their “bedside manner” counts! If you don’t like their stance, or they’re ‘forcing’ you to use them, walk away….!

Another year yet..

Every year, the mortgage industry holds an exhibition for all providers in London. The event lasts two days and it’s a good chance to meet lenders, discuss business with competitors, and review new product providers, etc. However, this year, it was somewhat of a small affair held at Olympia and only five or six out of the 60 exhibitors (normally 200+) were lenders happy to invest in promoting themselves and their product offerings! I still decided to visit and met with those who were participating and the general consensus was buoyant and one of optimism. This was until day two, when the last remaining Self Certification (no proof of income) lender withdrew from the market. If there’s one thing the market needs right now, it’s more lenders, not less! Although only lending a small amount compared to the high street names, a couple of billion is still a lot of lending in the specialist markets! Less than a week later, we’re already seeing a gap in the market which Self Cert used to fill.
The other message, repeated by various sources, was that the expectancy for new lenders to arrive and for lending to increase dramatically is still another year away. What does this mean? In short, the lenders currently lending can control the market between them. They have limited competition and, as long as they hit their own internal targets and profitability, need not reduce rates and/or fees to attract more customers. They can also keep criteria controlled and have a limited appetite to review applications that don’t quite fit their standard mould.
I’ve said it before, but it needs re-iterating again and again - if you have plans to apply for a mortgage in the not too distant future, keep your head above water. Don’t miss or make late payments to any provider. All financial institutions will base their decision initially on your credit history. If you have missed or late payments, or even a lot of recent searches (from multiple finance/mobile/car/home insurance applications), this could be detrimental to your ability to obtain finance, at a competitive rate. If you have not reviewed your credit search before, get it for free (for 30days) from the AToM website. It’s well worth a review and a good insight on how attractive you look to a lender!

You could be stuck in your current property...

It has been a very mixed week in the mortgage market! Recent reports suggest that the FSA have admitted to putting increasing obstacles in front of potential new mortgage lenders. Superb! So we’re left with the small number of current lenders, and their inability to share Quantitative Easing monies received from the Government. So much for competition in the mortgage markets and the much trumpeted instructions from the Government and Bank of England for lenders to lend!

As predicted a few weeks ago, the Self Certification (no proof of income) mortgage market has been dealt a major blow. Of the two lenders left, one withdrew last week and it is likely that the ‘last man standing’ will not remain so for long. I’ve no doubt that they will withdraw possibly before the FSA’s mortgage market review request to ban Self-Cert comes in to effect earlier next year. Whilst it is probably true that there has been some abuse of this product, and lenders are not immune from responsibility, it is still suitable for the right people in the right circumstances, especially the self employed. I am concerned that the forced demise of this sector has not been carefully thought through.

UPDATE - since submitting this article on 11/11 for publishing on 13/11, the last lender offering self cert mortgages has now also withdrawn from the market.

2.5 million homeowners are living in their current properties for longer than they had originally planned, reports Unbiased.co.uk. Of those surveyed, one in four homeowners are stuck in their current property due to the fact that they have been unable to sell at the price they envisaged. Another quarter are staying longer than planned because they cannot afford the increased mortgage repayments on their next home!

And finally, with Bank Base Rate remaining at 0.5% for the umpteenth month in a row and with some attractive products available in the mortgage market, this really is a good time to look at a new mortgage. Remember, you can deal with whoever you want to! Speak to your local and independent mortgage brokerage as soon as possible to ensure you don’t miss the right product for your specific requirements. You know who to call!

The run up to Christmas bargains!

Competition is rearing its head in the mortgage market as lenders start to flex their muscles, lowering interest rates in order to attract volume business before the year ends. Both fixed and tracker product rates have been reduced of late. Base Rate Trackers seem to be back in favour with many as pundits predict that the Bank of England base rate will remain low throughout 2010 (at least) with rises predicted at some point in 2011. Many re-mortgage deals are now being offered with free valuations and free legal costs. Although purchases continue to outstrip re-mortgages by some margin, this might be a good time to consider a re-mortgage bargain in the run up to Christmas with little or no cost involved to change lenders. With product availability on the increase, it’s certainly a time to review all the options and speak to an independent mortgage brokerage to ensure you don’t miss out on the right product. They may not be around for too long in this still fragile market!
October saw a 0.4% rise in average property prices - according to Nationwide – the sixth consecutive monthly increase, taking the value of an average home to £162,038. However the society warned that the pace of monthly increase is slowing and this aligns to other predictions that the first quarter 2010 may prove to be static or possibly even deliver a decreasing house price market.
So, having encouraged banks to get together, and funded them with billions of our hard earned cash, HMG is now looking to break them up! Not only that, but they are going to give them another huge chunk of cash too! How does that work? Well, apparently this edict is from our European masters who have decided that perhaps our banks are too large! I may have a simple outlook, but is this not what many of us said at the time worrying that there was a great danger that too few banks would have too great a control? Its beggars belief that we would willfully waste such large sums of money in such a short period of time and all at the expense of the UK taxpayer! Or is it just me?

Are you invisible to Financial Institutions?

30/10/09 - When applying for finance, if you don’t appear on the electoral roll or don’t have any credit, some lenders may consider that you don’t exist financially! This has been the bain of our lives over the past few months! In current climates, it seems that lenders only need to find the smallest of excuses to not agree a mortgage request. Historically, lenders were often more amenable if an applicant could not be located on a credit search. Today, if you have no regular credit commitments or do not appear on the electoral roll at your current address, be prepared for a knock-back.

The market has been pretty quiet this week, with only a few lenders making headlines and reducing rates. I suspect the market is still coming to terms with the impact of the FSA’s proposals for the mortgage market, as reported in last weeks column.

AToM is experiencing large numbers of ‘complex prime’ enquiries lately. One example is for an expatriate living abroad and who are working for a non international company seeking to re-mortgage a property which is currently rented out in the UK. Another example - for tax purposes - customers seeking to purchase a number of investment properties in a Limited Company name with their company structure designed purely to hold properties.
These are live examples which certainly can be placed. They just need a bit of extra thought and the location of lenders who don’t fit the normal credit scoring mentality.

Santander’s UK Banking arm, who own Abbey, Alliance & Leicester and Bradford & Bingley has confirmed a profit for the first 9 months of 2009 of £1.16bn, an increase of 58% compared to the same period last year! This is positive news and indicates that the market is turning. I am sure that we will see others reporting huge profits before the year end!

The PM once told us we'd never had it so good....

Predictably, the major talking point in financial services is the FSA’s Mortgage Market Review. Some of the proposals include:

1) Removal of Self Certification mortgages:
Self Cert mortgages account for approximately 10% of the residential market. True, this offering has been abused by a few yet, in the main, Self Cert is a valuable product offering. Once abolished, existing customers may become trapped in their current mortgage. Possibly with a lender no longer operating meaning that they may be unable to refinance or move. At current low interest rates this may not be an issue. However, when rates increase quickly, a new mortgage may be difficult to realise and may result in customer arrears or, worse still, repossession due to lack of options. Those who are self employed and have difficulty proving income (which may come from a variety of sources) or recently established businesses will undoubtedly find it more difficult to obtain a mortgage, if at all, should these new proposals be approved.

2) Lenders to assume responsibility for a consumer’s ability to pay:
Why give credit to someone who can’t afford it? This should be happening now! I agree with this in principle but it needs to be widened to the Credit Card companies still sending out “pre-approved - sign here” forms on a daily basis. If I said yes to them all, I could be ‘quid’s in’ but could I afford the repayments…?

3) Requiring all mortgage advisers to be personally accountable to the FSA:
This one is interesting. We are already authorised and regulated by the FSA and this proposal wants us to be accountable for the mortgage you take. In effect this proposal removes the consumer’s responsibility for any transaction undertaken. Whatever happened to Caveat Emptor? Can I buy a lottery ticket and then sue the provider if I don’t win?

4) The regulation of Buy-to-Let and all Secured Lending:
Great idea and I 100 per cent agree, once authorisation and regulation of the current residential markets have been tried, tested and proven! If they were, would we be in this mess?

Obviously there are many more proposals, but I’ve so few column inches! The certainty with this review, if implemented, is that consumers will have less choice and pay more. Do you remember a PM telling us that we’d never had it so good?

Buy and be quick! | Bye bye Self Cert?

It may have slipped your mind, but we’re only a couple of months away from…the stamp duty threshold increase! Oh and Christmas! This means that if you are looking to purchase a property priced between £125k & £175k, unless you complete the purchase before the end of the year, you could be paying out a further £1,250 to £1,750 in stamp duty costs. This is of course unless the property is in a ‘disadvantaged area’ in which case the Stamp Duty threshold decreases to £150k, rather than £125k. The clarification on a ‘disadvantaged area’ on the HM Revenue and Customs website is ‘residential, mixed use residential element’. Good, glad that clears that up then!
The Self Certification (no proof of income) market seems to have its days numbered as The Mortgage Works (specialist arm of the Nationwide) withdrew all its Self Cert products last week. This only leaves a few Lenders remaining in this arena and they will not want an increase in business from this sector. With speculation rising in the market that the FSA are looking to remove Self Cert altogether, Lenders will be currently reviewing the risks and their exposure in this category and I suspect more will withdraw in due course. It’s a shame as Self Cert is ideal for many customers with self employed income and, especially in the current climates, where people have two or more jobs with income not readily provable. On top of this, the removal of such a category could also trap existing borrowers into their current mortgage.
Finally, the Bank of England base rate is set to remain below 2% until 2014, according to the Centre for Economics and Business Research. The CEBR is predicting that interest rates will stay at 0.5% until at least 2011. If correct, this is great news for those on tracker rates. In fact, a few lenders have launched products for customers to start on a tracker rate and, if the Bank base rate was to increase, allows a switch to a fixed rate (for a minimal fee!) at any time during the tracker period (conditions apply!). Good to see some Lenders assisting with innovative products!

Properties selling over the asking price!?

09/10/09 - Confidence in the market continues with the Abbey, Alliance & Leicester and Northern Rock reducing the interest rates on some fixed rate and tracker mortgages. Some of the tracker rates are sub 3% and well worth a look if you believe rates will not increased rapidly over the next couple of years. Other fixed rates, sub 4%, will suit those who require the comfort of knowing that their monthly mortgage costs are fixed for the period of the product. Whatever your requirement, it’s worth reviewing your circumstances and seeing what’s available in the market.

Lenders seem to be the focus of my articles more recently and in more of a positive stance! As we move in to the final quarter of 2009, and having had lengthy talks with many lenders over the last few weeks, I believe we will see more aggressive products during this period as lenders aim to finish the year on a high and with volume business. Watch this space!

As people remain content to stay on Lenders low standard variable rates, having finished fixed, discounted or tracker rates, it comes as no surprise that recent reports are suggesting mortgages for purchases are outstripping remortgage applications by 9-1! This shows that despite the current market climates, people are still moving properties and first time buyers, as I’ve mentioned before, are getting on to the property ladder.

In fact, more recently I’ve been informed of properties in the local surroundings not only having many more viewings than expected, but selling for way over the asking price! Superb news for sellers. However, although demand for properties is high, supply is still somewhat less and as a result, more people are bidding for the same property.

This is also confirmed by the recent Halifax house price index for September. The report suggests that the increased demand and lack of supply of properties had pushed up house prices by 1.6% for the month. The third consecutive monthly increase and fifth this year.

Future's still not bright....

02/10/09 - The Land Registry has confirmed this week that house prices decreased in August by 0.1%. Slightly unsurprising news as their data is from property sales some months previous. However it is also stark reality that despite signs we are on the way out of recession, the market recovery is going to be slow and enduring!

In fact, Creditaction figures for October report that the average Brit is just £155 away from a money meltdown. 12m Brits (25%) are currently struggling to cope with their monthly bills and 39% of people would be in trouble if they had to find just £50 extra each month. Essential bills now equate to £1,378 on average each month per person and £2,001 for families.

House purchase mortgage approval numbers for August were 81.4% higher than a year ago, despite data from the Bank of England confirming that 20% of all applications for mortgages for house purchase by major UK lenders were rejected!

The average current Mortgage Interest rate is reported to be 3.58%. The average house price in the UK in July 2009 for first time buyers was £143,454 which is an annual decrease of – 9.1%.

There were 11,400 cases of house possession (equivalent to one mortgage in 1,000) in the second quarter of 2009. According to the Council of Mortgage Lenders, this equates to 125 properties being repossessed every day or 1 property being repossessed every 11.5 minutes.

UK house prices will not reach their autumn 2007 peaks for at least another five years, according to the Ernst & Young ITEM Club. They also expect that house prices will fall again in the first half of 2010.

So, where is the good news? Well, AToM have experienced a 22% upturn in new enquiries over the last month. We have been able to secure products for more than 80% of applicants and this is a dramatic increase. We are experiencing more flexible underwriting from a number of mortgage lenders and the signs are that interest rates for fixed term products are reducing again. All the more reason to visit us to discuss your personal mortgage requirements.

Win £10k tomorrow! Golden goodbyes....

25/9/09 - For some months, a few of the smaller specialist lenders have been offering existing borrowers ‘golden goodbyes’ to assist them in remortgaging away to another Lender. This tends to be a cost effective way for the lender to lower their exposure and re-capitalise over exposed mortgage books, or so we are led to believe! In some instances, the incentive to the borrower to move away has been thousands of pounds. We are aware of some discounting by tens of thousands. The most recent, Rooftop mortgages are rumoured to be reducing mortgage debts by up to 15%! Quite simply, some lenders are happy to pay substantial amounts to say goodbye! Other lenders have waived early redemption charges on some loans to encourage borrowers to move their mortgage elsewhere. This fad seems to be on the increase and it is likely that more lucky borrowers will be receiving offers of a windfall in the near future, to move lenders. If your mortgage is a with a small specialist lender, who you know are no longer actively trading, a call to them could be very worthwhile and could decrease your mortgage amount, term and payments!

Whilst commenting on windfalls, don’t forget that tomorrow is AToM’s mortgage open day, in association with Mercury FM and Address Estate Agents! Do come along, bring the kids and have a free go at cracking the safe code. If you guess the correct code, £10,000 is yours! You can get free independent advice on mortgages available, especially to First Time Buyers, receive details of properties on sale in the local area and meet Chris Oxlade and the team from Mercury FM who will be playing tunes and creating ‘chaos’ outside the AToM office, in the Carfax, all day! Plus we have a colouring competition for the kids with the best of the day winning a £20 toy voucher!

Enquiries on the up!

18/9/09 - Over the last week or so, enquiries for new mortgages and remortgages have increased substantially. Funnily enough, we’re receiving a lot of enquiries from customers who have been drawn to some recent bank’s ‘headline grabbing’ rates. Yet when they’ve applied for these amazing products, the lender has been very picky and for no clear reason, declined to lend! Sign of the times! However, we’re more than happy to be of assistance! When choosing who to speak to about your mortgage, ensure that the company you are talking to, whether it be a mortgage broker, or an Estate Agents in house mortgage adviser, has access to the ‘whole of market’ (such as AToM) and not just a fixed panel of lenders. If they do not have access to the whole of market, they may not be offering you the best deal available to meet your requirements (whatever the incentive given to put your mortgage business via their company).
Getting a mortgage through the lenders in the current climates is still challenging. One day it’s easy to get a case through, the next, it’s a nightmare! So whatever you do, try to not give lenders any excuses to decline your application or refuse to lend to you. Try to pay bills on time, don’t miss payments where possible and especially not mortgage payments! Any missed (or sometimes late) payments will be registered on your credit file and this is normally used as the basis of a decision to lend to you. Even Insurance companies are now carrying out credit searches on people before issuing home or car insurances.
Finally, we’ve got together with Mercury FM and address Estate Agents to provide a free First Time Buyers Open day on Saturday 26th September at our premises in the Carfax, Horsham. We will be available to discuss all the mortgages available to First Time Buyers, including Shared Ownership and Guarantor Mortgages. Address will be providing a range of properties for sale, and you have the chance to win £10,000 by cracking the Mercury FM safe code! It’s well worth a visit, even if you’re not a first time buyer and looking for mortgage or property advice. You never know, a visit to AToM could put £10k in your pocket! We look forward to seeing you.

Lender delays....although properties are selling!

SWAP rates (mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have reduced over the last few weeks. The cost of 5 year fixed monies currently resides around the 3.30% mark. The Lender then provides the product to you, the customer, at rates currently in excess of 5%. Add in an arrangement fee of circa £999 and you will understand my sceptical view that huge profit figures will be released by the Lenders later in the year when they report on their 2nd half of 2009 figures!
The surprising bit is that despite such comfortable circumstances some lenders find themselves in, they’ve not replaced staff that were sadly laid off over the last 18 months and, as such, are incurring service issues! Some are in excess of ten days behind! With property prices competitively priced and deals in need of a quick completion, before the chain collapses or someone gets gazumped, such delays could not be incurred at a worse time.
Despite these issues, some lenders are following swap rates and have reduced rates this week. Good news for those looking to purchase or remortgage (bad news for those in a hurry!). Others have tried to curtail their volume of business by tightening up on criteria, or by increasing the deposits required on their mortgage product portfolio.
First Time Buyer enquiries continue to engulf ‘AToM towers’, exploring all avenues in order to get on to the first rung of the property ladder. With rates reducing, we are also predicting that remortgage applications will increase over the next few weeks as people look to secure decent rates and ensure monthly expenditure is fixed for the foreseeable period. We’re also informed that properties are selling like hot cakes, although supply is still somewhat sparse.
Many experts are predicting the worst is over and a slow recovery has started. How slow, no one knows, but it’s not just positive talk in the market any longer, small signs are beginning to show.

First Time Buyers will get the ball rolling again...

First time buyer confidence is increasing. We are seeing healthy enquiry levels from first timers either on their own or using a shared ownership scheme. Lenders historically agreed mortgages based on income multiples. Some would lend up to 3.75 x income, some up to 5.1. On joint applications similar style calculations applied. Most lenders now base their decision on affordability along with a review of your credit history which details financial liabilities, previous addresses, financial associations you have with other people and much more. Credit searches provide a full financial picture to lenders, enabling them to decide if you have a good risk profile. You can access your own Experian report via the AToM website and we recommend this to any applicant looking at the mortgage market. It is well worth understanding what details a lender will be using to assess your potential borrowing capacity.
Despite the school break coming to an end with many of us breathing a sigh of relief to have survived it safely without losing too much hair, Christmas is just around the corner and will creep up quickly! Have the last few weeks been costly? Have you been ignoring your finances hoping they will go away? Are there financial decisions looming? If so, now is a good time to start reviewing them.
Recent figures from Credit Action suggest that 33,600 applications for credit have been turned down daily during the past six months. 3,036 people became redundant daily in the 3 months to the end of June. In the same period 125 properties were repossessed daily and, today, 362 people will be declared insolvent or bankrupt. Stark figures indeed!

An Equifax survey recently reported that almost 30% of consumers are turning to parents or close family members for help with debt repayments or finances. More than 50% will openly discuss their financial situation with friends and family. This being the case, it really is time to seek independent professional advice.

Undervalued. Lenders in control! Never....!

28/8/09 - Houses are being undervalued by mortgage lenders causing sales and re-mortgages to fall through according to research by the National Association of Estate Agents. Discrepancies between agreed sale prices and valuations are having a detrimental effect on the number of property transactions, says the association.
These revelations are perhaps not entirely unexpected as many of the large lenders either own their own valuation companies or employ in-house valuers. They insist on using their own valuers to assess a property for mortgage purposes receiving revenue for both mortgage and valuation! Those who take a cynical view might say that this allows those large lenders to have an element of control over house prices and this now appears to be a cause of concern for the NAEA. Does it also raise the spectre of conflict of interest and good governance?
Additionally, some surveyors appear to be predicting that house prices will rise over the next three months, partly due to the current lack of supply on the housing market. RICS (Royal Institute of Chartered Surveyors) indicates that the number of properties left on estate agents’ books remains low, despite a rise in the number of new instructions for the first time since May 2007. However, they also warn that if the availability of mortgages remains constrained there is a risk that prices will fall again as the potential dual prongs of rising mortgage rates and unemployment take hold.
The Council of Mortgage Lenders points towards signs of stabilisation in the mortgage market but says that lending levels remain weak. House purchase loans accounted for £5.9bn in lending, up 23% from 36,500 in May to 45,000 in June. The CML points out, however, that this is less than half the average number of loans recorded in June over the last seven years.
That said, there are still some good deals out there so if you decide to review your own mortgage position over the weekend please do call us! Have a great Bank Holiday weekend!

Sale & Rent Back

21/8/09 - Lets start this week with some statistics: Mortgage lending is at its lowest level since March 2001 (source British Bankers Association). By the end of 2009, 360,000 mortgages are expected to be in arrears and 65,000 homes will have been repossessed (source: Council of Mortgage Lenders). Unemployment will top 3 million before this recession comes to an end (source: British Chambers of Commerce). The Government’s Mortgage Rescue Scheme, designed to help 6,000 families avoid repossession, has so far helped just 6 (source: HM Government).
So what does this all mean? Simply that there are large numbers of mortgage borrowers who may struggle to keep their heads above water, financially, during the year ahead. However, not all news is bad news and, even for those who find themselves in deep trouble, there are some options which might help them keep a roof over their heads. Out of the gloom are some positive facts which might help them relieve their position:
The UK's first ethical sale and rent back scheme was launched in May this year and which, subject to criteria , gives homeowners the ability to avoid repossession and keep a roof over their heads. The RPS Home Rescue & Buyback plan offers tenancy agreements for up to 5 years, the option for tenants to buy back property and share in any increase in market value and the added benefit of having no application or administration fees to pay. The prospective clients are not pressured into making a decision. Indeed, they are encouraged to take independent advice and are given £500 towards any legal costs this may incur. Whilst, historically, Sale and Rent Back schemes have had bad press, RPS have gone the extra mile and encouraged the Financial Services Authority to regulate their product giving potential clients additional comfort value. Contact AToM if you would like more detail on this offering.

The Mortgage Process...be clear!

This week I want to take a brief look at the mortgage process when purchasing a property. First time buyer or home mover, your mortgage application process will be roughly identical. The selling agent will look to agree a number of deadlines including the arrangement of mortgage finance. You should speak to an independent mortgage brokerage (AToM?) who will assess your financial requirements with you. They are required to provide you with an Initial Disclosure Document detailing who they are, who they are regulated by and costs involved in arranging your mortgage, including any advice or consultation fees charged. This document also advises how to complain if you are unhappy with the advice given. A good advisor will complete a financial fact find form enabling them to ‘know their client’. This is a must before any advice or recommendation can be provided. Once you’ve decided on the best mortgage for your personal requirements, a decision in principle (DIP) will be completed with the chosen lender, normally on-line. This involves brief personal details, income disclosure and a credit search on you. Be wary though, the more credit searches carried out, the more likely your credit score will decrease. The moral here is to ensure that the product is right for you before a DIP is conducted.
Once the DIP is agreed, normally instantaneously, it is then upgraded to a full application. Payment for valuation is then needed (sometimes free) and the valuer will confirm to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost.
In the meantime, the lender will probably require information on income, identity, proof of residency as part of their due diligence requirements. Assuming no issues arise with any of these, a mortgage offer should be issued. Then, subject to the conveyancing process your solicitor has to work through, you are now on the road to completion and should soon pick up the keys to your new home!

Confidence appears to be on the increase!

Lenders have started to release their six monthly profit/loss figures this week. With HBSC and Barclays reporting £3bn in profits over the last six months, the future started to look great, especially for those anticipating large bonuses! But then came reports of losses from Northern Rock (£724m) and Lloyds Banking Group (£4bn) and with it signs that we really are not much further forward than we’d hoped.
Nationwide became the heroes of the week by lowering interest rates, some by as much as 0.5%. This was quickly followed by their specialist arm, The Mortgage Works, who major in Buy to Let mortgages, who also reduced some of their rates.
In our Carfax office, we have seen encouraging signs that people are now looking for property with more confidence than of late. Some are enquiring to find out how much they can afford whereas others are chasing interest rates whilst they remain low. Consumer confidence is definitely on the increase and this is supported by the increasing number of first time buyers exploring all avenues to try and get their foot on the property ladder. I am impressed by the increasing willingness of some lenders to accommodate first time buyers looking at shared ownership schemes. First time buyers, if eligible, can purchase a percentage of a property (between 25 and 75%) and a housing association purchases the remainder. The buyer then pays rent on the latter percentage with the option to purchase an increased share of the property later on. There are many schemes available and a good supply of properties in the area, so do review all the options available.
Finally, we were visited by one lender this week, who had ‘mothballed’ themselves about a year ago and who have now indicated that they will be rejoining the lending arena in the not to distant future and more surprisingly, they are currently looking to employ up to 10 new staff! Positive news and fingers crossed that this is the beginning of a new era.

Lenders meeting could be good news?

31/7/09 - The Government Open Market Homebuy scheme funding for 2009/10 has now been allocated. Eligible beneficiaries were able to take out a mortgage to fund part of their property purchase and a low-interest equity loan to cover the rest. Claiming to have assisted 6,000 households in 2008, no one is quite sure how many households have had funds allocated to them for this scheme period. It is thought that the government will now concentrate on first time buyers and new build properties, through the schemes Homebuy Direct and New Build Homebuy.
The Land Registry has released figures suggesting that house prices rose in June by 0.1%, complimenting the earlier released Nationwide reports of a 0.9% increase. But let’s not forget the Halifax release commenting on a 0.5% decrease! As I’ve said before, until these three report a simultaneous increase in house prices for a consecutive 3 month period, we can’t start jumping around just yet!
Not much to report on rates this week. Perhaps the lenders felt they deserved a holiday and have taken their kids away, expecting us hardworking independent mortgage brokers to be away also? No such luck. But good news in that rates seem to have stabilised for now!
And whilst on the subject of lenders, I was pleasantly impressed with Alastair Darlings meeting with all the major banks to sternly express his wishes that they lend more to consumers and businesses. Sadly, this is the second or third time they’ve met and we’ve not seen lending at sufficient levels to drive recovery in the property market since either previous meeting, so I’m not holding much hope! However, this time the threat of bringing in a competitions inquiry, if lending does not increase, has been raised. Although this struck me as funny, as I thought it was the gentlemen in question that sped up and agreed the merging and acquisitions of such ‘super banks’ at the outset?

Things that gripe..

As we commence our fourth week in the Carfax hub of Horsham, my eyes have been opened to a number of interesting issues. Some which really require comment and others which perhaps I should just let pass me by! That said, and this might perhaps go against my better judgement normally, I want to take the rather risqué route and speak my mind on one particular issue which is of concern to me. One which, in the current climate, is unfortunate and can be detrimental to the house buying public.
I accept that it is a tough market out there and that everyone needs to firstly attract business and then convert what they can. If this is conducted professionally you can retain a customer for life. However, if it is done aggressively you can just as easily lose face and this can be very bad for business! We have lots of long term friends in the house sales sector and find that, in our view, the majority of these do work hard to provide a superb service. But, it appears that one or two may sometimes go a little bit over the top. It is both understandable, and sensible, that when a purchaser puts forward an offer for a property, the selling agent will require evidence that they can afford the transaction and obtain a mortgage. Quite right too! However, when the purchaser is then told that their offer will not be put forward to the vendor unless they place their mortgage through the selling agents own advisers, then this is surely not good or fair practice, in any sense!
Whinge over, and on to more positive matters. Properties appear to be selling and the general level of confidence is increasing in the market almost daily. The Conservatives will dismantle the Financial Services Authority (FSA) if they get into power next year. Not sure if that is a good or bad thing (just in case anyone from the FSA reads this column!). Have a good weekend!

Going up or coming down? Anyone know about House Prices?

Nationwide launched a 125% mortgage this week! Sadly, most reports failed to spot that this scheme is for existing borrowers, in negative equity, looking to move house! Positive news, but the hype will have teased first time buyers who will have to wait a while longer yet! In the middle of 2007, there were some 28,000 first time buyer products. Today, there are roughly 1,200.
Are you confused about house prices? I am. Nationwide recently reported that house prices increased in June by 0.9%. Halifax refuted this stating a decrease of 0.5% in the same period! If they cannot agree what chance do we have? Your guess is as good as mine. Let’s wait for the Land Registry report, although they are usually three months behind the pace due to reporting timings!
The Bank of England retained base rate at 0.5% last week. Good news for those on tracker rates. Not such good news for the market generally. Customers who have recently finished a fixed rate period with a lender will revert to the lenders currently low standard variable rate (SVR) and remain there quite happily. Lenders SVR’s tend not to change unless bank base rate does. However, it is borrowers moving from lender to lender which helps to stimulate money movement in the financial markets. Borrowers leaving a lender release funds for someone else, and so on. With minimal movements, the lenders enjoy continued excuses to restrict lending! Or, is it me…!
Finally, re-mortgage applications have increased recently. Borrowers looking to secure long term fixed rates are applying at the right time. Some, who are in increasing financial difficulties, are looking for sensible ways to remortgage (not always our recommendation). Others are releasing equity to acquire Buy to Let properties in the current cheaper climate. Whatever your requirements, speak soon to an independent mortgage advisor. You know who to call…

First Time Buyers are active.

10/7/09 - The French Market brought some colour and a different shape to the Carfax during last weekend. It reminded me just how much we are inexorably linked with our European cousins and, in the mortgage market, this is very noticeable. Members of European states are entitled to borrow money from mortgage companies in UK in the same way and on the same terms as we can. Like us they must prove ability and intent to repay and then, subject to underwriting and due diligence, can take a mortgage on a property here. We have the same rights in European countries too, although it is fair to say that some do not really promote home ownership in the same way as us, preferring rental or long standing family home use. Anyway, it was good to see the colours and hear the Galic language whilst also enjoying sweltering Mediterranean temperatures!
Nearer home, fixed rates on mortgages are rising. Lenders are withdrawing some product ranges and, in some cases, dropping out of the investment (buy to let) market altogether. Is this a sign that there is a gathering nervousness at the welter of rental properties and concern at how they will fare if there are so many that they may soon outweigh the number of possible tenants? If this were to be the case then rental values will decrease and we will enter another cycle of downturn in the sector. Lets hope not!
First time buyers seem to be very active and we have seen a definite upturn in recent weeks. Mostly, 90% is the maximum available to them and rates swing wildly from the mid 3%'s (if you can get the lender to say yes) to the early 7%'s, the latter for five year fixed rates. This may not be such a bad deal as it sounds if interest rates do start to rise anytime soon.

Gone in 60 minutes....product withdrawals!

3/7/09 - It is really pleasing to note that there is an upward surge in consumer confidence in the housing market and this is showing in the mortgage market as well. There is a noticeable intent also on the part of some lenders who are re-visiting criteria and rates to see if they can start to attract more business which will progress from application to completion. For some time now initial applications have been approved in principle but then many cases have run into brick walls somewhere along the line.
More positive news with the Nationwide releasing figures stating that house prices rose 0.9% in June, the third rise in the last four months. It has also pushed up the average house price to £156,442 from £154,016 in May.
Conversely, this somewhat better news has the ‘occasional’ sting in the tale as interest rates are starting to rise and particularly in the fixed rate sector. So, as I keep repeating, make certain that you catch the rate before they rise even further and it is a generally accepted view that they will in the coming weeks and months.
To put this in to perspective, one lender last week sent out notice of their intent to withdraw products. This was sent to all mortgage intermediaries at 2pm. The laughable side was that they gave a deadline of 3pm (same day) to secure the product and rate by completion of a decision in principle (effectively an online application)! Just one hours notice to save rates that we might have been discussing with customers for some days previous! And of course, the replacement rates were all somewhat higher.
Finally, over last weekend, AToM moved to new premises in the Carfax, Horsham. We are right next to the bandstand in the town centre. Please feel free to drop in, appointments are not necessarily required and we’d be delighted to meet with you.

Lenders have service issues...unbelievable!

26/6/09 - Given everything that has hit the headlines recently it was something of a surprise to learn that RBS have agreed a salary package approaching £10m for the new man charged with rescuing the troubled bank, currently 70% owned by us! Am I right to be disappointed that I did not get invited to sit in on the interview?
Putting that to one side, the mortgage market is undoubtedly ‘hotting up’ again. Applications are at their highest level for some time and we are starting to see more ‘sold’ signs appearing almost daily.
For those of you old enough to remember the book ‘Catch 22’ many of our lender friends are now seemingly caught in that trap. Having had to let many of their staff go over the last 15 months or so and with business volumes on the increase, a few are now starting to suffer backlogs. Some lenders are up to 10 days behind and will not fast forward urgent cases causing much difficulty for new customers. Others have daily funding allocations that are released to mortgage intermediaries at 11am and inevitably are all utilised by 11.02am!
Fixed rates are on the increase and we still have some lenders arranging their criteria in such a way that they don’t write much business and this fits with their business plan needs at the present time. So it is a perverse situation we find ourselves in, at a time when we are starting to see rising consumer confidence!
That said, there are still some very competitive fixed rates available but we have to keep a close watch on them as lenders can pull them at a moments notice. Some lenders are offering fee free legal and valuation options on re-mortgages so, if you think it might be time to fix, do it now and catch a good rate with minimal or no costs along the way.

Fixed rates at the beginning of a steep hill?

19/6/09 - The Council of Mortgage Lenders has reported that 69% of borrowers took out a fixed rate mortgage in April, with an average rate of 4.83%. The percentage of borrowers fixing is the highest since June 2008.
While the number and value of house purchase loans increased by 16% from March to 35,600 loans worth £4.5bn in April, this was still well down on the year before.
SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) rose steeply last week. As a result, Accord, C&G, Nottingham, Northern Rock, Yorkshire, West Bromwich, Chelsea building society, Birmingham Midshires, Bank of Scotland and the Nationwide have all increased rates on longer term fixed rate deals.
Although the above emits some large high street names, such as Abbey, A&L, Woolwich, etc, those who have not increased their rates (at the time of writing) will receive a deluge of new business and thus, in order to stem the flow of business and maintain service standards (so they will say!), will no doubt increase rates anyway. What's there today may not be tomorrow.
The Confederation of British Industry expects quantitative easing to continue for “some months”, with the Bank of England maintaining interest rates at 0.5% until perhaps the spring of next year. But although the base rate looks to stay static for some time, both banks and building societies are showing signs of raising tracker rates also.
With house prices so low and experts predicting the harshest period of the recession is behind us, it’s now down to the consumers and house buyers to lead the way. As I stated at the beginning, purchasers are showing signs they think the worst is over.
To take advantage of the current relatively low long term fixed rates, DON'T DELAY and visit your local mortgage broker (AToM!)asap..

The music's stopped....all change at Lloyds!

12/06/09 - You may have seen the news this week regarding the Lloyds Banking Group reshuffle. When Lloyds took over HBOS, the newly created group had many differing brands, so it was only be a matter of time until a review of their market offerings was undertaken. At the time of writing this column, we have heard that the Cheltenham & Gloucester branch network is to be closed in November 2009 and that they will concentrate purely on business via mortgage intermediaries. With circa 160 branches nationwide, some in close proximity to Lloyds TSB, Halifax and Bank of Scotland branches, this is no real surprise. Birmingham Midshires, Cheltenham & Gloucester (intermediaries) and Scottish Widows will continue to have a strong presence in the mortgage intermediary market, with Halifax offering both intermediary and general public products, we believe. What this means for you, the consumer, is a wider variety of options when looking for your new mortgage with each brand understood to be targeting different areas of the mortgage spectrum. This is also great news for the mortgage intermediary market and product options available via mortgage specialists, such as AToM, should be sought when reviewing your requirements.
Having recently seen that Abbey, Alliance & Leicester and Bradford & Bingley are to be renamed under their parent brand, Santander, these are clear signs that condensing brands and fine tuning offerings are the way forward. Cost cutting is apparent and any recently seen green shoots, now appear to have no roots.
However, profit is key and we may well see some very competitive and attractive mortgage products to kick start the ‘all new’ brand looks. What is for sure is that these moves show the Lenders faith in mortgage brokers and intermediaries and for that, at least, we are eternally grateful! Now it’s your turn to do the same!

What credit crunch? £20m in bonuses paid....

05/06/09 -
News emerged this week that the FSA paid its staff near £20m in bonuses last month, a 40 per cent increase on last year’s payouts, according to figures obtained by the Liberal Democrats. The average bonus paid to regulator executives was £19,100, while the average for other staff was £4,107. A LD spokesperson commented that the size of some of these pay-outs would be hard to justify at the best of times, but it looks especially bad in the current economic climate.
Creditaction has reported that 33,600 applications for credit have been turned down every day during the past six months and that the Citizen Advice Bureaus have been dealing with 7,241 new debt problems every day.
The number of house purchase approvals in April hit 43,201, an increase on the March figure and the previous six-month average, according to the Bank of England. Although purchase approvals increased, the number of remortgage applications continued to decrease. This is somewhat surprising in current climates. With predictions of rates set to soar and current fixed rate mortgages so low, I’d have expected re-mortgaging to a long term fixed rate to be very attractive.
The Nationwide House Price Index suggests that house prices rose by 1.2% in May with the annual fall in house prices slowing significantly. Their latest figures show average house prices at £154,016, some 11.3% lower than this time last year but an improvement to the annual decline of 15% recorded in April.
However, let’s not jump up and down just yet! Every month, the variance in house prices is reported by numerous sources. So despite Nationwide suggesting house prices are on the up, there’s the probability that the Halifax and Land Registry reports may disagree. They all follow differing sampling measurements and more recently have rarely agreed. Some say that until these three align and consistently report that house prices are on the increase, for at least a quarter, the champagne needs to stay on ice.

Sale and Rent back...back?

Council of Mortgage data reports that gross mortgage lending fell to an estimated £10.4bn in April, 60% down on this time last year. April’s figure is down 9% from £11.4bn in March and 60% from £26.1bn in April 2008. These figures confirm that the market is still weak and, despite industry reports, lending is not increasing just yet.
Innovation is though! Lloyds TSB launched a new product this week. The ‘Lend a Hand’ deal offering first time buyers an ‘in’ to the property ladder with a 95% mortgage on an attractive rate of interest. Parents have to place an investment with the bank against which a legal charge is taken. The investment receives a fixed rate of 3.5% for 42 months. The combined savings and deposit from the purchasers must equate to 25% at the outset. Although this will not suit all first time buyers, it is a positive step forward.
The Sale and Rent Back sector (investors buy your property and rent it back to you) has received many derogatory press comments in recent times. However, with regulation of the sector due in July, the future should be ethical.
Sale and rent back will not be right for everyone, but it does provide a valid solution for homeowners facing repossession and who have exhausted every other option. A new company has recently launched in this sector and the founders have enjoyed many years experience in the mortgage market, most recently as lenders. Their model is based around the customer remaining in the home with the ability to buy-back the property at any time during the tenancy agreement (up to 5 years) and share in any increase in market value. Customers must take independent advice and there are no application or administration fees to pay. Customers can withdraw at any time before the sale of their property, at no cost. Valuations of the property are based on two independent assessments. This is a specialised market and we support its forthcoming regulation. Please call for more details.

Could it be a sign??

The latest Bank of England quarterly inflation report suggests that the economy will not now recover until the middle of 2010 (somewhat contradictory to Alistair Darlings recent budgetary prediction!). Analyst’s inflation review indicates that the Bank's base rate is likely to remain at 0.5% well into 2010. Therefore, a short term tracker rate with options to change to a fixed rate with no early redemption charges looks good. Generally known as an ‘all-weather’ product, a few lenders have previously offered this option, although Nationwide is currently the only lender with such an offering….at least for now!
This week, Rightmove.co.uk reported that sellers have increased asking prices by up to 2.4% during May in a bid to maintain their own position when buying. The average asking price is now £227,441 (against £222,077 in April). The Rightmove House Price Index for May shows that the jump in asking prices is the largest the property website has measured, for a single month, since 2003!
More positive news indicates that UK residential property sales have hit an 18-month high. Figures from the National Association of Estate Agents (NAEA) show that the average agency branch sold ten properties in April – compared with eight in March.
RBS (Royal Bank of Scotland) has changed its definition of New Build properties. Any property refurbished, modernised or altered since 1st January 2006 will now be classed as New Build. As a result, the maximum advance on these properties is now limited to 80% for residential and 65% for investment mortgages! This, from a lender who is seeking to lend a further £25bn over the next two years!
On the favourable side, the Abbey have increased their lending values from 60% to 70% on their competitively priced re-mortgages on 2, 3 and 5 year fixed rate products!
Congratulations to Lifestyle Ford of Horsham, who succeeded AToM in winning this years coveted West Sussex County Times Business of the Year Award. Well done!
Finally, you buy a car from a car specialist, flowers from a florist, so for all your mortgage requirements, why buy anywhere other than from your local mortgage specialist?

Easing the Financial Strain...

I did have a small chuckle last week as reports emerged from the government that the ‘mortgage rescue scheme’ initiative (which was due to ‘save the world’), has assisted just one family. This is despite suggestions that it would be available to circa 6,000 in the country. In an hour of need, it surprises me that with so many analysts, experts and others in the industry, they cannot come up with a more practical scheme that would actually help rather than just be an apparent PR stunt. Perhaps less concentration on expenses might be a start!
Following the unexpected drop last week, the cost of fixed rate monies increased this week, as have the number of mortgage products in the market. The latter is great news as competition and attractive product options begin to return. Despite being some 70% down on this time last year, the number of available products has increased by 22% over the last two months to circa 3,300.
Much is made these days of the fact that, pre-credit crunch, customers took on secondary borrowings simply because they were available! These are often very expensive and can ultimately lead to financial difficulties which might easily blight their credit file if it is left to fester. In many cases, re-mortgaging may be the right option for customers and the following is a live example of one case where we were able to make a real difference:
The clients owned a property worth £395000 with a standard mortgage of only £47000. However, they had accumulated more than £90000 in secondary borrowings, including car and credit card loans and other similar commitments. These had led to monthly outgoings in excess of £2700! Whilst it is not always wise to convert short term loans to long term borrowings, these clients were gradually heading towards a point where defaults on payments were going to happen soon. A view needed to be taken, and quickly.
Income was fine and a re-mortgage to £140000 was undertaken culminating in a new monthly payment of approximately £785 representing a monthly saving of £1915. This massively eased the financial strain the clients were starting to feel. This would not be the right response for everyone of course and every applicant has different needs demanding individual consideration. Even for those of similar age and financial circumstances! As always, for more information, please visit our website or contact us on the number above.

The right time to invest?

House prices are low, mortgage interest rates are competitive, traditional investment returns are poor. Therefore, purchasing a property as an investment might be viewed as an opportunity to make decent returns on savings. Let’s look at this in more detail.
A ‘Buy to Let’ mortgage is specifically targeted at borrowers who wish to invest in property to let out. The rental income landlords receive should generally exceed monthly mortgage payments and will help to offset maintenance/management costs as well as making some profit!
As a result, more and more people are looking at Buy to Let as a viable option for:
Planning for retirement.
It is a sad fact that many people in UK do not plan sufficiently for retirement. Additionally, large numbers of pensions and endowments may fail to perform to target or pay out as expected. As a result, purchasing an investment property might be considered as a flexible, controllable means of planning for retirement and also a medium to long-term investment.
A second income from property.
Investing in property can deliver a modest monthly return over and above the mortgage payments and be drawn as additional income or (with a flexible loan) used to “overpay” the mortgage. This might lead to early redemption and a nice profit once the mortgage debt has been re-paid. There are, of course, no absolute guarantees!
Letting as a long term investment.
Repayment terms range from 5 to 30 years so some might consider Buy to Let as a viable medium to long term alternative to more traditional investments vehicles.
These options do give rise to potential taxable implications (no surprise there then!) and these should be investigated with your financial adviser/accountant.
Finally, other news - The cost of fixed rate money nose-dived last week, prompting lenders to, against some expert predictions, lower fixed rates! Some have already launched reduced rate deals giving new customers some great fixed options. If you want to fix your monthly mortgage costs for the next 2 to 15 years, there’s no better time to be speaking to your local and independent mortgage brokerage!

The Highs and Lender Lows...

Let’s start this week with some really good news! Halifax have announced that they are going to refund stamp duty for first time buyers who purchase properties up to £250,000. They will rebate the 1% stamp duty figure which takes effect above £175,000 after completion. This is available to first time buyers only and is seen as a positive move towards kick-starting this sector of the mortgage marketplace. Let’s hope other lenders now follow the HBoS giant and find other ways to stimulate new growth.
Contrastingly, the UK's biggest building society, Nationwide, has changed its reversion rates for new clients at the end of their fixed rate period. Whilst existing customers are guaranteed to pay no more than 2% over the Bank of England base rate when their current product term ends, new customers, who take a mortgage after April 30, will instead revert to the society’s new 3.99% variable rate (which will not track BBR).
Other news this week, the Leeds Building Society announced the launch of two new fixed rate mortgages for 5 and 10 years. With a loan to value available up to 85 per cent on the 5 year fixed rate deal (5.69%, 5.9%APR) and up to 75 per cent on the 10 year fixed rate loan(5.49%, 5.9% APR), borrowers who want to lock into the certainty of a long term fixed rate mortgage could be interested in these products.
The Budget was something of a mixed bag and certainly not a welcome one for those in receipt of high incomes. It does seem that we are entering into a phase where the tax payer is going to carry the can for many years to come as a result of the current government’s volume borrowing.
That said, another long weekend ahead provides ample time to review financial paperwork and here comes a plug! AToM has diversified into a number of new areas to ensure that we provide a one stop financial ‘shop’ for you. Historically, we are one of the longest established mortgage brokers in West Sussex and more recently have expanded our offerings which now include All Types of Mortgages, secured loans, wills, life/car/house/travel/pet insurances, equity release, bridging/commercial loans, debt management plans, IVAs, Utility Switching and other products such as Sky TV, Vodafone and 3 mobiles! AToM has them all. As always, no appointment is required, so please visit our offices in North Street, Horsham, or visit our website for more information.

Buy now, Fix now!

Not only is it a great time to buy, but remortgaging is becoming attractive too. There are some very competitive 3-10 year fixed rates available and the continued uncertainty in the financial markets is causing borrowers to review and stabilise outgoings longer term.

A few weeks back, I mentioned that fixed rates were set to increase and they are showing signs of doing so! Woolwich have increased their 3, 4 and 5 year fixed rates by up to 0.40% yet, at the same time, have reduced 2 year fixed and tracker rates by some 0.30%. Interesting, as general costs to lenders acquiring fixed rate monies (swap rates) had decreased! Yorkshire Building Society also increased fixed rates by 0.40% for loans exceeding 75% of property value. If this is the sign of things to come, then a trip to AToM in the very near future could be a financial masterstroke!

The Council of Mortgage Lenders estimates that 900,000 homes are in negative equity (house value lower than mortgage balance) and that prices have fallen around 16pc during the past year, although this figure might be open to question! Notwithstanding this, some lenders are showing a willingness to assist. Halifax and Bank of Scotland (members of Lloyds Banking Group) are offering 95% loans to selected remortgage customers and up to 120% of the property value in certain cases. You won’t find these schemes advertised as they are discreet offerings to existing customers. However, anything which helps stimulate the market is encouraging.

Halifax have also launched a scheme where they will pay 50% of your first years council tax bill (to £1,000) to attract first time buyers (available until 23/5/09 - conditions apply).

Continuing the “good news”, mortgage products now available increased to 3,700 in March, a 25% increase on February. And there’s more! Lombard Street Research declared that housing is now affordable and the slump will be over by Christmas!

And finally…The Confederation of British Industry (CBI) says. "The UK recession was more extreme than expected during the first three months of 2009, but the worst is now behind us. The recession is expected to last until the end of 2009 with sluggish growth resuming in Q2 2010. The Bank of England is expected to start raising the UK Bank Base Rate from its current 0.5% level in spring 2010.”

As I started, so will I finish…Buy now…Fix now!

Mortgage payments are being missed..

When I was approached to write these weekly columns, the brief was to be descriptive and update readers with news from the world of mortgages not on general release. Whilst I knew times were tough, I didn’t realise how little positive news there actually is (or isn’t) in our market! Believe me, I look for positives but the stark reality of the current situation (and that still looming) makes it difficult. The statistics released by ‘creditaction’ for March, show the reality:
o Average house prices have decreased by £95 every day during the last 12 months.
o A property is repossessed every 10 minutes.
o 2,915 people are made redundant daily.
o 1 person is declared bankrupt or insolvent every 4.5 minutes.
o 33,600 applications for credit have been turned down every day during the last six months.
According to research from Which? homeowners are really feeling the pinch with 62% of the working population fretful that they or their partner may lose their job. Some 43% joint income households are anxious they won’t be able to pay their mortgage.
Despite house prices stabilising the ‘experts’ predict 2010 before ‘some normality’ returns with matters likely to get worse before they get better. Recent news from RBS with the loss of another 9,000 jobs and BT suggesting a further 10,000, indicates that the knock-on market effect will be huge.
Moneyexpert.com estimates that 8% of all mortgages holders have missed one payment during the last six months. One in twelve borrowers! Additionally, they suggest that nearly a third of all adults would face financial disaster within two months if they lost their jobs. Half of those believe they would only last a month.
Simply put, if you miss a mortgage payment, finding a lender to offer you a new mortgage is tough. Miss two or three and its as good as mission impossible.
I have said this with regular monotony but there really is no better time to review your finances and plan ahead for the next two to three years. Ask yourself questions including - if I lose my job how will I pay my mortgage? How will I support my family? If you are stuck for answers, speak to AToM or visit our website for more information. Don’t leave it any longer. Let us help you plan a positive future.

HIPS from the outset...

New legislation came into force with effect from Monday last week regarding Home Information Packs (HIPS). Every property must now have a HIP available on the first day it is marketed for sale. The seller has to provide a copy of the pack free of charge; however, a ‘reasonable’ charge may be made to cover the costs of copying and posting it!
A National Association of Estate Agents survey has reported that HIP’s are stopping people from putting their property up for sale. The survey found that 65% believe that the new arrangements will actually discourage sellers and this will further damage the property market. The NAEA has called for HIP’s to be scrapped during the recession, and for the Government to re-examine their viability once the economy begins to grow again. If you need a HIP, make sure you shop around as prices vary dramatically and you can purchase them from many sources (including our website!).
The Council of Mortgage Lenders are anticipating some 75,000 repossessions in the UK during 2009. In the US there were over 290,000 in February alone! It is even more interesting when you look at these numbers in terms of households. In the UK it equates to one repossession for every 155 outstanding mortgages whereas in the US it is one for every 27!
We’re hearing various commentaries that house prices are showing signs of stabilising. Some local Estate Agents have confirmed that properties are selling well, but not many new properties are coming onto the market. With demand exceeding supply, this will inevitably stabilise prices. Even the experts cannot agree with the Halifax reporting that house prices dropped by 1.9% and Nationwide reporting a 0.9% rise, both in March!
If the signs are to be believed, this is positive news and lenders appetites for lending should increase. At the same time buyers, who have largely stayed out of the market, will quickly return.

Mortgage Approvals up!

The mortgage world entered this nightmare way back in August 2007. The first signs of problems, to the public eye at least, were that of Northern Rocks issues in October 07. In just that small passage of time, we lost some four or five lenders in ‘our world’. Yes they were relatively small, lending just 1 or 2 billion per annum, but they were specialist. Great for unique self certification mortgages, buy to lets and sub prime. How we miss some of those product offerings today!
Since late 07 and right up to the present (Dunfermline BS this week) many others have fallen by the wayside. Some well known and many not so well known: Victoria, Rooftop, Preferred and Mortgages plc to name but a few. They all gave us, your mortgage broker, many market options and gave you, the customer, products designed to meet your specialist requirements. As with most lenders they were owned by larger conglomerates and had funding pulled at quick or no notice, as soon as financial institutions started to come under the auditors and credit department’s scrutiny. Long gone have the days that a lender was run by sales! Everything now is purely profit and quite rightly, compliance orientated! Ignoring the latter for a second, you may have seen that this week the Woolwich launched a £150 charge for every mortgage application, even if it does not proceed for any reason! With others charging huge arrangement fees for their mortgages, it appears that lenders simply can, right now, call the shots.
There’s no doubt we have a long way to go before we see any decent signs of recovery in the market as a whole. But, as Yazz! once sung, ‘The only way is up!’. In contrast to the announcement from the Council of Mortgage Lenders recently, the Bank of England last week advised that mortgage approvals for purchases were up in February and the highest since May 08. At the same time, consumer debt repayments were the highest since records began in 1993.
Nothing to jump around about just yet, but certainly a glimmer of hope in a very uncertain and testing time for all.

Mortgage lending restricted to 3 times income?

This weeks announcement from the Council of Mortgage Lenders advises that mortgage lending figures for February were down some 60% against the same time last year. Hardly surprising when available products had dropped some 85% in the same period and most lenders criteria has changed dramatically! Due to the continued pressures that lenders are placed under, they are finding many ways to refuse applications, even for those with large deposits and good credit ratings. In addition, some high street lenders have recently reduced their maximum loan amounts to £250k, and others lending above £500k are charging an additional 1% per annum for the increased “risk”!
The US government recently announced plans to buy over $1trillion of toxic mortgages from struggling US banks. Mortgages that should not have been granted in the first place and were always unlikely to be paid consistently by the consumer. No surprise there then! However, this is a positive move forward and is intended to stimulate US lenders in to funding again albeit supported by the public sector!
In contrast, the UK Financial Services Authority (FSA) are expected to announce plans to look at restricting the amount of mortgage loans advanced to consumers by capping income multiples. Only 2 years ago you could obtain a mortgage loan at 6 to 8 times your income, depending on your status. This has already reduced to the 4 to 5 level but is heavily reliant on the computer not saying “no”! The new plans are to restrict lending to just 3 times income….
This is partly justified by recent reports from the FSA that mortgage arrears are up 31% for the last quarter of 2008 compared to the same period in 2007. It’s interesting to note that arrears statistics are only reported when the mortgage account reaches 1.5% of the balance. So, on a £100,000 mortgage, the account needs to be in arrears of £1,500. Therefore, the true picture of mortgage arrears is probably substantially higher.
With an average house price in the south east of £248k (BBC statistics) and borrowing at 75% loan to value on 3 times income, you will need to prove annual income of £62k! The days of mortgage rationing are looking more like reality!
Following the success of our Mortgage Clinic we are holding another on Saturday 4th April, from 9am to 2pm, at our North Street office, Horsham. Please do come along!

Mortgage rates on the way up?

During the past week some mortgage lenders have reduced their Standard Variable Rates following the recent Bank of England base rate reduction to 0.5% yet others have increased their fixed rates by up to 0.25%! Is this the start of things to come? What is available on a Friday night may not be there on a Monday morning.
Two more mortgage giants, Chase De Vere and Cobalt Capital, shut their doors this week. Both, further casualties of the current mortgage climate and a real loss to the sector.
Recent trade news also suggests that when regulation renewal fees are due in April, 32% of mortgage brokers will choose not to renew. That is a huge number of professional advisors likely to exit the market. Now, more than ever, it is important that you seek out the services of an independent advisor who is not tied in any way to a linked business.
Last Saturday saw AToM exhibiting at the excellent MicroBiz, a great medium for small businesses to work together and understand each others needs and benefits. We had chance to meet many different people there and all with various situations.
Some had been made redundant and were evaluating all options available to them in starting up a business, whilst others, still in employment, were forward thinking should redundancies occur. Being self employed did not seem to scare anyone! All were opportunity seekers, prepared to go over and above the standard call of duty to ensure they survive and are in the ‘last man standing’ pack!
With this in mind, the weekend could be a valuable time for you to complete a full review of your personal finances, or even go out looking to buy new property! More and more people are turning towards alternative methods for securing their families future. With saving returns so low and house prices bottoming out, many experts would agree that property is a great long term investment.
But be wary. As I have commented before, Lenders really don’t want to lend in volume currently, despite the numerous requests from no. 10! So seek independent advice to ensure you get the best available products for your requirements.
See all mortgage products available, for free, at www.atomltd.co.uk and now you can follow the latest AToM product updates on Twitter, Facebook, Linkedin, Ecademy and more, if you’re that way technology inspired!

Products on the decrease, but new launches are great!

Overall, market conditions continue to deteriorate and mortgage products are subject to regular review and withdrawal. Between February and March, more than 20% of mortgage products were withdrawn from the market. To put this in context, the number of available mortgage products today are approximately 2,800 compared with 3,500 in February and more than 20,000 this time last year!
Mortgage Brain, one of the mortgage industries largest product sourcing systems recently commented that, for the first time in three months, fixed rate mortgage schemes had suffered the biggest fall (20%) followed closely by variable rate mortgages (18%) and base rate trackers at 15%.
That said, even though product offerings are on the decline, the actual rates available are extremely attractive. There is no surer bet that, despite the Bank of England Base rate being at its lowest ever, rates will increase. As a result, fixed rate mortgages should and will be in great demand.
One lender recently launched a 10 year fixed rate mortgage with an interest rate of just 4.75%. This really is a superb rate and is available to anyone looking to borrow up to 60% of the property value for either a purchase or remortgage.
For those with a smaller deposit, competitive rate examples include:
- Up to 75% LTV, 3.49% fixed for 2 years, subject to terms and conditions
- Up to 90% LTV, 5.50 fixed for 3 years, subject to terms and conditions
There are also many lenders offering attractive remortgage fixed rates to existing clients. These are known as retention rates and a specialist company like AToM can advise you on these as most are not publicly advertised by the lenders!
Please visit www.atomltd.co.uk where you can now view all major rates in the market and apply or enquire online.
Whether you are looking to remortgage or purchase, with rates so low and potentially tenuous, please don’t delay and possibly regret it later….

The statistics...

I thought this week I would review some ‘interesting’ statistics which have just been released!
Credit Action suggests that today in the UK:
- 323 people will be declared insolvent or bankrupt. One person every 4.5 minutes.
- 2,430 County Court Judgements will be issued
- 144 properties will be repossessed
- 33,600 applications for credit will be declined
- Unemployment will increase by 1,600
- There are more debit/credit/charge cards in circulation than people, with an estimated 73m in use…
Let’s stop there and see if we can put a positive spin on this:
- Average house prices for first time buyers now stand at £140,857
- According to smile.co.uk, the credit crisis has made 64% of Britain’s change their attitudes towards spending. The average Brit saved £1,882 in 2008, but plans to increase this to £2,605 in 2009!
And the reality…
Openness about finances is important to a relationship. A new survey from CreditExpert.co.uk suggests a very different story:
- 1 in 5 adults admit they haven’t told their partners what they owe!
- 10% (3.2m) have set up a secret bank account!
- Women are more suspicious than men (not new news!), with 31% secretly looking at their partner’s paperwork, against 24% of men!
- While 17% of men aren’t telling their partners what they really earn, against 13% of women, 28% of females do not own up to the full amount of their spending on clothes and shoes, against 11% of men….
So where am I leading with this? Undoubtedly, it is time to batten down the hatches, extract heads from the sand and review your finances. A visit to AToM, for impartial, independent advice, could help you see through the next few months more comfortably, especially if you find yourselves in, or approaching any of the above categories.
We are delighted to be exhibiting at Microbiz at the Drill Hall, Denne Road on the 14th March. Do visit us there or pop in to our offices in North Street, Horsham at any time. We will be pleased to assist you.

The day of the First Time Buyer...

The great ‘new news’ of the week is that Northern Rock have confirmed their intent to lend over the next 2 years and are to increase their product offerings to 90% of the property value. This shows ambition from the lender in dire times, especially for first time buyers. A spokesperson, commenting in trade press added ‘We might do some business at 90%, but we will test this market very carefully.’!
With house prices and interest rates so low, today’s market is veering towards first time buyers. Those with a decent deposit have many many options!
For those with less, or even no deposit, the government has recently launched some ‘initiatives’. But do you even know what’s on offer? It can be confusing……………
- New Build Homebuy – Buy 25% of a newly built property with savings/mortgage (some properties in certain areas) and pay rent on the rest.
- Homebuy Direct – Receive an ‘equity loan’ of 15–30% on the cost of newly built properties (some properties in certain areas). You’ll need to repay the loan when you sell the property. The remainder is obtained via a traditional mortgage.
- Open Market Homebuy – Receive an ‘equity loan’ of up to 50% to buy any property. Remainder covered by a traditional mortgage. Interest charges on the loan apply.
- Rent to Homebuy - There are certain newly built properties that you can rent at an affordable rate – 80% (or less) of the market rent, for up to five years. If you can afford it, at the end of 5 years, you can buy part of the property under the New Build HomeBuy scheme.
You need to be ‘deemed’ eligible and may still need some funds to cover costs such as Stamp Duty, legal fees, etc.
For more information, or advice on all mortgages (including First Time Buyers), speak to AToM or visit our new website at www.atomltd.co.uk

It looks good news, but is it?

The snow invaded and the UK ground to a halt! Although good fun and great to see, the underlying effect amounted to some £3.5bn in lost revenues to businesses, experts have predicted. Add this to an increase in insurance claims (myself being a snow accident statistic!) and you quickly realise it’s been an expensive week. But at least some are spending; the sale of 4x4 vehicles locally seems to have increased!!
More positive movements over the last week with a noticeable expansion in 'sold' signs around the local area and a further Bank of England Base Rate(BBR) reduction to an all time low of 1%. The latter greeted with both applause and despair! Great news for those on tracker mortgages, but bad for the economy. With lenders Standard Variable Rates decreasing, those coming to the end of their fixed rate periods need not move mortgages or lenders. However, we need this to happen so money moves between lenders to get the economy flowing again. Plus, the banks aren’t always passing on the full base rate cut; one rather large (government owned) institution only reduced their rates recently by 0.19% and not the full 0.50%!
Don't ‘panic buy and move’ your mortgage. You may be on a fixed rate and eyeing up some superb tracker rates on offer, but will it put you in a better position? Your current fixed rate may have a redemption penalty, so will cost you to change. It is also likely that a new tracker rate will have a large arrangement fee and tie you in for a few years. It’s unlikely that BBR will remain low for long as there’s the small matter of £228bn lent to the banks, that needs paying back. Guess who’s going to be hit for that!? Thus, check before you do anything abruptly. For free mortgage advice, speak to AToM…

Lloyds Banking Group use power....

The Lloyds Banking Group (HBOS and Lloyds TSB) began to wield their new found power on the mortgage market this week and withdrew all adverse and self certification mortgage products from two of their subsidiaries, BM Solutions and Bank of Scotland.
This will have a major impact on the mortgage market, not only because they had great products and were specialists in these areas, but their removal leaves the remaining providers who still offer such products, out on a limb and right now lenders are not keen to be 'last man standing' in any product areas. Thus, the next few weeks are likely to witness more changes as the need for these products increase, from both those in genuine financial difficulties and others who simply cannot easily prove all their income. This, despite the governments instruction to banks to lend more will, no doubt, see the contraction of both sectors of these markets in coming weeks. If either self certification or adverse credit products suit your personal requirements, come in and see us, sooner rather than later!
Good news this week came from a surprising source, the Woolwich who launched a market leading 2.29% one year fixed rate for borrowers with a 40% deposit. Their rate then follows the bank of England base rate + 2.29% for a further two years and has a 2% arrangement fee which can be added to the loan and no extended redemption penalties.
Our wish is that others follow suit and that we will see some really competitive rates on offer soon. This will help get the market moving again…

Mortgage Rationing?

So, it’s official! The UK is in a recession for the first time since 1991, although the reality is that most of us have known the downturn has been gathering pace since early 2008. However, that didn’t stop a Government owned bank, Northern Rock, paying staff a reported £9m in bonuses last week! Enough said!
Following the recent £50bn government rescue plan attracting less than welcoming consequences in the stock market, shares fell. RBS required further investment from HMG (who now own circa 70%) and shares in Lloyds Banking Group (the new name for HBOS and Lloyds TSB) also plummeted.
A week for bad news continued with the FSA reporting that possession orders agreed by the courts were up 92% in the last quarter of 2008 and those who were up to 3 months behind on their mortgage payments increased by 24%, compared to the same periods in 2007.
Those who have been in the mortgage industry for some time are starting to compare the current situation to the 80s when customers had to ‘queue’ to be approved for a mortgage and even then you would only get a mortgage if you had a superb relationship with your bank/building society manager along with savings accounts already with them! This was sometimes known as rationing and some pundits are questioning if that is where we are heading in 2009? The signs would appear to be pointing us that way. If you had a 5% deposit in Feb 2008, there were some 1,100 mortgage products available to you. Today, there are less than 5, with numerous conditions attached! A 10% deposit attracted 1,200 products early 2008 yet today there are less than 20! Conversely however, if you have a 30% to 40% deposit available then the product offerings are fantastic!
The stark reality is that, if you can, there’s probably no better time to purchase a property with house prices and interest rates as low as they are. But be advised, in order to avoid having to ‘queue’ to obtain a mortgage, it might be sensible to talk to a professional advisor who can review the whole market for you and seek out a product best suited to your specific needs and requirements, be it a new purchase, re-mortgage or for investment purposes.

Time to hit the button?

Mortgage interest rates may have hit an all time low although share prices have plummeted and credit card companies are tightening their purse strings. Now is not the time to bury your head in the sand! Every day we are seeing customers wake up to the reality that their finances are causing them issues which cannot be avoided. More recently credit card companies are reducing their liabilities by removing any surplus between the outstanding balance and the customers credit limit. This is causing immense issues as this surplus was being relied upon to carry people through the upcoming months, especially for those recently made redundant and whilst they seek further employment. Last year, most had nearly unlimited credit. Today, there is a ‘ceiling’ to credit available and now is the time to seek advice and find a quick resolution...