Another year passes by!

For my final article of 2011, I have to start with the obligatory round up:

It’s been a year where we were supposedly out of recession but certainly not into full
recovery! Business volumes remained constant throughout the year, yet the smaller Building societies/mutuals were, apparently, the only ones actively crying out for more! Bank of England Base rate remained at 0.5% for the year with speculation constantly evaluating when it may rise (currently estimated to be late 2012/early 2013). The emergence of Short Term lenders (Bridging Finance) was highly noticeable and this area flourished. First Time Buyers were given a ‘boost’ with the launch of the Governments FirstBuy scheme yet there was no change to the decision to end the Stamp Duty holiday in March 2012. The State Bank of India launched in the UK, Abbey for Intermediaries (Santander) launched in to the Buy to Let market and Virgin Money bid for Northern Rock. AToM turned 20 years young! Social media and technology appears to have taken over day to day attention and let’s not forget the Royal Wedding! European issues continue to make the headlines. Finally, just a few days before Christmas, the FSA has issued a 400 page consultation paper on the Mortgage Market Review (MMR) – new rules and regulations for the industry due for implementation in 2013. I will cover this in detail in the New Year….

So what for 2012? Many have predicted a stable market with no sign of growth in lending volumes compared to 2011. Total mortgage lending is estimated to remain around the £136-£140bn mark. House prices are predicted to remain the same in the south and who can guess what will happen to BBR? We know it will rise, but no one knows when! MMR will cause a stir when implementation is announced later in the year. Lenders haven’t made it easy for borrowers in 2011, don’t expect that to change in 2012. All the more reason to use a whole of market independent mortgage brokerage (AToM!). Last plug of the year!

Thank you for reading my column. Trying to be positive in another year of negative markets has been an interesting challenge. However, I’d rather say it as it is. Please let me know if there are
any specific issues/areas you would like me to cover in coming months. You can email me at
dale.jannels@atomltd.co.uk, or call me on the above number.

The directors and staff at AToM wish you and your families a very Merry Christmas and a relaxing and prosperous New Year. We look forward to being of assistance to you during 2012.

A lot of Mortgage activity in the run up to Christmas

There has been substantial mortgage activity happening across the country as we roll
towards the Christmas break and festivities. This is slightly unusual for this time of year, but then nothing surprises us any more in the current climate! I certainly shall not complain at being very busy!

As mentioned last week, Abbey for Intermediaries (part of Santander) has launched
into the buy-to-let market with a range of products for non-professional
landlords. The products are available exclusively through mortgage brokers/intermediaries and require a minimum purchase price of £100,000. The launch products are by no means market leading, but appear to be more of a ‘dipping toes in the water’ exercise and getting systems set up. I suspect Abbey for Intermediaries will be a major player in the Buy to Let sector in the coming months and, from a market perspective, having another lending giant in this arena is great news.

Halifax have forecast that House Prices will remain stable next year. Despite many others suggesting a large property price decrease, the lender’s housing market outlook for 2012 predicts little change in property values over the next 12 months, with price movements of
between -2% and +2% expected.

The low interest rate environment has made monthly mortgage payments for first-time
buyers the most affordable for nearly eight years, according to figures
released from the Council of Mortgage Lenders (CML). Although first-time buyers’ deposit
requirements have remained stable in recent months at an average of 20%, their
monthly interest payments have continued to fall and now typically consume
12.3% of income, the lowest level since January 2004. Don’t forget that the stamp duty exemption for First Time Buyers up to £250,000 ends on 24 March 2012.

Finally, the CML have also estimated that there are some £8bn worth of mortgages due for
renewal in January 2012. Many reverting from long term fixed rates, or discounted products. If you’re one of those whose product period is ending, it’s definitely worth a review over the festive period and even a conversation to see what other options are available to you. It could be very beneficial!

Make sure you can pay back before you spend

Trying to remain positive in a reasonably bleak market is tough at the best of times. However, not only are the national press hinting that rates are to increase, but the Bank of England are also getting in on the act!! This week, in it's Financial Stability Report, the Bank has said wholesale funding (loans between lenders) will rise, resulting in higher mortgage rates. The report claims that the gap between funding costs and pricing has grown, making lending less profitable. It will be interesting to review that point once the end of year lender profit announcements have been released! That said, Matthew Wyles, Group Distribution Director of Nationwide has also suggested that mortgage rates would probably need to rise next year! These are very big names making these comments and we cannot afford to ignore them.

HSBC have been in the news this week as the FSA have fined them £10.5m for alleged inappropriate investment advice to elderly customers, via one of their subsidiary companies. The HSBC commercial division is also undergoing a restructure with the loss of around 330 jobs.

Good news for the Buy to Let market as Abbey for Intermediaries (part of Santander) are shortly to offer products in this arena. With few big players in this market, we welcome this giant who will shake up the competition, as in the main, the associated costs with a Buy to Let mortgage have become pretty expensive of late. We await to see their products and offerings, but anticipate these to be launched before the end of the year.

Finally, it’s just round the corner and will be on us all before we know it. Christmas is a time for
joy, cheer, laughter, happiness and credit… Not that I want to preach, but credit is your life history to a financial institution. I’m not saying don’t use credit, but make sure you can pay it back! If you miss a payment over the Christmas period on any debt, it could affect your ability to
obtain any type of credit next year. Credit reports may show the last six, yes SIX years of your financial history.

SWAP rates on the increase

Can you believe it’s December already? It’s been a busy few weeks at AToM towers. Consumers have been reviewing their finances and looking to secure a good deal in time for the Christmas break. Many are torn between a long term fixed rate and the temptation of a medium term tracker rate. The latter obviously being lower in rate, but more risky on monthly budgets if the bank base rate was to rise earlier than the experts have predicted. SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have also risen recently and lenders fixed rates have seen rate rises. Many expect this business increase to continue, with possibly a dip around the time for the ‘January Sales’.

For the employed consumer, mortgages are relatively easy to come by. For the self employed, where net profits, drawings and dividends have been generally low over the last 24 months, it’s becoming slightly more difficult, despite the number of mortgage products being on the increase. There are many alternatives than can assist in these types of scenarios. Some lenders will
look at adding additional properties as security for mortgage purposes. Others will look at investing two or three years up-front mortgage payments as additional comfort for the lender where income is not necessarily easily provable. Whatever the scenario, and no matter how complex, there may well be a lender willing to assist, if you know where to look!

On a slightly different tack, HMG are faced with a three pronged dilemma in that they need to provide additional cash for small businesses to stimulate growth whilst curtailing public sector borrowing and instilling confidence in the private employment sector. Unemployment
continues to rise and the Doom Sayers - where on earth do they come from – seem hell-bent on driving us into recession again. I guess that, like me, you will yearn for more positive vibes on the basis that positivity is infectious.

Enjoy the start of the Christmas festivities. It is never a bad time to start talking about your mortgage.