Thank you for reading my columns! Have a super Christmas and relaxing New Year!

Quite unbelievable that this is my last column of the year, where has the time gone?  It's been a busy year but at the same time, frustrating, testing, enjoyable and thankfully full of both hope and opportunities.

As we shut the door on 2014, we look forward to next year and the promise of good things that lay ahead.

We have a new housing minister (again!) who looks like he may understand our markets and could be the right man for the job.   The housing market itself is vastly under delivering the number of properties actually needed, so house building and growth in 2015 will have to be on the increase.

The new Mortgage Market Review regulations have settled down and are now a daily part of our lives.  We look forward to the next big thing to impact our lifestyles - the EU Mortgage Directive, due in 2016!  And, of course, we have the Election just round the corner. Exciting times!

However, lending for 2014 is expected to reach circa £200bn.  Many mortgage pundits are expecting this to increase to £225bn in 2015, an increase of 12% (+).  This will ensure lenders remain competitive to attract new business and meet targets and this can only be a good thing for the end customer.

Finally, a heartfelt thank you for reading my column.  I've enjoyed providing a (hopefully) unbiased weekly insight to what happens behind the scenes in the mortgage market.  What an eventful year it has been to report on!

Thank you to everyone who has instructed AToM to source and arrange their mortgage during the past twelve months. It has been a fantastic year and we have enjoyed growth in both volume, November saw more than £24.5m in new applications and staff numbers, with our headcount now over 25 between our two Horsham offices! They are a great team.

On behalf of all the staff and directors at AToM, we wish you and your families a very Happy Christmas and a Relaxing and Prosperous New Year! 

Stamp Duty changes are a good thing.

There's really only one place to start this weeks column and that's with the superb news released by the Chancellor in regard to changes to Stamp Duty.

With effect from Thursday 4th December, stamp duty will be applied as a progressive tax.  Buyers will pay no tax up to the first £125,000, they will be charged 2% on the additional portion up to £250,000, then 5% on any additional portion up to £925,000 and 10% on the additional portion up to £1.5m and 12% on any portion above.

This is a big step forward and very positive for house purchasers.  On the old scheme, a person buying a property at £300k would have paid 3% equating to £9,000.  On the new scheme, there is nothing to pay on the first £125k, 2% to pay on the £125k to £250k (£2,500), and 5% on the remaining £50k (£2,500) making the new total £5000, a saving of £4,000 in total. 

Although this is a hugely positive and much applauded move, there is still much uncertainty about customers actually being able to achieve a mortgage.  Until lenders criteria is truly relaxed and funding becomes more widely accessible, cash buyers are likely to be the main benefactors of these rewards rather than the first time buyer or home mover. 

Recent data published by the Bank of England has reported that the average Lender Standard Variable Rate, the rate that which many customers revert to after their promotional or fixed rate period ends, has risen to 4.53%.  This is up 0.16% over the last year, despite the average two year fixed rate dropping by over 0.75% in the same period and the Bank of England base rate not changing for over five years. They have also noted that the largest proportion of mortgage borrowers have not experienced a rate rise for more than five years (some for more than seven) and are concerned about the possibility of what is generally known as ‘payment shock’. For example, on a £100k mortgage a 1% rise in rate will mean a monthly increase of circa £83.33! For some, this points towards the possible need to consider a fixed rate to avoid this possibility.  Maybe time to talk to your independent mortgage adviser? 

People over 40 yrs old should be able to get a mortgage!

It was interesting to see many of the national press last week covering stories on how difficult it now is to get a mortgage if you are aged over 40.  The articles suggested that many first time buyers are now not able to purchase their first home until they are 40 years old, or even up to 50 years old, report some lenders.  However, this can then limit the availability of mortgage finance, as many lenders want loans to be paid off by normal retirement age (67).  With the Mortgage Market Review (MMR) rules now firmly embedded in the day to day calculation of mortgage finance and lenders making decisions based on the customers ability to pay back what they have borrowed, age can now affect affordability. Especially for the more mature applicant or if a customer wants to retire before the end of the mortgage term.  Of course a shorter term means a hike in monthly repayments which affects affordability issues, and so on. 

Despite many high street and household name lenders setting a maximum age at the end of the mortgage term, usually circa 70 years old, there are an increasing number of smaller building societies and other specialist lenders who will consider a much older maximum age of 80+.  This will be subject to affordability, lending criteria and the customer working or having a defined income long after normal retirement ages.

The rules and regulations are there to protect the end consumer, and in the main are working as required.  We will see criteria relaxed over time, and they will need to be as many customers are now working long in to their later years.

So the bottom line is that just because you are aged over 40, does not mean that mortgage finance is unavailable to you.   But be wary that any lender will want a full and detailed explanation on how you will continue to make your monthly mortgage payments if the term of your loan exceeds 'normal’ retirement age – whenever that may be!

Rates decreasing again!

Just a few weeks from the festivities and a number of lenders are still cutting rates.  Plaudits go to Natwest Intermediary Solutions who cut 87 rates in their Residential and Buy to Let range with the largest being a reduction by a huge 0.91%.  All good news heading into the final stages of the year.

The Council of Mortgage Lenders have released figures confirming that Octobers gross lending figures were up 8% compared to the same time in 2013.  Circa £19bn was lent during the month, compared to £17.5bn a year earlier and up £1bn from this September. If activity here is anything to go by, this will be higher again in November.  Busy times!

The market is experiencing large increases in requests for secured loans.  A secured loan is a 2nd, or subsequent charge, designed for homeowners and which allows the equity in their property to be used as security. Loans are usually between £3.5k and £2.5m. There are usually no 'up-front' fees to find although costs are added to the advance.

Often, customers looking to remortgage to raise additional funds are already on an attractive rate with their lender.  To move away could be costly and they could end up on a much higher interest rate.  Depending on the amount already lent as a mortgage, compared to the value of the property, most lenders will allow a secured loan to be added as additional borrowing.  

And finally, I’ve mentioned it a number of times throughout the year, but make no apology for mentioning it again!  If you have an Interest Only mortgage, do make sure you keep reviewing the options for repaying it back.  For a customer to get to the end of their mortgage term and still owe exactly the same as when they took it out, with no form of repayment apart from selling their property, creates a major headache for the lender, especially when they want their money back!  This will once again be a major part of lenders reviews in 2015, so be on top of your options before the lender calls!  If in doubt, seek professional advice.

Can Lenders handle an increase in business in 2015?

Many mortgage market pundits are now trying to predict what will happen in 2015 and the overall volume of the mortgage market.  Pre credit crunch figures amounted to gross mortgage lending of £363bn (2007).  In 2013, it was circa £176bn.  This year, it is estimated to be in the region of £200bn and many, including myself, think that 2015 will see an increase of around 12.5%, circa £225bn. 

However positive this is, there are many concerns.  Firstly, the number of lenders who have left the market for whatever reason, since the highs of 2007, have not yet been replaced.  Neither have staffing levels within those who continued trading, but who downsized.  As such, lenders are currently incurring delays given today's volumes, let alone the large increase that is expected for next year.   Secondly, it is a similar story for surveyors.  Every property has to have a valuation completed and the surveyors are the eyes of the lender on mortgage transactions, confirming that each property provides suitable security for mortgage purposes.  This is a complex and niche market and therefore takes time to train people to the relevant standard.  Again, could this area of the market take on an increase of 12.5%?  

There are many many other areas begging answers, but the bottom line is that lenders will need volume to meet their increased targets.  With new lenders launching and an already quite saturated market, competition will be intense and aggressive and this can only be a good thing for the end consumer.

With this in mind, the quickest area for lenders to increase volume is in the re-mortgage market.  With an estimated 400,000 customers coming to the end of their fixed or discounted rate periods between now and March 2015, lenders will be targeting this share of the market for quick business.  Many lenders offer free valuations (normally a 'drive by' or automation) and free legals to attract new customers.  If you're one of those with a rate due to expire, now is probably a good time to shop around and you can start the process a few months in advance! 

Lenders still competing for business

There have been a number of remortgage applications recently for those looking to raise funds to purchase other properties or to make improvements to their current homes.  Just around the local area, I have seen an amazing amount of building work and renovations / extensions being carried out.  Many home owners appear to be improving their current residence rather than taking the big leap of selling and moving up (or down) the ladder.  This appears consistent with the general view that there is a shortage of properties up for sale and in fact, some agents have told me that they are becoming quite worried about stock levels in the early part of next year.

Other consumers might be making the next step, but are then renting out their current property on a Buy to Let basis rather than selling it.  Nice if you are in that lucky position!  The rental market is certainly buoyant and showing no signs of slowing down over the coming months. So a Buy to Let might provide you with a modest return for your investment and may be the start of building a little portfolio nest egg for later on life. We have noticed that this is a growing desire for many who fear that their pension arrangements may not be sufficient and that rental income may be a suitable supplement.

Lenders are still competing for business even as we move in to the final stages of the year.  Over the last week we’ve seen further rate reductions in the arena for first time buyers, those wishing to remortgage, the Buy to Let sector and the specialist bridging/short term lending market has seen movements in both criteria and rate decreases.  There are many opportunities whatever your circumstances and lenders are willing to have a conversation in order to do the right deal. 

Finally, due to an increase in business volumes, we’re looking for staff to join our expanding AToM team.  If you know someone in the mortgage sales sector, with the relevant qualifications (or studying towards them) and who likes to be kept very busy, then please ask them to get in touch! 

Remortgage before Christmas?

Now is the time I tend to get asked "can I re-mortgage before Christmas"?  In short, yes, this should be possible.  However many lenders are 5-10 working days behind in their underwriting of applications (some are longer!) and there are also delays in getting a surveyor out to see your property (effectively the 'eyes' of the lender).  So the quicker you get the wheels in motion, the more likely you are to get the process completed in time for Christmas.  Rates are so low currently and lenders are desperate to do business, but the reality is staffing levels are still some way short of where they need to be and the lenders are creaking with the volume of business.  However, rates are fantastic so if it is something you are considering, do review your options sooner rather than later.

Product choice is the best it has been for some time and this is across all sectors, not just the residential market.  As the high street lenders creak at the seams, this also means that many more customers are being turned away, for whatever reason.  Smaller and more manual assessment lenders have realised this demand for assistance and can offer help in a number of ways.  Whether it is catering for those who might have had a historic credit blip;  those looking to buy a property for investment; those looking for shared ownership; those looking for a property with a commercial element or those looking for someone to 'think outside the box'………there are many possible funding line options, if you know where to find them.  The human decision making process is making a comeback!

Finally, the Nationwide House Price Index has reported that house prices rose just 0.5% in October 2014.  They also suggest that the market has 'lost momentum' as the annual house price growth change has dropped from 9.4% in September to 9% in October.  NHPI suggest that the average house price now sits at £189,333.

Market slowing but rate options on the up!

The market has slowed over the last week or so.  This is surprising as we've seen many lenders reduce rates again, with some being adjusted by a huge 0.7%. The number of products now available is circa 9,000 which is more than it has been for some time.  With many short term fixed rates sub 2%, five year fixeds sub 3%, and even a ten year fixed at sub 4%, the remortgage market should be booming!

However, even with a slight slow down, there are many unusual properties being purchased.  AToM recently assisted with the purchase of a property that had been split in to seven individual flats and where the title has not been split. In essence there was only one title for seven properties.  Normally lenders stipulate a separate title for each unit.  Valued at £1.9m and a loan of £1.4m being required, many of the normal lenders declined their interest.  But, due to the customer being an experienced landlord, we managed to find a specialist lender who would accept the whole scenario. Following an in-depth valuation, confirmation of rental income achievable for each property, and normal underwriting, the lender completed quickly.   This is just one example of many complex and specialist scenarios that pass through our doors each week!

Finally, credit scoring is still creating challenges for mortgage applications to high street lenders. Most lenders credit score applications based upon the amount of credit you have, whether you are on the electoral role and your recent payment profile. If the computer says ‘no’, you will tend to find all high street lenders doors shut to you. Fear not, if you want a loan to value of 90% or less and you can prove income, there are lenders who do not rely on a credit score. They manually review and underwrite clean and affordable applications on an individual basis. AToM has access to a number of these lenders so don’t despair if the high street lenders say ‘no’, if you fit the above profile, give us a call to see if we can assist.

AToM is a Specialist Mortgage Packager & Distributor

Those who know AToM will be aware that, in addition to arranging mortgages for the general public, we are also a specialist mortgage packager/distributor.  We look after and arrange mortgages for other mortgage brokers, estate agents and independent financial advisers nationally.  In fact, our database now reaches almost 9,000 financial intermediaries.

For some lenders, AToM acts as their administration arm, collating information, instructing valuation and processing applications right up to the issue of the mortgage offer. For other lenders, AToM is often allocated a tranche of funds to distribute for them and AToM advertises and controls the administration process.  It could be that the lender requires AToM to pilot schemes and iron out any potential system issues before the products are opened to the general mass mortgage market.  Alternatively to just use our experience and extensive market knowledge to highlight product gaps in the market which the lender can then explore further, if the funding is available!

Any mortgage broker, independent financial adviser or similar, who require these particular offerings, will often have to come via AToM to gain access to such products. The benefit to the lender is that AToM carry out all the work, including taking telephone calls, requesting information from employers/accountants, collating documentation, and more. So potentially it can be cost effective for the lender.

These can be specialist lenders and not normally household names.  But this also works to your advantage when requiring someone to think 'outside the box' or needing a lender who adopts a more individual approach to each case.

Most high street lenders credit score applications based upon the amount of credit you have, whether you are on the electoral role and your recent payment profile. If the computer says ‘no’, you will tend to find the usual high street lenders doors will be shut to you. Even your own bank, with whom you’ve been a loyal customer to for many years, may report back that you have a low credit score and the computer says “no”.  Consequently, they will not offer you a mortgage and there’s no arguing with their systems and technology which has, in effect,  made the decisions! 

This is a dramatically increasing scenario.

However, the emergence is with the smaller lenders who will manually assess and carry out a  manual credit search. A human being who makes the decision based on the merits of the application and has the ability to agree (or decline) based on non standard criteria or circumstances.  Don't give up just because someone says 'no' to your initial enquiries, there might be other options out there.

Think of number one when it comes to your monthly mortgage costs.

SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have dropped to a ten month low and as such some lenders are passing on the reduction through their interest rate offerings.  Just in the last few days we've seen Natwest cut some rates by up to 0.39%, now offering five year fixed rates at below 3% and Halifax also cut selected rates by up to 0.4%.   I suspect others will follow suit in the coming days.  This is great news for the end customer as not only are the lenders in the midst of a rate price war, their funding costs are also lower and thus they can pass on bigger savings to you! 

So with such positive news and some fantastic rates around, it does surprise me that the Council of Mortgage Lenders (CML) has advised that remortgaging figures for August were down 4% compared to Julys figures. 

Remortgaging away from your current lender should not be looked upon negatively!  Many lenders will cover the cost of surveying your property, as well as covering the legal fees in transferring your mortgage from one lender to another.  But most of all, you should think of number one as this could save you money on your monthly budgets and, subject to terms and conditions, this can only be a good thing. 

The CML reported that First Time Buyers and Buy to Let investors were both up in August, by 3% and 13% respectively.

The National Association of Estate Agents also reported that Augusts figures showed that just 3% of all recorded sales were to buyers aged 18 to 30 years old.  This is the lowest level since August 2013 and possibly shows that many First Timers are getting older and just don't have available funds for deposits.  Or are they still struggling to get mortgage finance?  With the options available to AToM for First Time Buyers, with deposits as low as 5%, at an all time high, I'll stick with the former!  Seek advice..

Secured Loans market is in a period of change

The second charge secured loans market is under a period of change and has been since April 2014 when responsibility for the regulation of consumer credit transferred to the FCA.  But there's also an EU Directive due to be implemented in 2016.  In short, when a customer wants to remortgage to raise additional funds, the intermediary/broker will need to demonstrate the best outcome for the customer and not only look at a full remortgage on a first charge basis, but compare with an appropriate secured second charge loan allowing the customer to keep the existing mortgage.  Although the Directive is still a way off, the FCA principles already apply to firms and individuals so best outcomes and best practice for borrowers are at the forefront of any advice and recommendation.

In fairness, and depending on the reasons for the capital raising, there are numerous examples of borrowers being better off with a secured loan rather than moving their existing mortgage, especially if it's an interest only mortgage.  In addition, those who are self employed with minimal accounts, have historic adverse credit or need a greater flexibility than that offered by first charge mortgage lenders, may have no other option than to look at a second charge on their property. 

So be prepared moving forward, if you want to raise some additional funds on your property, you will be presented with a standard remortgage first charge illustration as well as a secured second charge alternative. With rates now starting from below 5% on a second charge loan, this may not be a bad thing.

At the beginning of October, as mentioned in some previous articles, the Bank of England has enforced capping restrictions to lenders.  Funders will now only be allowed to lend up to 15% of their loan book at more than 4.5 times income.  No one knows the true effect this will have to funds available in the market generally, only time will tell. 

Finally, it is really good to see a new lender coming to market.  Fleet Mortgages, a new Buy to Let lender is set to launch in November.  The management team are no strangers to the market as many have been involved in various lending guises previously and we certainly welcome a fresh outlook and further funding in the market.  I wish them every success.

Lenders will consider all types of customers.

Over recent weeks, I've been reporting on the apparent 'interest rate war' currently taking place between lenders assisting First Time Buyers, Residential mortgages and the Buy to Let sectors.  But this is also happening in the ‘Near Prime’ arena. I’m calling it ‘Near Prime’, but it has many other names including, Sub Prime, Credit Repair, Almost Prime, Adverse and so on.  In short, it’s the area of mortgages that cater for those who have had some sort of financial issue in the past.

There are many lenders lending in this arena and they will cater for a missed mortgage payment in the last 12 months, Defaults, County Court Judgements (CCJs), discharged bankrupts/IVAs and those who are in a debt management plan.

There’s no denying that this area of the market took a battering back in 2007 as many, many lenders who offered these types of mortgages were shut down or mothballed. However, the regulatory lending restrictions are now more stringent than back then and the new breed (some never really left) have a whole new outlook on the term ‘responsible lending’.  Where there is demand, there will always be supply.

Rates start from the late 2%s and go right up to the early 6%s, depending on individual circumstances. Lenders will lend up to 85% of the property value in the main and will cater for both employed and self employed.

Financial issues do adversely affect credit scores (the normal assessment process used by a lender to decide whether to lend or not), and as such, some Near Prime lenders will manually review on a credit search, rather than resort to a credit score.

Of course, a lender will only consider those who have endeavoured to right the financial issues of the past. They will not entertain those who continue to flout good financial management.

Finally, the Near Prime lender is a ‘stepping stone’. Most issues tend to disappear from a credit search after a few years. Therefore, the aim would normally be to cater for current requirements on a short to medium term basis with the longer term outlook being structured to enable the customer to get back onto high street mortgage offerings, as quickly and cost effectively as possible.

Positive news for the Self Employed and also Ex-Pats!

The self employed have had a good week on the mortgage side.  Specialist lender, Precise Mortgages has changed criteria and will now allow customers to use just last years accounting figures as income for a mortgage.  Previously the lender, and most lenders, would look at two or three years figures and average over the period.  However, whether the customer has been trading one year, or twenty, the lender will now work on just the last years figures.  This is available right up to 85% of the property value and only via a small and select number of companies, including AToM. 

A number of lenders have joined the current price rate war over the last few days.   Metro Bank, Virgin Money and Leeds Building Society joined a number of other lenders who have cut rates substantially.  We even saw a six year fixed rate launched, under 3% interest rate, but sadly this was only available for three days before being withdrawn  - probably due to huge demand 

Others have also launched short term availability schemes. Accord Mortgages have launched a '10 day sale' on some of their products covering both their Residential and Buy to Let schemes.  These include lower lender fees, enhanced cash backs and low fixed rates options.  But be advised that these products will require your mortgage adviser to submit a full application before midnight on 1st October!  Terms and conditions apply, etc.

Finally, we are delighted to be one of only seven companies in the UK who can offer a new product range aimed at Ex-Patriots from Skipton International.  For UK Nationals  living abroad, looking to buy or remortgage an investment property in England and Wales, up to 75% of the property value, Skipton International will consider lending up to £1.5m with rates starting below 4% and no lender arrangement fee (for a limited time).  This really is a superb offering and if you know someone who may fit this criteria, please get them to contact us to find out more!         

Rates drop and Over 65s enquiries on the up!

Although the majority of mortgage pundits and industry experts are expecting a rate rise towards the end of 2014, or possibly early 2015, at the moment rates are decreasing! There is an apparent rate price war currently in full flow and most lenders are taking part!

Just in the last few days, we've seen Virgin Money reduce some fixed rates by up to 0.26%,  Accord reduce some products by up to 0.40%, Woolwich reduce some products by 0.24%, Halifax reduced some by 0.20%, NatWest decreased some rates by a respectable 0.64%, and hats off to Nationwide who reduced selected rates by a huge 0.70%!

All of these have created a stir in the market place.  It's great for the end consumer and activity is currently high. 

With this in mind, August was a superb month for New Business for AToM and I'd like to thank everyone who has used us to assist with their mortgage requirements.  We've had some fantastic challenges and some great accomplishments in helping arrange mortgage finance for a variety of property types and people!  Do explore all options available to you before signing on the dotted line.

Finally, we have recently noticed an increase in mortgage enquiries for those over the age of 65.   Normally, a high street lender will allow a mortgage term to last until the applicants usual retirement age.  This used to be 65, officially it's now 67, but the reality is it can be much later.  As such, most lenders increased their maximum age at the end of mortgage maturity to age 70.  However, we all know that people are working a lot longer now and repayment of such a large amount of money may not be possible in these restrictive conditions.  So the option is to raise further finance to repay the original loan or sell the property.  Thankfully, the first option is less onerous as it used to be.  Many non household name lenders will look at lending to customers a lot later in life, assuming the customers can prove their continued ability to pay.   This can take the maturity age up to age 80, 85 or even 90 and above.  If the customer has a good amount of income, a good amount of equity in the property and can satisfy the lenders affordability requirements, then a lender should be happy to lend.  Seek specialist advice. 

Buy to Let mortgages in high demand

Buy to Let mortgages seem to be the flavour of the month again.  With the rental market remaining buoyant and showing no signs of declining, lenders are reacting to the huge demand for investment / buy to let properties.  This sector has also experienced a recent mortgage price war and some major criteria changes as lenders seek to attract more of this business type.  Mortgages can be achieved up to 85% of the property value.  But, as with all mortgages, the smaller the deposit, the higher the 'risk' and therefore the higher the rate.

Buy to Let properties will often provide a modest monthly return over and above the mortgage payment.  The additional amount can be used to supplement income, or, with flexible mortgages, can be used to “overpay” the mortgage and reduce the term.   Most lenders in this sector will require the rental income to exceed the mortgage payment by up to 125% and may use a higher stress test rate to calculate this.  Remember that, whatever the deal, lender terms and conditions will always apply and there are no guarantees of continued rental or capital growth.

More generically, many of us will review car insurance, home insurance, gas and electricity suppliers to find the best rate on the market and tell everyone when they have made even a small saving. Given this, it is astounding just how many people  leave their mortgage with their existing supplier and some don't know what rate they are paying!  Most lenders look to attract new customers, but are less likely to offer attractive options to retain them. This, in the main, is due to the different fees and charges that can be added to the new mortgage at the outset. In the current climate, the lenders bottom line tends to be more profitable with new clients, rather than old.  There are many good rate options available currently and most with minimal costs to move. So don’t feel loyal, if a better option is with another lender - think of number one!

Fitting criteria is the key to unlocking lenders appetite

Lenders want to lend, but in some cases are not able to, even to existing customers!  Those who already have a mortgage, but took out their original loan before April 2014 (Mortgage market Review!) may not pass the same lenders new criteria.  Reasons can include, original borrowing on a multiple of income, age, small equity levels in property. Lending rules have changed dramatically and more stringent measures are in place, as well as tougher reporting to the regulator. Lenders have to be sure the customer can afford their mortgage for a number of years ahead and stress test against possible rate rises. Seek professional advice if you are concerned or are looking for an alternative lender as some might be considered to be hiding behind the rules!

I was surprised to see that an increase in housing supply has led to two-thirds of homes selling for less than their asking price in July according to the National Association of Estate Agents. They report an 11% increase in the average number of properties for sale per branch last month from 46 to 51, the biggest increase seen in three years. However, increasing supply and declining buyer registrations (possibly as a result of the above restrictive mortgage options) resulted in around 66% of homes sold last month failing to meet their asking price. 

Products though continue to increase and one of the fastest growth markets seems to be in the Ex-Pat sector. A British Ex-Pat in good employment is favoured by a growing number of lenders who are willing to provide a mortgage to help them obtain a Buy to Let property in UK. The rules are tight but there are lenders who will advance up to 75% of the property value. Incomes usually need to be from a recognised multi-national business abroad and in a region upwards of £50000 sterling equivalent. A couple of lenders will also allow Ex-Pats to own a residential property in UK and where their family, usually off-spring, will reside pending their return to UK.   

We are finding that criteria is the key to unlocking lenders appetite and you will not find this on most, if any, of the popular web-site offerings. Talk to your local professional mortgage adviser who will know how to access this important information quickly for you.

It all revolves around affordability

The world of mortgage advisers has taken a seismic turn following the launch of Mortgage Market Review (MMR) on April 26th this year. This date will be forever etched in the memory of all involved in this hugely important sector. As I have mentioned before, the largest impact of MMR has been the need for lenders to consider the affordability of a mortgage. Both for now and also considering potential future rate rises! Where is Mystic Meg when you need her?

This is all well and good, but in truth, no adviser worth his salt would seek to encourage borrowers to take a mortgage they cannot afford and, yes, we are capable of looking out into the future and assessing the impact that rates rises might have.

We have experienced a recent example of how this initiative has caused problems by not allowing a level of common sense to prevail and the brief details are as follows. The client is approaching the end of a five year fixed rate. When it was taken out the rate was 5%. Payments have been made on time, all of the time and the client now wishes to take another five year fixed rate but this time the rate will be 1.3% lower and therefore much cheaper than before. His job is the same as five years ago and his income has increased, albeit marginally. Yet the new lender has decided that the client cannot afford the mortgage despite the fact that he has paid at the higher rate for five years!

This is not an isolated case and it causes me to question the sensibility of those in charge of these decisions as, whilst there is no doubt that affordability is crucial, so is a credible sense check to understand the applicants overall ability to pay. In many cases accurately completed budget planners, mandatory in any climate, will give a picture of the applicants disposable income and most lenders should use this to determine what amount can be  apportioned to the mortgage. This is known as 'Debt to Income Ratio' and is another key factor in the underwriting process. The danger here is that some lenders use the Office of National Statistics figures which are an average and which often bear no relation to reality yet cause declines to happen as they may point to a reduction in perceived affordability.

The market is seeing a 'rate price war'!

It's always good to see a lender reduce their rates.  Over the past few days, a number of lenders have taken action and cut a number of rate offerings.  Some examples include Accord Mortgages who reduced some rates on selected fixed rates by up to 0.40%, Woolwich sliced a life time tracker rate by a huge 0.76% and other selected rates by up to 0.50%, the Halifax took 0.3% off some rates and the Coventry Building Society reduced some fixed rates by 0.20%.   All good news for the end consumer and might be a good time to look around if you are considering making changes to your mortgage.

The Ex Pat market is awash with enquiries from those living overseas looking to purchase back in the UK, in the main for a property to rent out.  Although it is a restricted market in terms of lender appetite, there are a number of specialist lenders who will consider, depending on the country of residence and nature of employment, with loans of up to 80% of the property value.   Normally a minimum valuation amount will be required, circa £150k and a minimum loan of £100k.   Most lenders will also require customers to be property owners in the UK or have had a mortgage within the last three years.

Finally, August has been a flurry of activity and caught many of us out, which is a pleasant and great surprise!  Of those approaching AToM, many are seeking straight forward simple human assistance having become confused by the huge amount of information currently available on the internet, or they've been turned away from the normal high street lender for no apparent reason, apart from maybe being told 'credit score'.  The majority are after the superb low rates currently available and also speed.  Many high street lender products are available through mortgage brokers and can often be dealt with much more quickly than with the lender directly.  But do also remember that lenders are incurring huge delays with processing and underwriting at the back end.  In addition, August’s great business volumes won’t have helped clear the back logs! 

SWAP rates decrease, delays still wide spread and Shared Ownership in demand.

We've seen a large increase in enquiries for customers looking at Shared Ownership schemes.  Shared Ownership schemes are provided in conjunction with housing associations. You buy a share of your home, between 25% and 75% of the property value, and pay rent on the remaining share to the housing association. You usually have the opportunity to purchase a bigger share of the property later on (known as ‘staircasing’).  Local housing associations must confirm your eligibility in order to join these types of schemes.  There are many schemes available and a good supply of properties, so do review all the options available.   By buying a smaller share, it does give an opportunity to obtain a property for many who may struggle otherwise with normal lending criteria.  

Delays are still wide spread across the market.  An existing customer phoned their lenders mortgage sales team and was advised that they could not have a discussion about a new mortgage for over two weeks!  Another customer requested a homebuyers valuation on their property (more investigative than a standard mortgage valuation) and although the surveyor could carry out the normal mortgage valuation within days, the enhanced homebuyers report could not be carried out for a month!!  You need to be aware of these delays as many property sales are sold subject to contract and this normally carries a 28 day exchange period. 

Finally, we have seen some surprising product interest rate decreases over the last few days.  SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have reduced over the last week or so, and as such some lenders have passed on the reduction through their interest rate offerings.   This is great going in to the holiday period and should encourage anyone considering reviewing mortgage options in the not too distant future, to maybe consider it sooner as these may not remain low for too long.  Always seek advice! 

Some Lenders reduce income multiples

Quite a few rates have been increased over the last ten days and some further criteria restrictions implemented.   In quite a significant move, Nationwide has limited their overall income multiples to a max of 4.75% times income for all residential loans.  This follows recent guidelines from the Bank of England allowing only 15% of all new lending to be over 4.5 x income from October.   Other movers include Lloyds Banking Group and Royal Bank of Scotland who both implemented a maximum 4.5 x income for all loans over £500k.  Rumours are rife that others will follow and I'm sure these will be revealed in the coming weeks.

First Time Buyers rose 27% in the first half of 2014 according to LSL property services.  More than 146,000 bought a property compared to 115,700 in the same period last year, with deposits on average, around £24k.

However, remortgage approvals have not followed the same trend, surprisingly.  The British Bankers Association have reported that June 2014 figures were some 12% down on June 2013, amounting to 18,645 transactions worth £2.8bn.  This does surprise me as rates are low, there are some good long term fixed rates around and the majority of lenders are offering minimal or no costs to move to them.   

Finally, and I don't 'plug' often(!) at AToM, we are independent and we will happily go through the pros and cons of changing any of your financial details before proceeding to conduct any credit searches or decision in principles. You need to be clear that it’s the right deal for you. If your current deal is still the best option for you, we will suggest you stay where you are.  Whilst the holiday period is up on us, do take time to dig out that paperwork and come and have a chat.  It could be a very beneficial exercise!

Delays with high street lenders? - same products quicker with Mortgage Brokers.

AToM has launched a new exclusive mortgage product aimed at the over 65s.  The Retirement Remortgage product is designed to assist those who wish to continue with a mortgage when their current mortgage term expires and their lender requires repayment of funds.  Or those with large equity in their property who wish to raise finance for specific projects. There is no maximum age and this offering  will allow customers to borrow up to 50% of the property value either on a repayment or interest only basis.   Interest rates are calculated based on the borrower’s individual circumstances but start from 4.50% fixed for two years (4.9% APR).  A minimum property value of £300,000 applies and terms and conditions apply.    

Whilst talking remortgages, the market is awash with lenders actively looking to attract new customers.  Whether you want to fix your monthly payments for a period of time, or you fancy a low rate tracker mortgage - or maybe both - a tracker rate with the option to fix later on, there are plenty of great products currently available.  Many lenders are offering superb remortgage opportunities with minimal costs to change, including free standard valuations (lender survey on your property) and legal costs (solicitors or conveyancer to register the charge in the new lenders name).  Rates are competitively low and mortgage product choice is at its highest for some time. 

Finally, we have had many mortgage customers approach us who have become frustrated in recent times.  Mainly with two things:  firstly, that some of the local banks or building societies cannot see mortgage customers for a matter of weeks (we heard one was booking four weeks ahead!) and secondly, each appointment often takes well in excess of a couple of hours.  Sadly, for whatever reason, that lender could not offer the customer what they wanted and so they went to another lender and sat through another hour or so only to find they could also not then offer what was required, and so on.  This is a large consumer commitment to time but without a satisfactory solution.  This is where independent and whole of market brokerages come into their own.  They will be able to offer you access to a number of lenders, including the high street names, if appropriate, and you only need to have one conversation with the same person.  In addition, they should have access to lenders who will manually assess your needs rather than a ‘computer says no’ type scenario, if required.  If I can also ‘plug’ a little, we also have access to a number of limited access lenders and exclusive products (as mentioned earlier!) not readily available to the wider mortgage market! 

The average Mortgage interest rate was 3.22% at the end of May.

I've been very positive and buoyant in most of my recent columns.  The mortgage market is awash with business and has more product offerings than for some years.  Local Estate Agents confirm properties are selling quickly and there's a general shortage of stock and local builders have advised that bricks are in such high demand across the country that there are some weeks delay in supply.  However, we do sometimes need to take a step back and look at the reality of our market and economy.

The Money Charity (the UK’s financial capability charity), report that:

- The average amount owed per UK adult (including mortgages) was £28,610 in May. This was

around 115% of average earnings

- The estimated average outstanding mortgage for the 11.2m households that carry mortgage

debt stood at £115,006 in May

- The Financial Conduct Authority estimates that at the end of Q1 2014 there were 255,561 mortgage loan accounts in reportable arrears (i.e. arrears of over 1.5% of current loan balance), a drop of 3.5% from the previous quarter, and the lowest figure since Q1 2007.

- One in every 400 mortgages was 10% or more in arrears.

- 71 properties are repossessed every day (based on Q1 2014 trends).

- 1,910 Consumer County Court Judgments (CCJs) are issued every day (based on Q1 2014

trends). The average value of a Consumer CCJ in Q1 2014 was £2,360.

Ok, so a little disheartening, but reality.  It's not all bad though as the UK economy grew by 0.8% in the first quarter of 2014, according to latest estimates from the Office of National Statistics and The Bank of England Base Rate has been held at 0.5% for 63 months.  Whilst the average Mortgage interest rate was 3.22% at the end of May.

Finally, according to the Council of Mortgage Lenders (CML), the typical first-time buyer deposit in April was 17% (around £29,260). The average first-time buyer borrowed 3.42 times their income and the average first-time buyer loan was an estimated £142,857.

Short term lending has immense advantages..

During the last few years, increasing attention has been focused on short term lending, or bridging as it is more widely known.

Commentators are concerned, rightly so, that short term lending is used as a substitute for more traditional mortgage lending in order to obtain funds quickly. This is fine where speed and accessibility are of the essence, but care should be exercised where a normal mortgage could be used instead.

So, what is short term lending and what should it be used for?

It is exactly what it says it is! Money to be used in the short term to facilitate a financial transaction which has either an urgent or short lifespan mainly geared to a property transaction. The most regular type of transactions include: A property being purchased at auction: The purchase of a new property whilst the current one is still being sold - usually when downsizing: Acquisition of a property which needs substantial renovation before it is suitable for a traditional mortgage:  Payment of an unexpected expense whilst more regular finance is being arranged.

There are a myriad of other reasons for which short term lending can be applied and each application is looked at on its own merits before a lender will agree to assist. The best way to look at this is as a means to an end. These lenders will need certainty on the exit route (how will they get their money back) and they will always insist on an agreement being in place from a traditional mortgage lender to provide a mortgage, at a given time and once any requirements have been fulfilled. So, short term lending is designed to fulfil an ability to act quickly. We have seen funds drawn in 48 hours from application!

Undoubtedly, these lenders have a growing influence in a fast moving marketplace. Interest rates charged will reflect what lenders consider to be the risk to them but will generally start around 0.65% per month although, for the more obtuse applications they will be around 1.5% per month. Short term lending has immense advantages enabling you to move quickly but as always, make sure that you fully understand all aspects of the offering and, especially, your responsibilities to the lender.

Buy to Lets now with just a 15% deposit

The Buy to Let market is buoyant as First Time Buyers continue to find it hard to obtain mortgage finance and turn to renting.   More lenders have entered the sector and many are seeking criteria niches in addition to competitive pricing, to attract new customers.

Buy to Let mortgages are now available with as little as a 15% deposit and are available to First Time Landlords, as well as experienced property professionals.

In addition, some lenders no longer require a minimum income.  Historically, this would have needed to be between £20-30k per annum in order to meet the lenders requirements.  However,  there are now instances when this stipulation has been removed and as long as the customer has an income (mainly to cover the lenders affordability should their be a rental void period), lenders will assist.

Another recent development is the way a lender calculates the loan available.  With all properties a surveyor will visit the subject property and value it's worth.  With Buy to Lets, the valuer will also include a rental estimate.  It is this estimate that will be the key factor in lending any amount to a prospective borrower.  A normal calculation suggests that the rental must be 125% of the mortgage payment.  Any less and the lender will reduce the mortgage loan according to the reduced rental income.  For example, if you wanted to borrow £100k, a reasonable test would be to multiply this by 5% (a fairly average calculation) and divide by 12 to get the monthly cost. This  would then be multiplied by 125% to determine the required monthly rental!  Therefore, in this example, the rental would need to be £521pm to achieve the £100k loan.   We are seeing competition increasing in this sector and as such some lenders have reduced this calculation to 110% of the mortgage.  Please note that varying lenders will have alternative calculations and, in most cases, the actual rate paid to the lender will be less than the rental stress test calculation mentioned above.

With property prices still low, First Time Buyers struggling to get on the property ladder and returns on savings still relatively unattractive, many are investing in property as a long term investment.   Remember that lender terms and conditions will always apply and you should always seek professional advice!

Life does not end at age 70!

You may be surprised to hear this, but life does not end at age 70!  This is despite a majority of mortgage lenders requiring full repayment of their loans at this age.  Normally, a high street lender will allow a mortgage term to last until the applicants usual retirement age.  This used to be 65, officially it's now 67, but the reality is it can be much later.  As such, most lenders increased their maximum age at the end of mortgage maturity to age 70.  However, we all know that people are working a lot longer now and repayment of such a large amount of money may not be possible in these restrictive conditions.  So the option is to raise further finance to repay the original loan or sell the property.  Thankfully, the first option is less onerous as it used to be.  Many non household name lenders will look at lending to customers a lot later in life, assuming the customers can prove  their continued ability to pay.   This can take the maturity age up to age 80, 85 or even 90 and above.  If the customer has a good amount of income, a good amount of equity in the property and can satisfy the lenders affordability requirements, then a lender should be happy to lend.  This almost demands that you seek specialist advice. 

There are a number of mortgages available to those over retirement age.  We’re seeing a lot of first time buyers turn to the bank of Grandma and Granddad as the money well of Mum and Dad appears to be running a little dry!  There are various ways in which the older generation are helping the first timers.  Some are gifting deposits, to help them on to the property ladder.  With most products, the larger the deposit, the lower the interest rate. Others have agreed to the placement of a collateral charge on the parents or grandparents property.  This gives a lender more security and maybe a better credit risk rational to the deal, than originally might have been the case.  In some cases the parents have joined in to provide additional income support and bolster the overall  application.  Whichever way required, always explore the options and have a conversation with a professional as there may just be an alternative way to do the deal.

Budget planning - essential to obtaining mortgage finance.

The Chancellor has recently given the Bank of England new powers to restrict Loan to Incomes and also Loan to Values.  In short, we’ve seen income multiples restricted for loans over £500k recently by a couple of lenders , to a maximum of four x income.  But the BoE now has powers to force lenders to do this.  If the BoE thinks lenders are lending too much or at too much of a risk, they have the powers to restrict the lenders offerings both on loan sizes offered to the customer or loan sizes against the value of the properties.  Personally, with the recent Mortgage Market Review (MMR) implementations across the market, these new powers could be deemed an unnecessary distraction to the lenders, especially as MMR already covers these areas and should naturally stop unaffordable loans being issued.

With MMR in mind, we are still seeing long delays across the market in customers obtaining appointments at local branches, as well as general processing delays.   Some lenders are not taking appointments for three or four weeks, are ten working days behind on processing, and we have experienced recent telephone calls taking over an hour to receive a response!  These are just on the broker side so heaven knows how customers are faring!

With all new mortgages, a budget planner will be required.  So make sure you know and can advise exactly how much you are spending on your lifestyle.  Especially make sure you know your monthly costs on food, household expenses, travel, pension and saving contributions and other likely costs such as hobbies, going to the gym, lottery direct debits and more.  Every lender will review your ability to afford your new mortgage over coming years so all direct debits and most entries on your bank statements or credit report will need to be advised.  This is so the lender can make a viable stress test on future rate rises and ensure that you will still be able to afford your mortgage at that time.  Yes, maybe there is a little guess work, but do make sure you disclose all monthly expenditure as the lender will normally want to review your bank statements and will see it all anyway!

Rate rises with only one hours notice!

A number of lenders have increased rates over the last few days with one in particular only giving us one hours notice to save the existing rates for potential new customers.  Normally a lender will send round a notification advising of the impending rate increases and the timing for withdrawal of the current product offerings.  We will then need to submit a full application and pay any fees to secure the existing rates.  Most lenders will give twenty four hours notice, some a couple of days.  But one high street lender only allowed one hour to secure their rates. This meant that they did not see a 'spike' in business as people rallied to submit cases as this left no time to secure the lower rates.  In the main, these rates increased by 0.2%, but an increase is an increase.  And if a customer was not able to be contacted and engage within that hour, then the rate was lost!

Product of the week comes from Virgin Money who have launched some superb four year fixed 2.99% rates (4.4% APR) for a limited time.  For remortgages these also have free valuation and legal costs.  The lender fee is also low at just £999 and customers can overpay up to 10% per annum penalty free.   Max loan to value is 60% and the rate increases to 3.29% at 75% borrowing.

The Nationwide House Price Index suggests that house prices increased in May 2014 by 0.7% and are 11.1% higher than in May 2013.  The report also advises that the average house price now stands at £186,512.

Finally, Natwest has decided to follow the LLoyds Banking Group in capping income multiples for all loans over £500k.  Recently the lenders would have looked at a customer's affordability rather than an income multiple.  However, with immediate effect, the maximum any customer will be able to borrow with these lenders is 4 x their income for all loans over £500k.  Both have highlighted London as their main reason for changing their criteria.  Specifically that wages are not keeping pace with house price growth and forced inflationary pressures have forced these required changes...

Nearly 8,000 mortgages products now on offer.

There are now nearly 8,000 mortgage products on offer.  This is a substantial increase from the same time last year and gives a good indication that lenders are actively looking to assist clients with product choice.  The majority of those visiting AToM are looking for a longer term fixed rate, although some are still happy to take a short term tracker rate and are confident that rates will not fluctuate too much in the coming months.  There are some good products with minimal set up costs that have no early redemption penalties at all.  So if you wanted to switch products later on, to a fixed rate for example, this could be done (be aware that most lenders charge product fees on fixed rates).  Some lenders even offer the ability to do both in the same mortgage offering.  Lenders are innovative when it comes to attracting a certain type of business and clientele!  But do remember that tracker rates can go up, as well as down.

With all mortgages, lenders will look closely at an individual’s recent payment profile (to credit cards, loans, mortgages, etc), how many recent exploratory credit searches have been made by financial institutions and more.  The more credit searches you have on your profile, over a recent amount of time, the more likely your credit score will be lower as a result.  Try and ensure there’s no missed or late payments as these will also decrease your credit score.  In short, your credit search / score is the basis on which most lenders will initially decide whether to lend to you or not.  If you’ve not checked your credit file before, it is well worth a review.  Experian, Equifax and Noddle tend to be the main providers used in our market with some offering free initial trials and you can find links to these on the AToM website.

Finally, we are looking to recruit again.  Are you in the mortgage market, or have experience and fancy a new challenge?  If so, we would like to have a chat.  Pop in to the Carfax office, or please have a look at the job descriptions on our website to find out more.

Rumours are rife on a Bank Base Rate increase soon.

Following on from the Bank of England Governor's recent comments on a Sunday TV programme, and in fact some time beforehand, the rumour mills are rife trying to guess when we will see a Bank of England base rate rise.  The economy is so buoyant that it needs a little slowing down, apparently!  I was recently in attendance at a seminar in which five notables gave their views on when the increase may occur and the general consensus was that it could be later this year and, if not, then most definitely in the first quarter 2015. 

With this in mind, have you checked your rate and product recently?  Now might be the time for a review.  However, be wary that your local bank of building society, in some cases, are taking up to four weeks to see customers!   Some are a number of days behind on underwriting.   And the most bizarre scenario we had this week was from a surveyor.  They were happy to visit the property to carry out the normal mortgage lender valuation.  However, they were also required to carry out a homebuyers report, a more in-depth survey for the customers benefit and, to great concern, they could not conduct this at the same time and would have to return, possibly four weeks later.  Frustrating for the customer who wanted to buy quickly.  Generally the whole market is incredibly busy yet the current staffing levels just can't cope. 

Further impositions were seen this week as the Lloyds Banking Group slapped on a maximum income multiple for all loans over £500k. With immediate effect, the lender will only allow a maximum of four times income on all loans in this segment.  Described as a “targeted policy change” to address inflationary pressures in the housing market, especially London, the change applies to mortgage lending through Halifax, Lloyds, Bank of Scotland and Scottish Widows Bank.   Thankfully, there remain other opportunities in the marketplace and we are hopeful that other lenders don't feel that they have to follow the Lloyds lead. Only time will tell. 

Parental support might help achieve your dream home

Horsham is a popular location and as a result scores highly in the property price stakes. That said there are many 'would be' homebuyers with an appetite more expansive than their budget and this can be a deal breaker if income and deposits do not meet lender criteria. This is where parental support can help.

The traditional route has been through a parental guarantee, so parents guarantee the full amount lent to the siblings with the lender.  Although lenders no longer favour this so much on a stand alone basis.  Often a lender will prefer a parent to actually join in using their income to support affordability until such time as the original borrowers income has grown sufficiently to assume full responsibility.

Alternatively, the parents may gift the siblings the deposit toward the purchase of the new property. The parents must confirm that there are no monthly repayments, it is a non repayable gift and that they will have no interest in the new purchase.  

Finally, a lender may sometimes accept a charge taken on the equity of a parental property thus alleviating the need for such a large deposit.

It may well be that a hybrid of all three may work too.

Another potential stumbling block may be age with some of the high street lenders still working off a retirement age of 65. So what about the growing population of people working into their 70's and further?  Well there are options and not all based on Equity Release although there are hybrid options are available to cater for most needs.  Many will lend long in to later years, but these will be specialist lenders and not high street names.  In the current climate this is not an issue and you should not be shy of dealing with a non-household name.  Some of these are small regional building societies who have been established over 100 years!

As with any mortgage type you need to ensure that you take proper and in-depth advice before you commit.  Who knows, that dream property in the Horsham area may well be available to you.

Volumes continue to rise, but so do delays..

The market is creaking as delays strike lenders, valuers, solicitors and ultimately the end consumer.  Volumes continue to rise, rates remain low and attractive, but the new regulations are biting in to the processes and thus these are taking longer than normal.  Some lenders are taking over an hour to answer their phones whilst taking up to ten days to look at mortgage applications.  In addition the already apparent shortfall in surveyor numbers is becoming more apparent as customers seek quick turn-arounds in order to compete deals, but the reality is that although volumes are increasing, staff  number increases across the sector can't keep up.  AToM has had first hand of this as we've been recruiting over the last three months.  But finding the right person with the right experience and/or qualifications has been tough!   Whatever transaction you are looking to do, especially with purchasing, be aware that the market is experiencing these delays and the processes are taking much longer than expected.

However, I won't spend to much time on the lows of the market as the fact we have so many lenders offering so many fantastic products across all areas of the market is superb and more people are buying houses than have been for some time, albeit supply might be faltering a little.   Certainly makes it more enjoyable working in our industry with 11,000 product offerings, than when there were fewer than 2,000 not so long ago!

With this in mind, the average two year fixed rate rose by 9 basis points, from 3.52% on 1 April to 3.61% by the end of the month, according to moneyfacts.co.uk. This was the largest one month increase since February 2012, when two year fixes rose 0.13%.  Not time to hit the panic buttons yet, but be aware that there is rate movement occurring.

Finally, the Halifax House Price index suggests that house prices are up 8.5% over the last year with the average property price standing at £178k.  It is also suggested that while London and the South are fairing well and seeing some increases, the North and Wales are still static.  

Not many lenders will not look favourably on Payday Loans

We’ve seen an increase in enquiries from those who might have used a Payday loan over the last twenty four months.   I need to reiterate that these are classed as an ‘adverse entity’ with most lenders (not that some would admit it!).  However, even the lenders who accept customers with historic CCJs, defaults, or missed mortgage payments registered against them, MAY NOT accept someone who has taken out a payday loan.  So, although these may be right for a customer in certain circumstances, they will almost definitely limit the number of lenders available to you when you come to apply for or change mortgages.  Seek advice.

With this in mind, lenders will look closely at an individual’s payment profile, how many recent credit searches have been incurred by financial institutions and more. The more credit searches you have on your profile, over a recent amount of time, the more likely your credit score will be lower as a result.  Try and ensure there’s no missed or late payments as these will also decrease your credit score.  In short, your credit search / score are the basis on which most lenders will initially decide whether to lend to you or not.  If you’ve not checked your credit file before, it is well worth a review. Experian, Equifax and Noddle tend to be the main providers used in our market with some offering free initial trials and you can find links to these on the AToM website.

But don’t be put off, there are many opportunities whatever your circumstances and lenders are willing to have a conversation in order to do the right deal. These are not always high street names, so do speak to someone who has whole of market access and not just a limited panel of lenders.  Of course, rates and terms will vary depending upon the type of mortgage written. Lenders have varying degrees of risk assessment calculations and this will determine the loan to value and charging rate levels.  Finally, remember to always read the small print and understand all fees involved.  The lowest rates on offer may not always be the most cost effective over a period of time for you.

Interviews over 2 hours and keep an eye on your Interest Only mortgage..

So the new MMR (Mortgage Market Review) regulations are now in force and the mortgage market has not ground to a halt, despite what some pundits insinuated it might!  It’s business as usual, albeit a little more intrusive and the process may be taking a little longer than before.  Some customers are reporting that the high street lenders mortgage interviews are taking well over two hours and more than a week to book appointment (no such problem with your local independent mortgage advisers!).  Others are reporting some absurd questions being asked such as how much do you spend on alcohol per month, how much on pet food and have you got a national lottery direct debit?  As with all things, whilst the new rules settle in, there will be some teething problems, but be patient with them as they are here to stay and for everyone’s protection.   Just ensure that you have all your monthly costs laid out accurately from the outset and ready for when requested.  If you spend £500 a month on food, then that’s the figure to advise.  If you don’t and the lender reviews your bank statements and finds discrepancies, this will not be looked upon favourably.

Coincidently, we have seen some rates increase over the last week.  Both NatWest and Santander have increased rates on their Help to Buy Mortgage Guarantee schemes.  NatWest increased some of their 95% loan to value rates by 0.4% on two year fixed deals.  Santander increased their 5% deposit rates by 0.1%.

The British Bankers Association has confirmed that purchase figures for March 2014 were up 45% compared to March 2013.  Gross lending amounted to £6.4bn.  

Remortgaging amounted to £2.9bn for the month, the same as in February, but an increase of 32% compared to the same time in 2013.

Finally, I’ve mentioned this matter a number of times, and make no apology for doing so again!  If you have an Interest Only mortgage, do make sure you keep reviewing the options for repaying it back. Where a customer reaches the end of their mortgage term still owing exactly the same as when they took it out, with no form of repayment apart from selling their property, this creates a major headache for the lender. Especially when they want their money back! This is a major aspect of the new regulations which are now implemented, so be on top of your options, before the lender calls! If in doubt, seek professional advice.

Two days till MMR! Time to use a broker..

I don’t think I can talk about anything else this week apart from the launch of MMR.   The Mortgage Market Review comes in to effect on April 26^th and will fundamentally change the way a lender looks at a mortgage application.   Amongst a number of new rulings, one area being reviewed is affordability, a key element when arranging a mortgage.  The MMR takes this a step further in also requiring a lender to predict affordability into the future.  For example, will any material changes occur in the next five years; how much will you spend on seasonal commitments this year; will you need to consider an increase in property size to meet family requirements?  These are just some of the more intrusive questions that are to be explored when budgeting for a mortgage.

As lenders new systems are released, we are also noticing the phasing out of income multiples and the introduction of affordability models.   So, no more “4 x income” conversations!  The amount you can borrow will depend on your monthly net income against expenditure and living costs and the lender will be the judge of what they think you can afford! 

One thing is for sure in that the time taken up in research and recommendation for a suitable mortgage product might just start to increase as each lender advises their differing requirements!   

As such, we’re hearing that mortgage appointments with local banks or building societies are now taking well in excess of an hour (some up to three hours!).  Sadly, if for whatever reason, that lender cannot not offer the customer what they want, the customer may have to approach another lender and sit through another hour or so possibly to find that they too cannot help, and so on.  This raises the spectre of a large commitment to time for the consumer without a satisfactory solution.  This is where independent and whole of market brokerages come into their own.  They will be able to offer you access to a number of lenders, including the high street names, if appropriate, and you only need to have one conversation with the same person.  In addition, they should have access to lenders who will manually assess your needs rather than a ‘computer says no’ type scenario, if required.  Independents, like us, have access to a number of limited distribution lenders and exclusive products not readily available to the wider mortgage market!

A new 'Retirement Mortgage' for the over 50s

The Buckinghamshire Building Society has launched a new mortgage aimed at borrowers aged 50 and over who have an interest only mortgage but do not wish to sell their property when their current mortgage term expires. 

The Retirement Planning Mortgage has no maximum age and will allow customers to borrow up to 70% of the property value, 40% of which can be on an interest only basis.

Interest rates are calculated based on the borrower’s individual circumstances but are variable in all cases and start from 5.24%.  A minimum property value of £300,000 applies and this product is only available through a handful of distributors, including AToM.   Terms and conditions apply.

We’re hearing that a number of lenders are struggling to get enough qualified mortgage advisers into their branches in time for MMR (Mortgage Market Review) which comes in to effect on 26^th April.  This means that with such shortages on advisers, some borrowers are having to wait as long as a month to see an in-house mortgage adviser.  Remember that ‘whole of market’ mortgage brokerages could possibly offer these lenders products, and quickly, so review your options.
The number of house purchase loans shot up by 33% on an annual basis in February, according to the Council of Mortgage Lenders.  The value of purchase loans in February reached £7.8bn, an increase of 47% from the same time in 2013.   A total of £3.5bn was advanced to remortgage borrowers in the month, up 29.6% from a year earlier.

Finally, The Newcastle Building Society has launched two new 95% loan to value products with no reservation or booking fees.  With rates starting from 5.39% (and a five year fixed at 5.49%), they will not set the world alight, but do present another option to a consumer needing a manual assessment, rather than a tick box high street lender.  At the same time the Mansfield Building society has reduced its 95% loan to value products by 0.5% down to 4.49% but only for those who live in their designated postcode areas.  Slightly restrictive lending!

Have a great Easter break!