Delays, low rates and AToM at the Property Investor & Homebuyer Show

Delays, delays, delays!  With so many lenders dropping rates to all time lows, it was inevitable that their back end would not be able to cope with front ends sales!  We are finding a number of lenders are often taking one to two weeks to turn things around.  A few are much longer and we know of one that is currently taking over nine weeks to review applications.  Yes, nine weeks!  When applying for the house of your dreams and with the Estate Agent demanding a quick survey, always check with the lender to find out their service levels before putting your mortgage with them.  You might find the agents won't be happy with a substantial wait. 

The other impact, just around the corner, is the impending Election.  Based on previous experiences, many people put their home plans on hold whilst elections occur and this can also have an effect on lenders, who then reduce rates to attract more business, and so we have a spiral effect as per my earlier comment above.

On the up side, we've seen some incredible offerings from lenders.  Last week we saw the lowest five year fixed rate deal at 1.29%, which was withdrawn pretty quickly and although the rate has increased, is still a very respectable 1.59% (up to 60% of the property value and £900 fee).  We also saw one Building Society launch a 0.89% two year fixed rate deal with a £1,495 fee.  How low can they go?  The choices are currently attractive and seemingly very good for the end consumer.  As always, terms and conditions apply and are subject to individual circumstances, so seek advice!

Finally, this weekend is The Property Investor & Homebuyer Show at ExCel in London (28/29th).  If you are looking at property to rent out, this is the ideal place for obtaining up to date property market information, networking and, of course, property to buy.  It is designed to cater for all levels of property experience, so whether you are a property novice or a seasoned investor you will find the answer to your questions.  Better still, both the show and seminar programme sessions are free to enter.  AToM will be exhibiting, so if you are attending, come and say Hi

Five year fixed at 1.29% available only via an app!

I can't ignore the headline of the week, from Atom Bank (not related!), who have launched a market leading five year fixed rate at just 1.29%.  This is available to those with a 40% deposit and has just a £900 fee.  They have also launched an 80% loan to value (LTV) fix at 1.49% and a 90% LTV at 1.99%, both with a £900 fee and for five years.  APRCs will relate to individual circumstances and obviously terms and conditions apply!  What is for sure is that these are so good, they are in huge demand, have been covered by all the major consumer websites including Martin Lewis, etc and won't be around for long, so be quick!   Only a few brokers in West Sussex have access to this product...

Long term fixed rates won't be for everyone as you are tied in for the full five years and will have a redemption penalty to pay should you repay the mortgage early.  However, they tend to be portable and thus can be taken with you, subject to the lenders criteria, should you move house.

Atom Bank do a lot of their functionality via an app, including voice and face recognition.  Impressive hi-tech stuff indeed. 

Already, most people will start their home buying process via the Rightmoves and Zooplas of the world, but some commentators are also predicting that the whole home buying process will soon become a digital revolution.  With more effective use of technology cutting down the mortgage process, and many lenders now processing everything online, I can see how that can happen.

However, at the same time, I can also see many customers just wanting to speak to someone face to face.  Especially those who have not grown up with technology! Plus, as mortgage volumes are increasing, we will see more and more customers fall out of the 'technology only' bracket.  So explore all options and if the technology becomes to confusing, pick up the phone!

See if a remortgage to a fixed rate might benefit you..

We are in the middle of the Easter school break and this is traditionally a time when many people do one of three things in the mortgage sector. They start looking at new properties to move to: they are already committed and are packing ready for the removal lorry or, they take time to review what mortgage they have and question if there is anything better out there. It might be argued that huge numbers of people simply take a holiday, and why not?

Certainly, once the holiday is over, then it makes sense to review the current mortgage deal and see if there is a better option and perhaps look to secure a competitive rate for a few years. Whilst I always err on the optimistic side of a rates argument we are entering a truly unknown era. We have never left the EEC before and so there is no history to prompt what the immediate and longer term implications will be.

It may well be that we need to be prudent and a medium to long term fixed rate will allow the head to drop comfortably onto the pillow each night if rates do rise as a result of Brexit (whoever thought of that word to describe it?)

So do take the chance to look and see if a re-mortgage to a fixed rate might benefit you. Actually, it is wise to consider this anyway, regardless of Brexit as there are millions of people on lenders standard variable rates enjoying complete and deafening silence from their current mortgage lender. Why the silence? Simply because lenders are comfortable with you paying over the odds and increasing their margins! They are under no obligation to offer you a better deal when you come to the end of an incentive term and you automatically flip onto their variable rate. It is worth looking for a better deal and many lenders will welcome you with free valuation and legal initiatives and a difference of 1% can save you a substantial sum over few years.

Talk to an independent mortgage adviser and see what they can offer.

Lenders have to report statistics. Are you one of them?

According to the CML (Council of Mortgage Lenders), gross mortgage lending in January totalled an estimated £18.9bn.  This is an increase of 2% on January 2016, and down 6% from December.  There were 29,743 loans approved for house purchase in January, according to the British Bankers Association (BBA), with the average loan approved for house purchase rising to £182,500.

The Financial Conduct Authority reports that 69.75% of mortgage lending in Q3 2016 was for 75% or less of a property’s value.  Just 5.3% of lending was for mortgages over 90% of a property’s value!

Lenders are restricted on the amount they can lend in many different mortgage categories.  So for example, if a lender offers more than 4.5 x income, the maximum allowed across their business for the year will be a set percentage of business.  If this is, say 15% of business, once this target is hit, the lender will need to withdraw this offering (or dramatically increase other areas to bring the split of business back in line).  This is also the same with lending in loan to value bandings, so a percentage limit will be enforced on lenders offering over 90% loans to the value of the property and so on. 

The Office of National Statistics say that the average house price for first-time buyers was £184,973 in December 2016, which is an annual increase of 7%.

Whereas The Money Charity Statistics confirm that outstanding mortgage lending stood at £1.326 trillion at the end of January.  That means that the estimated average outstanding mortgage for the 11.1m households with mortgage debt was £119,752 in January.

As you can see, everything is a statistic.  With this in mind and with so many rate changes and reductions, lenders will look closely at an individual’s recent payment profile, how many recent credit searches have been incurred by financial institutions, and more.  So don’t give them any excuses not to lend to you!  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.  In short, your credit search / score are the basis on which most lenders will initially decide whether to lend to you or not.  The best rates will almost definitely go to those with the best credit scores.  If you’ve not checked your credit file before, it is well worth a review and most are now free.