AToM Mortgage Blog

2012 - a year for Specialists

2012-01-06T10:48:00.000Z

A very Happy New Year to you all! Let’s hope 2012 brings us all something to be upbeat about! Although lending volumes are predicted to remain much the same as in 2011, I do predict that the mix will change slightly. We will see more specialist lenders offering products aimed at specific types of customers. This is a good thing as this will help those who may not currently be able to get a mortgage such as those with multiple incomes from various sources, those who have had financial issues, those looking to buy their Local Authority houses, and so on. Lenders may also consider more complex scenarios working on an individual basis and pricing.

The cost of borrowing funds between lenders has risen over the last few months and as such, the cost of fixed rate monies has risen. Remember, these rates are calculated on a different basis to tracker rates. In the main, the former is based on SWAP rates, the latter on Bank of England base rate. With the Euro Zone issues still hanging over all of us, the cost of borrowing funds between lenders was always likely to rise. However, some experts predict that the cost of fixed rates monies is unlikely to decrease again once risen. Back to wishing I had a crystal
ball!

Lenders have already started adjusting their product offerings. Coventry Building Society is the first to pull all of their products! At the time of writing, I have not seen the new products to be launched, so cannot comment specifically. However, lenders product withdrawals pre Christmas all resulted in higher rates. Will they follow suit, or maybe set the trend for attracting business in the ‘January Sales’?

The Nationwide House Price Index suggests that house prices declined by 0.2% in December, but
increased by 1% in 2011 as a whole. The price of a typical home is now £163,822. London saw the strongest growth in 2011 (5.5%), but less regional variation in house prices compared with previous years. The South East saw an annual growth of circa 2%.

Finally, AToM had a very good final quarter to 2011 and were pleasantly surprised at how busy we were between Christmas and New Year. Hopefully, this is a sign of good times ahead and a positive 2012 for us all.

Another year passes by!

2011-12-23T14:10:00.003Z

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

2011-12-16T13:26:00.003Z

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

2011-12-09T13:36:00.000Z

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

2011-12-02T13:40:00.001Z

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.

Inside the mortgage trade exhibition!

2011-11-25T13:49:00.001Z

Over 70 exhibitors, including AToM, were in attendance at last week’s Mortgage trade event of the year - Mortgage Business EXPO 2011. More than 2,500 Mortgage Brokers, Independent Financial Advisers and Estate Agents visited over the two days to explore the products and offerings of the many Banks, Building Societies, Solicitors, Bridging and Commercial Funders and Specialist Mortgage Packagers. In addition, our trade association (Association of Mortgage Intermediaries) held numerous seminars covering various issues including ‘Mortgage Market updates: the impact of the impending European Mortgage directive’: ‘Consumer Protection’: ‘Current Issues’ and ‘Economic impact of the Economy’. How exciting it all sounds!

However, the reality is that we currently appear to be in a buoyant mortgage market and all of the Lenders at EXPO wanted to lend! This included some of the usual household names (not all could make it!), but more so the smaller lenders with no obvious funding issues, including Building Societies! Especially prominent were those in the Commercial and Short Term Lending (Bridging Finance) arenas.

All in all, we had a good two days exhibiting, made some fantastic new contacts and achieved a real insight as to how the market is currently holding up in various areas of the country. Believe me, the south is doing pretty well…

What I found valuable was the firm response to a question posed during a Lenders seminar with a panel consisting of Nationwide, Barclays, Northern Rock (Virgin Money), Platform (Co-Op) and GE Money Home Lending. The question raised to them all was, simply put, when do you hink the Bank of England will increase the base rate? The responses were pretty similar from all
parties – between late 2013 and early 2014.

Take what you want from this, but all of a sudden, short to medium term tracker rates look more attractive than they did just a few minutes ago!

Is your adviser qualified?

2011-11-18T13:47:00.001Z

In October 2004, mortgages fell under the spell of the regulator, The Financial Services Authority. This was not a bad thing as it was becoming very clear at that time that certain areas of the mortgage market were not being patrolled properly and that some of the borrowing public may not, in turn, have been looked after satisfactorily.

Even at that time, many mortgage intermediaries were already professionally qualified, although, not necessarily in the mortgage sector, most being authorised in wider ranging financial services arena. Since 2004, mortgage intermediaries seeking to provide advice and recommendation to their clients have had to be specifically professionally qualified, by examination, and the subsequent denotations that are shown vary in format but mainly incorporate CeMAP (Certificate in Mortgage Advice and Practice).

Therefore, for any mortgage which falls under the regulatory banner you should ensure that the advisor who deals with your mortgage is qualified under this title at the very least and that they are not simply information gatherers for others who will remotely research and advise at arms length. At the moment, Buy to Let mortgages are not regulated although the authorities are looking very closely at this and we fully expect them to fall under the regulatory banner before too long.

So why the need for professional qualification? Simply put, it is in your best interests to be advised by someone who adheres to and works with a high level of principles and who regularly undertakes continuous training to ensure he or she is always abreast of the best market products and practices designed to suit your personal circumstances.

Finally, on this subject, the regulator is now proposing that all advisers take further examinations to ensure that their skill and professionalism is continually upgraded in line with market needs. AToM supports this as we believe in full and dedicated commitment to the profession and we are keen to see the restoration of advice as a welcome requirement of our customers rather than the
less regarded necessity which appears to have become the case in recent years.

Small positives and Mortgage Expo!

2011-11-11T10:37:00.001Z

Each month I shudder as various statistics arrive on my desk - £130m daily increase
in Government national debt (PSND); 1,600 people made redundant daily; 99 daily
property repossessions and the suggestion that every UK adult owes £29k (122%
of average earnings). This, in addition to the global issues currently taking up the daily headlines and adding immense pressures to the various financial markets, does not paint a pretty picture of
what might lie ahead.

However, we can take some small positives as current lending markets see a little Retail
Mortgage-Backed Securities (RMBS) action occur. What does this mean? In short, it's a volume of mortgages, bundled together and sold off to investors as a package. On this basis, it dilutes the
downside of any one borrower defaulting. For the industry, it means that the Lender,
once this book is sold, should be able to lend a further amount in new lending. Competition with product pricing is also more active than of recent months and appetite for volume lending is apparent with a few exciting exclusive product launches.

One thing to think about when taking out a new mortgage is the reversion rate of that product (the rate at which the mortgage reverts to, once the incentive fixed, discounted, tracker rate period expires). Some lenders tend to revert to a tracker rate at an amount above Bank Base Rate (BBR). Others revert to their own Standard Variable Rate (SVR), and even in the current climate, they can be high (5.99% +). Always do your homework and make sure you understand all the elements of your mortgage before signing on the dotted line. Ensure that you have no cause for regret later.

Finally, next week sees the great and the mighty of the mortgage industry meeting together at Olympia 2, London for Mortgage Business Expo 2011. This exciting two day event consists of lenders and ancillary businesses showing their wares and seeking to establish increased business relationships and volumes. Many presentations occur over the two days, but the most anticipated
will be the ‘update on the mortgage market by The Financial Services Authority’. I suspect that this one will be standing room only and I’ll update you on their thoughts and views in the coming weeks.

It's still tough out there..

2011-11-04T10:11:00.001Z

Getting a mortgage application through a lender in the current climates can still be challenging. One day it appears relatively easy, yet the next, it’s a nightmare! So whatever you do, try to not give lenders any excuses to decline your application or refuse to lend to you. Try to pay bills on time, don’t miss payments where possible and especially not mortgage payments! Any missed (or sometimes late) payments will be registered on your credit file and this is normally used as the basis of a decision to lend to you. Remember that most Insurance companies and mobile phone providers carry out credit searches on people before issuing their products. Try not to incur too many searches in a short space of time. This can also be detrimental to your credit score.

When choosing who to speak to about your mortgage, ensure that the company you are talking to, whether it be a mortgage broker, or an Estate Agents in-house mortgage adviser, has access to the ‘whole of market’ and not just a fixed panel of lenders. If they do not have access to the whole of market, they may not be offering you the best deal available to meet your requirements.

Finally, for some months, a few of the smaller specialist lenders have been offering existing borrowers ‘golden goodbyes’ to assist them in remortgaging away to another Lender. This tends to be a cost effective way for the lender to lower their exposure and re-capitalise over exposed mortgage books, or so we are led to believe! In some instances, the incentive to the borrower to move away has been thousands of pounds. We are aware of some discounting by tens of thousands or up to 25% of the current loan amount! Quite simply, some lenders are happy to pay
substantial amounts to say goodbye! Other lenders have waived early redemption charges on some loans to encourage borrowers to move their mortgage elsewhere. This fad seems to be on the increase again. If your mortgage is a with a small specialist lender, who you know are no longer actively trading, a call to them could be very worthwhile and could decrease your mortgage amount, term and payments!

Exclusively through AToM - Packaging!

2011-10-28T10:54:00.000+01:00

It’s been a really busy few
weeks at AToM HQ. For those regular
readers, you will know that AToM does not only arrange mortgages for the
general public who visit the shop front, but we are also a specialist packager/distributor
dealing with mortgage brokers, estate agents and independent financial advisers
nationally. For some lenders, AToM acts
as the administration arm, collating information, instructing valuation and
processing applications right up to mortgage offer status. For other lenders, AToM will be allocated a
tranche of funds to lend on their behalf and AToM advertises them and controls
the administration process. Any mortgage
broker, independent financial adviser or similar, who require these certain products,
will often have to come via AToM to gain access to such products.

One recent example is from a
company called Precise Mortgages. They
have launched a product aimed at the ‘Near Prime’ sector, and this means those
who have had some financial issues in the past.
Their normal core range is available up to 80% of the property value,
but via AToM, customers can achieve 85%.
This is totally exclusive.
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 it’s cost
effective for the lender. In return,
AToM gets ‘almost’ guaranteed business.
A great two way relationship! As
the saying goes, it’s amazing what happens behind closed doors!

Finally, according to
unbiased.co.uk, and since the inception of the credit crunch, there are
approximately 46% of all mortgage borrowers who have failed to review their
mortgage to see if they can get a better deal!
This seems crazy on the face of it unless you are one of the lucky ones
with a rate including just a small margin over the base rate. If you are on a
lenders standard variable rate and this is more than 4% you might be missing a
valuable trick, and the opportunity to fix to avoid the potential pain when,
eventually, rates do start to rise. Seek
independent advice – you are unlikely to regret it. Even if the advice is to stay put!

The Process!

2011-10-20T13:50:00.000+01:00

The mortgage process, regardless of whether you are a first time buyer, home mover or simply re-mortgaging, will be roughly the same. On any new purchase, the selling agent will seek to agree a number of deadlines with you, including the arrangement of mortgage finance.

At this point you should make sure that you speak to an independent mortgage brokerage who will assess your overall financial position and discuss your mortgage requirements with you. They are required to provide you with an Initial Disclosure Document detailing who they are; who regulates them; their scope of permissions; whether they use a restricted lender panel or ‘whole of market’; any fees and costs involved including any charged for advice or consultation. This document also advises how to complain if you are unhappy (now or in the future) with the advice provided.

A good advisor will complete a financial fact find ensuring that they fully ‘know their client' and fully understand their client’s financial position and requirements.’ This is necessary before any ‘advice or recommendation’ can be provided. Be patient as this process can be lengthy. It is in your best interests however, ensuring that you receive the best possible advice designed to meet your personal mortgage needs and requirements.

Once you’ve agreed the best mortgage for you, matching your financial needs and aspirations, a decision in principle (DIP) will be completed, usually on-line with the chosen lender. This involves brief personal details, income disclosure and a credit search. Be wary here as too many credit searches will have a negative effect on your credit score. Ensure that the product and lender are right for you before a DIP is conducted.

DIP decisions are often instantaneous. Assuming success, it is then upgraded to full application. Payment for valuation is made (sometimes free) and the valuer confirms to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more detailed in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost. That said, for older properties it should be considered a worthwhile investment as it could save you thousands in the long run.

The chosen lender will require information on income, identity, proof of residency as part of their due diligence requirements. Assuming no issues arise, a mortgage offer should now be issued. Then, subject to the solicitor’s conveyancing process, you are on the road to completion and, if it is a purchase, you should soon pick up the keys to your new home!

New 95% Loan to Value aimed at First Timers

2011-10-07T18:51:00.000+01:00

First Time Buyers have received more attention this weekwith The Hanley Economic Building Society being the latest to offer anattractive product to this sector. At95% of the property value and with a 3 year discounted rate of 4.75% (5.3% APR)and a fee of just £99 upfront and £400 on completion, this is a bold attemptfrom the lender to attract first timers. Only six distributors in the UK have access to this product (AToM areone!) and I suspect funds will be utilised on this product pretty quickly forthose with just a 5% deposit! Well doneThe Hanley!

Leeds Building Society have also been busy in the productsdepartment and launched a 1.99% (4.5% APR) fixed rate for two years forpurchase or remortgage. They will lendup to 70% of the property value and will charge a £199 booking fee upfront and£1,800 completion fee.

On both these products, redemption penalties will applyduring the product period and terms and conditions apply!

In other news, according to creditaction, Rightmove has saidnew sellers raised average asking prices by 0.7% (£1,596) to an average of£233,139 in September. Prices rose 1.5% compared to September 2010.

House purchase approvals (35,226) were higher in August thanin July according to the British Bankers Association, and 14% higher than inAugust 2010. The average loan approved for house purchase in August was£145,500 which is 1% higher than a year ago.

A moneysupermarket.com survey has found that 27% of Britscurrently spend over 40% of their wages on paying off non-mortgage debt. Thefigures show that the average person pays off £322 every month, which isequivalent to a quarter of the average monthly income for a UK adult (currently£1,288). Even more strikingly, 8% of people say that they spend over 80% oftheir wages on repaying debt.

And finally, a study by Endsleigh suggests that twice as many people living inthe UK are renting (45%) compared to those owning their own home (23%).Middlesex is the most popular area, with over three times as many renters (51%)as buyers (16%). It is closely followed by East Sussex (48%), Surrey (46%) andBerkshire (46%) – all of the top 10 regions for renting are in the South. According to Endsleigh, 62% of renters intendto buy a property in the next five years.

Low rates and new lenders!

2011-09-30T09:30:00.000+01:00

As we enter the final months of the year, we are starting to see more positives from some lenders as they relax their previously strict underwriting criteria. New lenders are also knocking on our doors to see if we can distribute their products. Hoorah! An appetite to lend! I suspect others will make a last ditch attempt to end the year on a high by offering lower rates to attract decent volumes of business in order to hit targets. Rumours are that we shall see some low and attractive tracker rates, but only available for a limited amount of time (i.e. one week, etc). Watch this space! But be wary that if you are after a fixed rate, these are currently more volatile and rates are moving rapidly, some up and some down, depending on the term of the deal.

That said, long term rates have been considerably higher than where they are now. If you are on a long term fixed rate, in excess of 5%, then it may just be worth having a review to see if re-mortgaging now could save you money. With many lenders offering low rates and some offering fee free re-mortgage deals, there’s no harm in reviewing your current mortgage product to see if money can be saved. Even if you are to incur redemption penalties to change lenders, a new mortgage could still work out financially beneficial although this is an important calculation in the overall process. Speak to your local independent mortgage advisers to find out more. It could be a very worthwhile conversation in the run up to Christmas and looking to the future!

Finally, the Buy to Let market has had a busy week. The Post Office withdrew its entire range of Buy to Let products. The lender says it plans to concentrate on helping First Time Buyers and Residential mortgages. And Kensington, the only lender in the Buy to Let market to offer an 85% mortgage, has withdrawn their product. After a bumper few weeks, the lender has allocated their tranche of funding on this great product offering. They will continue to offer mortgages up to 80% of the property value.

Don't allow un-necessary credit searches

2011-09-23T09:57:00.000+01:00

A mortgage is the biggest debt you’re likely to ever take on, so you need to do your homework and understand more than just what certain marketing / PR headlines suggest about how the “100% mortgage is back” or how Bank Base rate will not rise for many years, or how much profit the banks are reportedly making!

Advice is crucial and should, ideally, be sought from a company offering ‘whole of market’ mortgages. Remember that some Estate Agency chains and Banks, in particular, can normally only offer advice on their own products or from a limited number of lenders.

Be wary that the more of these you talk with, the more likely you are to be credit searched. Make sure you stipulate at the outset that you do not authorise any credit searches, until you are happy to proceed with a specific product or lender.
Also, if not presently, but you have plans to apply for a mortgage in the not too distant future, keep your eye on your credit. Don’t miss or make late payments to any provider. All financial institutions will base their decision initially on your credit history. If you have missed or late payments, or even a lot of recent searches (from multiple finance/mobile/car/home insurance applications), this could be detrimental to your ability to obtain finance, at a competitive rate. If you have not reviewed your credit search before, get it for free (30day trial period) from Credit Expert (see www.atomltd.co.uk for a link). It’s well worth a review and a good insight on how attractive you may, or may not, look to a lender.

Finally, as lenders endeavour to control volumes and distribution, many limit which companies can access their products. Therefore, it is with delight that Platform (The intermediary lender of the Co-Operative Bank PLC) has retained AToM as a specialist mortgage distributor for a number of their products. The lender has a good appetite to lend in a specific arena in the mortgage market and we are privileged to be one of only 3 selected companies in the UK to promote their services and exclusive products.

Discount to leave your current lender?

2011-09-17T10:55:00.000+01:00

The FSA (Financial Services Authority) has published its latest Mortgage Lending Data for the UK covering the second quarter of 2011. The key areas of interest are -
- The proportion of lending for house purchase, which includes buy-to-lets, increased from 54% in Q1 to 59% in Q2,
- Lending to first-time buyers rose from 14% in Q1 to 16% in Q2.
- New lending at fixed rates increased in Q2 to 56%.
- The average rate on new advances rose from 3.65% in Q1 to 3.81% in Q2, which the FSA puts down to the increase in fixed rate lending and a rise in the average fixed rate from 4.24% in Q1 to 4.43% in Q2

Despite the latter, fixed rates are really very competitive in the current climate and well worth a review.

Other figures released this week show that mortgage lending may top £40b which would be £3b more than the last quarterly predicted figures. This is very positive.
However, be aware that we have just seen an increase in the three monthly LIBOR rate (London Interbank Offered Rate) which has increased to 0.90%. This is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London (effectively a measure of confidence between banks). Reports suggest that the European debt crisis is pushing up LIBOR rates as banks start to eye each other with suspicion again. Watch this space!

Finally, I’ve mentioned this before, but its back on the mortgage lending radar. A few dormant lenders are offering customers a discount (some up to 30%) off their mortgage as an encouragement for them to move away. If your current lender is one of these (and is not actively lending) then it’s worth a call to see if you qualify for a discount. Normally, they will give you a deadline in which to complete the transfer of your mortgage but I’m sure it’s a timescale that AToM could meet assuming you meet all of the new lenders criteria requirements!

Another Summer gone....now time for a Financial review!

2011-09-09T09:49:00.000+01:00

The summer holidays are over, the kids are back to school, and you may (or may not) be looking forward to peace and quiet and having some time on your hands. However, as the final few months of the year race towards us, maybe it’s time to start thinking about 2012 and what trials and tribulations this may bring.

Without doubt, the only certainty in the current financial markets is uncertainty. When will bank base rate rise? Who really understands what is happening with house prices? Will 2012 mortgage lending be more or less restrictive than what we have seen throughout 2011, especially as the banks scrape and save(!)to pay back the circa £300bn to the Bank of England in early 2012, advanced to them via the Special Liquidity Scheme? Will the world really end on 21/12/2012? Ok, the latter is a Mayan ancient prophecy and has nothing to do with mortgages....!

All of the others point towards ensuring you review your current financial arrangements and determine that you are on the best deal to see you through the medium to long term. Whether you require the security of fixing your payments for an amount of time, or whether you are a bit of a risk taker and might look at a short to a medium term tracker, or a discounted option, right now, all are available at attractive rates in the mortgage market.

Other things to consider - Do you have a Will? Statistics show that only one in three people has a will in place, with the remainder leaving the state to take over and determine how their assets and belongings are distributed, if they die.
Do you have Life Assurance, Mortgage Payment Protection, Accident Sickness and Unemployment cover, Critical Illness Cover, and more? Any of these products might be beneficial to your personal circumstances or needs.

A quick review with an independent mortgage advisor with permissions for access to whole of market mortgage rates and other associated financial products, could be time very well spent.

Remortgages are creating a stir...

2011-09-02T09:46:00.000+01:00

Despite coming towards the end of the holiday season, there is certainly a lot of mortgage activity happening! AToM have seen a huge increase in enquiries for re-mortgages as customers look to refinance existing deals on to better rates or raise capital to purchase other properties or for home improvements. There’s no better time to review the market as there are some competitive rates currently available.

With rates so low we have also seen a vast increase in customers looking to consolidate debt and add these to their current mortgage. This can sometimes cause issues. If you consolidate unsecured finance in to your mortgage, although your monthly payments may be lower, you may be paying more for your debt over a longer term.

Those whose finances have got out of control tend to look at debt management plans, or Individual Voluntary Arrangements (IVA). Again, the lower monthly payments may help in the short term, but you may well find it hard to gain an approval from a lender to refinance at a later date. Lenders tend to shy away from debt management plans and may not touch anyone who has been in an IVA unless it has been discharged for more than four years. Advice should always be sort before entering in to these types of arrangements.

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.

Whatever you do remember to check what terms and conditions apply and also remember that your home may be repossessed if you do not keep up repayments on your mortgage.

What is Credit Scoring?

2011-08-26T09:45:00.002+01:00

Credit scoring is creating havoc 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. Even your bank, with whom you’ve been a loyal customer to for many years, reports back that you have a low credit score, the computer says “no” and they will not offer you a mortgage.

But you have no credit problems: you have a good income: no debts and you are looking to buy a property or maybe remortgage. This is a dramatically increasing scenario. The world of credit scoring (tick box mentality) has taken over and there’s no arguing with the lender once their technology has made the decisions.
All credit scores include a credit search – this reviews your financial history, payments to utility suppliers, mobile phones, etc . Every financial institution from mobile phone companies to insurance companies will carry out a credit search before offering you their services. This can also be a negative though, as the more credit searches you have, the lower your credit score maybe.

Fear not! There is light at the end of the tunnel. AToM recognised that good clients were being rejected by lenders for no apparent reason and has built up exclusive relationships with a number of lenders who will assess an application manually and seek to offer assistance to such customers. This is our alternative to ‘the computer says no’ and have found an avenue for the right deals working with lenders that not only manually underwrite cases, but who have an appetite to lend. We call this Complex Prime and it does not just include those turned away by their bank for low credit scores. It could be a case scenario that needs a bit of lateral ‘out of the box’ thinking by an underwriter keen to say ‘yes’. This could include cross collateral security for clients who are asset rich: a sympathetic view for those who have trouble in proving ‘real’ income: customers who need guarantors or maybe just need someone to sit down, review the whole picture and advise on the best route to take.

I have always suggested that you speak to an independent mortgage broker with access to whole of market mortgages. Banks may only advise on their product range. Estate Agents ‘in-house’ mortgage advisers may only be able to offer mortgages from a select panel of lenders. Therefore, in order to get best advice, make sure you do your homework, speak to a whole of market mortgage broker who can advise on the most appropriate mortgage in the market to meet your requirements, whether this be with a credit score or just a credit search.

Really exciting mortgage products!

2011-08-19T09:49:00.000+01:00

Some really exciting new mortgage products have been launched over the last week. You could even go as far to say the lenders are pretty confident that rates are not going to be fluctuating any time soon. One article I saw had a spokesperson from moneysupermarket.com suggesting the likelihood of Bank Base Rate being cut by 0.25% is greater now than it has ever been! Great for the consumer! Not so great for getting money moving around the mortgage markets!

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 few weeks. The cost of 5 year fixed monies currently resides around the 1.80% mark. The Lender then provides the product to you, the customer, at rates currently in excess of 3%. In comparison, 2 year fixed rates monies stand around 1.20%.

As a result, we’ve seen a number of long term fixed rates launched over the last few weeks and the one causing great excitement (as I write) is from Coventry for Intermediaries who are offering a 2.99% fixed rate available for 2,3 or 4 years. The lenders fees range from £200 to £1800 and can be added to the loan. The lender also offers one free property valuation and free legal costs on remortgages, so keeping the cost of changing to them at a minimum. Five year fixed rates have also reduced with some lenders offering rates as low as 3.39%.

House price commentary continues to make headlines as rightmove.co.uk report a decrease of 0.1%, despite property transactions increasing by 5% in July. This is in line with Zoopla.co.uk who suggests that two in five, 39% of all properties currently for sale, have had their asking prices reduced at least once since coming on to the market. And Investec Specialist Private Bank reported a 10% increase in high valued properties during the second quarter of 2011, with over 21 thousand properties up for sale valued at £1m and over.

Statistics tell the story

2011-08-05T09:13:00.000+01:00

Of late, the mortgage market has been a very positive place with product choice rapidly on the increase. Lenders have been appearing keen to lend and some even wanting to help over and above the normal call of duty! But (and you knew it was coming!), the statistics are still showing the fragile state of our economy.
August’s creditaction figures state that:
- 331 people every day of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 60 seconds during a working day.
- 1,577 Consumer County Court Judgements (CCJs) were issued every day during Q1 2011 and the average judgement amount was £3,118.
- 220 mortgage possession claims will be issued and 160 mortgage possession orders will be made today (100 properties were repossessed every day during Q1 2011)
- 1,578 people reportedly were made redundant every day during the 3 months to end May 2011
- The UK population is projected to grow by 1,205 people a day over the next decade

However, despite all of these eye opening and, frankly, quite depressing figures, the one that really is quite unbelievable in the current climate is that, in Q1 2011, UK banks and building societies wrote off £1.89bn (£866m of that being credit card debt). This amounts to a write-off of £20.71m a day! Who said lenders have funding issues??
The average house price in the UK in May 2011 for first time buyers stood at £150,685 which is an annual decrease of 2.1%. The typical first-time buyer deposit in May was 20% (£29,874). The average first-time buyer borrowed 3.14 times their income and the average first-time buyer loan was £119,497.
As at the end of March, there were 1.3m buy-to-let mortgages outstanding, worth a total of £152 bn. By value, buy-to-let mortgages accounted for 12.3% of all mortgages.
And finally, as the summer is well underway - Barclays estimate that, over the course of the six week summer holiday period, British holidaymakers will spend a total of £1.47 billion whilst they are abroad (via debit cards and cash withdrawals). However, Barclays say that this figure is broadly the same as that for summer 2010, and suggest that this shows that consumer confidence has not totally bounced back since the end of the recession.
Next week will be more positive, honest! Sometimes, we just need a reality check!

'Near Prime' mortgage options on the increase

2011-07-29T09:56:00.001+01:00

My articles over the recent weeks have concentrated on the apparent ‘rate war’ raging between lenders in the Buy to Let, First Time Buyer and Residential sectors. We should not ignore that the same 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 re-lending in this arena and they will cater for a missed mortgage payment in the last 12 months, historic 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’. But where there is demand, there will always be supply.

Rates start from the early 3%s and go right up to the early 9%s, depending on individual circumstances. Lenders will lend up to 80% of the property value in the main and will cater for both employed and self employed. Some rates are also offered without any redemption penalties.

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.

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.

Product Choice still on the increase!

2011-07-22T09:52:00.000+01:00

Product choice has been on the increase over the past few months. Independent research company, Defaqto, suggest that 8,968 mortgage products were brought to market, or updated between April and June this year.

186 brand new fixed rate mortgages were introduced and there were 4,815 changes to existing fixed rate deals. 80 Tracker rate mortgages were launched and 99 buy to let products were brought to market.

Defaqto also go on to say that, given the speed of change in the mortgage market, lenders are faced with three key challenges:
• Keeping on top of what competitors are doing, and being aware of new launches or product changes as soon as they happen
• Being able to respond quickly to take advantage of opportunities or to counter threats
• Identifying how to make their mortgage product stand out from the competition and how they can cut through the noise of competing products to reach target consumers

Although obvious, I think this hits the nail on the head. In the current climate, lenders are changing rates daily to keep abreast of each other. Some are launching marketing leading products, available for just a week, in order to bolster business volumes. This is good news for you, the consumer! Do keep any eye on AToM’s shop front window in the Carfax (near the bandstand), as we are now highlighting some of the most competitive rates available. Just be wary that rates can be withdrawn at any time!

Moneysupermarket.com have also highlighted that there are good opportunities around for those with a 10% deposit. 312 products are now on offer and this is up 17% compared to June.

Someone asked me this week if it is true that FSA spent more than £500k on internal caterers for staff and visitors last year. They also asked if it was true that this represented an increase of more than 30% on 2009 and, finally, they asked if it was true that the top job in the FSA now pays more than £800k per annum (against the £308k paid to the Governor of The Bank of England). I immediately responded that I could not possibly comment!

Switch and Fix on Buy to Let!

2011-07-15T08:40:00.000+01:00

More movement in the mortgage market this week as yet more lenders have decreased rates and a pricing war seems to be unfolding in the longer term fixed rate offerings. One lender, Accord Mortgages, have reduced their 5 year fixed rate to just 3.84%, available to 75% of the property value and with a lender fee of just £995. They have also reduced their 2 year fixed to 2.79%, also with a £995 fee.

Loans of 90% of the property value and over also seem to have been targeted this week as lenders seek to assist those with small deposits. The rates are reasonably priced, but as more and more lenders re-enter this arena, with sensible lending, the rates will decrease. One example is Kensington Mortgages, funded by Investec, who offer First Time Buyers a 2 year fixed rate at 5.99% with a £699 fee and a free valuation, with a 10% deposit required. For home movers, the rate is 5.79% with a £999 fee. The benefit with Kensington is they do not credit score, compared to many others. Certainly an area to keep an eye on over the coming weeks.

The Buy to Let (BTL) market has also seen huge changes as Natwest cut some rates by 1.4%, Mortgage Trust (part of Paragon group) launch 18 new BTL products, some starting from sub 4% and The Mortgage Works (part of Nationwide) launch a 2.99% tracker and allow ‘switch to fix’ on all of their Buy to Let trackers.

The Switch to Fix option is now available on both Residential and Buy to Let mortgages via certain providers. It is a great product offering allowing you to have the best of both worlds. Take a low base rate tracker and enjoy the Bank of England base rate whilst low, and when you feel you want to fix your monthly payments for a medium to longer term, transfer to a fixed rate with the same lender. Sounds great, but just beware that the lender may charge a product fee for the fixed rate and of course, you will only have access to those fixed rates available at the time of the switch. Terms and conditions apply!

A 5 year fixed at 3.89%! Very nice!

2011-07-08T09:56:00.002+01:00

Shortly after writing and submitting last weeks article, nearly every lender reduced their rates! It must have been something in the water, but this really does now signify a superb time to review the amazing mortgage products on offer and see if you could make savings on your current arrangements. The most noticeable headline product was from Nationwide, who launched a 5 year fixed rate at 3.89% with a product fee of £900 and a £99 booking fee. Available for loans up to 70% of the property value, this product provides exceptional value for those looking to fix their monthly payments for a reasonable amount of time. Nationwide becomes hero of the week! Perhaps, in future articles I should nominate hero and villain of the week. Perhaps not, as that would set me up to be shot at as well I guess!

Late last week, Hinckley and Rugby Building Society launched an exclusive Buy to Let product, only available through AToM. The rate is fixed at 3.99% for 2 years up to a maximum loan to value of 65%. The lender fee of £1,250 (cheap compared to many) is added to the loan within the 65%) and this is a very attractive rate for those landlords looking to fix rates for the next couple of years and maximise their income.

Godiva, the intermediary of Coventry Building Society have launched a superb 2.99% flexible rate for the life of the mortgage to 75% on either purchase or re-mortgage cases. Their booking fee is just £199 and the arrangement fee is £800 and this can be added to the advance. What makes this product even more exciting is that there are no early redemption interest charges at any time. If you are re-mortgaging the lender will cover the cost of a standard valuation (up to fee value £670) and standard legal fees too. The product is also fully flexible and should therefore appeal to many borrowers looking for both a cheap rate and flexible mortgage options.

The only thing to note with these products is that they tend to have a short shelf life, so don't delay! Talk with your independent financial advisor.

The 'mortgage product sale' continues!

2011-06-24T09:27:00.000+01:00

The great ‘mortgage product sale’ has continued over the last week with some lenders reducing rates and one lender offering market leading products for just 7 days! This is the third ‘1 week’ sale we’ve seen in the last month and, in this instance, the products were very competitive short and long term fixed rates. Lenders who have recently reduced rates include Woolwich, Santander, Halifax and Leeds. Most lenders also offer a free valuation (and free legal costs on remortgages) to attract new business.

The government has issued details of the FirstBuy scheme this week. Announced in the budget, the scheme is aimed at assisting First Time Buyers purchase their first home. A 5% deposit is required, a 20% equity loan is funded by the government and house builder and the remaining 75% is funded by a mortgage, from the lenders taking part in the scheme. The loan is then repaid on resale of the property. The suggestion is that this will help over 10,000 first time buyers over the next two years, but let’s see the scheme in action first before commenting on the possible results! First timers are encouraged to register their interest as the first ‘new build’ properties are due to be available from September. More information is available on the Directgov website but, as yet, no questions and answers page!
The Financial Services Authority (FSA) have released Mortgage Lending Data figures revealing that repossessions increased by 17% in the first quarter of 2011. There were 9,613 possessions during the first three months of the year. These figures are collated from around 300 lenders submitting their quarterly mortgage lending activity returns to the FSA. New arrears cases in Q1 were 8% lower than the previous quarter, while the total number of accounts in arrears at the end of Q1 were 2% down on the previous quarter.

Finally, if you are already working in the mortgage industry and fancy a new challenge, AToM is looking to recruit experienced and qualified mortgage professionals. Come in and see us or visit our website to find out more!

Great products on offer - time to Remortgage?

2011-06-16T10:38:00.000+01:00

There has been a lot of movement in the mortgage market recently. Lenders half-year figures are due shortly and it appears that some of them will be slightly short on new business volume targets and as such have had to try and remedy the situation. Two lenders in the last two weeks have issued market leading products but only allowed a 7 day period for applications, before withdrawing the products entirely. These ‘quick sale’ products provide superb deals for the end consumer, mostly at minimal cost, if you know how to access them and can act quickly!

In the main, these products have only been available via Mortgage Brokers and financial intermediaries. Lenders have been re-installing their faith in this distribution medium over the last few months. This is also backed up by recent figures from the Council of Mortgage Lenders showing that brokers accounted for 63% of first-time buyer mortgages, 60% of remortgage loans and 53% of home mover loans in Q1 2011. Whilst some attractive rates are being offered by the high street lenders, there may also be a better option from a lesser known provider. Simply put, the best way to find these is to speak to an independent mortgage brokerage which has access to the ‘whole of market’.

Finally, following on from the above, the sun is shining and the remortgage market is well and truly open – some lenders are actively looking for business. Now is a superb time to review your current mortgage and possibly obtain a great rate with minimal (if any) costs to change your mortgage. 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. If you are in any doubt, speak to a mortgage adviser, get a free mortgage review and you may not miss out on some great offers before they are gone. It’s good to talk..

Know what's right..

2011-06-10T09:59:00.000+01:00

You may have noticed that I have not had a rant for a while, but as it appears that some underhand activity appears to be starting up again I feel obliged to highlight these to both sellers and purchasers alike.

We have had customers approach us recently advising that, when they are ready to make an offer on a property, the Estate Agent has refused to forward the offer to the vendor unless the proposed purchaser obtain their mortgage facilities via the Agents own internal mortgage consultant!

This is not good for so many reasons including the main, it’s wrong! In addition, the vendor wants to sell the property and is not really concerned about which provider arranges the mortgage for their purchaser!

No one is disputing that the proposed purchaser must prove their ability to obtain finance, where applicable. Nor do I argue with the selling Agent’s right to offer their services, as competition is a healthy thing. However, the purchaser must retain the right to decide for themselves who provides their mortgage finance.

The National Association of Estate Agents (NAEA) is the UK's leading professional body for Estate Agents. Most of the independent Agents in Horsham are registered with the body and adhere to the code of conduct - The Property Ombudsman Code of Practice for Residential Sales. Section 6 states:

By law you must not discriminate, or threaten to discriminate, against a prospective buyer of the seller’s property because that person declines to accept that you will (directly or indirectly) provide services to them. Discrimination includes – but is not limited to – the following: - making it a condition that the person wanting to buy the property must use any other service provided by you or anyone else - failing to tell the seller of an offer to buy the property.

Purchasing a home is probably the largest monetary event you will ever incur and you need to be 100% happy in all aspects of the whole transaction. For more information, go to www.naea.co.uk and see if the Agent you are looking to use is subscribing to adhere to these rules and regulations.

Finally, beware, as not all Estate Agents internal mortgage consultants can offer ‘whole of market’ mortgages. Make sure you ask the question! If you’re not being offered ‘whole of market’ and instead are being offered mortgage products from a ‘limited panel of lenders’, you may be missing out on the best product available to you.

Mortgage Business Expo - Positive!

2011-06-02T10:07:00.000+01:00

Last week, I visited the Mortgage Business Expo (MBE) in Manchester. MBE is the mortgage industry’s leading exhibition where lenders, mortgage distributors, solicitors, and the like, advertise their wares to visiting mortgage brokers and intermediaries. The exhibition, which is usually held in London, has recently expanded to Manchester.

As well as exhibition stands, there are also seminars from industry leaders, trade bodies and regulators. What was apparent was the huge number of visitors in attendance and the very buoyant mood fulfilling the event. Although all seem to agree that lending volumes in the mortgage market will still be relatively small for this year, there was some anticipation from a lenders debate/seminar that volumes will increase next year. Especially after the government has recovered the funding (due early 2012) that was lent out to some Banks via the Special Liquidity Scheme.
This could be good news and would be great for first time buyers.

Despite a lot of positive news in this sector of late, a recent survey by the Yorkshire Bank has revealed that 84% of first-time buyers rely on financial support from their parents in order to purchase their first home. The figure has more than doubled since 2005, when just 38% of first-time buyers relied on the ‘bank of mum and dad’. As reported previously, some lenders are now offering mortgages to those with just a 5% deposit. A huge step forward since just 12 months ago and nearly all lenders are now actively looking to help first time buyers get on the property ladder.

Finally, it can be tempting to take up the offer of a ‘payment holiday’ from your lender. This usually allows a period of time (1 – 6 months) in which no mortgage payment is made. Although this can be an attractive offer, usually this will show as ‘no payment made’ on your credit report and more importantly, may extend the term of your mortgage repayment and increase the interest payable. Always make sure you read and understand the small print before taking any action. If in doubt, seek professional advice.

Short Term Lending is on the increase!

2011-05-26T09:59:00.000+01:00

The ‘Short Term Lending’ market has been flourishing recently. Specifically geared at speedily arranged loans, normally with a monthly rate of interest and pre-agreed with an ‘exit’ route, the term ‘Bridging Finance’ is quickly becoming a household name.

With many lenders in the market, offering loans up to 75% of the property value (sometimes higher with additional security offered) these types of loan are calculated and charged on a daily/monthly basis, with some even offering to roll up the interest (no monthly payment). Interest rates start from 0.75% per month and normally are arranged over a period of between 1 to 18 months. Most will carry a lender fee, an assessment fee, some will include early repayment charges and possibly an exit fee. However, for the right scenario, these loans provide a superb funding line.

Ideal scenarios for Bridging Finance include –

1) Refurbishment – allows you to buy and refurbish property quickly
A loan to support with the purchase of a property and then undertake the refurbishment before it is eventually presented to a mortgage company or bank for long term re-mortgage finance, or sold.

2) Purchasing properties at auction
Short Term Loans can be arranged very quickly and can be ideal where there are tight deadlines to meet. A typical 28 day completion from purchasing an auction property is usually easily achievable. A pre-auction valuation is considered a must.

3) Funding under value purchases
A loan based on the actual value of a property and not the purchase price. Thus, when purchasing a property, under value, you may have the ability to borrow up to 90%of the cost of a property (subject to valuation) and then re-finance the transaction using a traditional lender later on.

4) Chain breaking or not sold your property yet
When the chain breaks or you have not sold your property but found one you have fallen in love with, bridging finance may enable you to complete on the purchase before you have sold your existing home.

These are just some examples, there are many others.

However, where there are positives, there can be negatives! Many lenders have set a minimum term for a property to be owned before they will allow a remortgage to occur. This is usually six months. So please ensure this is factored in to any purchase, budget calculations, etc before committing to any Short Term Funding/Bridging Finance. For more information, or to discuss a specific scenario, please contact AToM.

An increasing appetite to lend..

2011-05-20T10:02:00.000+01:00

The ‘Property Today’ box outside AToM ran out of property papers by Monday lunchtime this week! A new record! And with my neighbours selling their property within three weeks of going on sale, I could be accused of being overly positive about public interest in the current property market, despite what the national press are reporting!

One of the mortgage trade magazines (Mortgage Strategy) this week has revealed that they are aware that 11 new lending institutions have applied to the FSA for authorisation to lend, over the past 12 months. Great news and this shows an increasing appetite to lend. However, with the regulators indicating that they will make a decision within 12 months of receiving an application, some of these new lender opportunities could be a way off just yet!

Inflation has risen to 4.5% for April, from 4% in March, state the Office of National Statistics. Easter and the numerous Bank Holidays had a significant impact. Although, this probably won’t have an impact on the Bank of England Base rate with any rise unlikely to occur until November at the earliest, reports an economist for Cebr. Who knows!?

I’ve mentioned this before, but its back on the radar. Many dormant lenders are offering customers a discount of up to 30% off their mortgage to move away. If your current lender is one of these (not actively lending), then it’s worth a call to see if you qualify for a discount. Normally, they will give you a deadline in which to complete the transfer of your mortgage but I’m sure it’s a timescale that AToM could meet!

And finally, remember that financial institutions evaluate your mortgage application based on your credit history. In fact, every financial outlay you have, or have had, may be reported upon. Most institutions will use either Experian or Equifax to review your financial status. If you have too much credit, not enough credit, or missed payments on any credit or utilities (including Gas bills or Mobile phones), you may find that mortgage availability to you could be limited.

A positive for First Time Buyers!

2011-05-12T09:30:00.001+01:00

I start this week’s column with superb news for First Time Buyers who have a 5% deposit! Two lenders have launched 95% mortgages over the last few days. It’s been some time since we’ve seen a true 5% deposit product with an affordable rate of interest (sub 6%) and low arrangement fees. Although the lenders are not actively promoting these products, they are available through certain mortgage intermediaries and will undoubtedly have limited funding availability. So be quick!

This does show a positive attitude from the lenders and an apparent appetite to lend. Although these products may only be ‘testing the water’ and will be extremely difficult to get through, I hope this is the start of the return of some normality to an under funded first time buyer market.

The Halifax House Price index has suggested that house prices dropped by 1.4% in April, compared to March. This is following Nationwide’s suggestion earlier in the month that prices for April had decreased by 0.2%. Despite the two indexes differing in amounts, they do come to the same conclusion that prices had dropped. This puts pressure on the Bank of England to keep the base rate on hold, which, in turn, is good news for those on tracker rate mortgages.

The number of mortgage products available in the market rose by 13% in April up to 11,748 according to an analysis by Mortgage Brain. This is nearly 7,000 more products than at the same time last year. Fixed rate product offerings rose by 16%, cementing their position as the most popular product type.

Whatever your particular need, do talk to an independent mortgage advisor who has access to all lenders in the marketplace rather than a limited panel or single provider.

Finally, AToM has been heavily involved in a local initiative called Set4Success which is due to launch shortly. Working in partnership with Horsham District Council, Horsham Rotary Club, Horsham Schools and local businesses, Set4Success will assist Horsham District’s young sportspeople with funding for training and competing. To find out more or to see how you can get involved, visit www.set4success.org

Lenders products available via Intermediaries

2011-05-05T10:33:00.000+01:00

There has been an influx of lenders joining the intermediary mortgage market recently. Having previously been solely ‘business to consumer’, these lenders are now establishing that there is value in offering their products via a wider audience and gaining a better exposure in a large, but somewhat strained, intermediary marketplace.

Although these lenders are not household names, they do have some superb product offerings and by distributing these products via intermediaries, the consumer has access to products they may not have been aware of otherwise.

Some lenders have chosen limited, or exclusive, distribution. For example, the Chorley Building Society, based in the north, has chosen AToM to exclusively distribute a product that caters for borrowing up to 85% of the property value right up to a maximum loan size of £1m. This is a rare opportunity as not many lenders will lend that high in the current climate. Others, including Precise Mortgages are choosing to solely distribute their products (aimed at those who have minor credit issues) through the intermediary sector, and AToM is one of their limited approved distributors! Mortgage Trust recently re-launched into the Buy to Let market, solely through intermediaries.

Metro Bank, Post Office and the oncoming launch of Tesco mortgages later in the year are likely to remain customer facing only. Which is fine for the right type of consumer. However, like most banks and building societies, you will only receive advice on their own products and not any others available in the market place. So although you may get a great deal on ‘club card’ points, there’s really no substitute for advice and recommendation from someone who can review the whole of market and cater to your exact requirements. Don’t you just wish they would stick to what they are good at rather than trying to take over the whole world?!

Finally, I am delighted to announce that AToM has been voted ‘Best Mortgage Packager’ for a second year running in the national MyIntroducer.com awards 2011. This is a great achievement and is in recognition of the hard working team we have at AToM.

Know the mortgage process

2011-04-28T10:01:00.000+01:00

The Easter break always tends to stifle the supply of any deeply interesting mortgage news, so this week I thought I would recap on the mortgage process.

The mortgage process, regardless of whether you are a first time buyer, home mover or simply re-mortgaging, will be roughly the same. On any new purchase, the selling agent will seek to agree a number of deadlines with you, including the arrangement of mortgage finance. At this point you should make sure that you speak to an independent mortgage brokerage who will assess your overall financial position and discuss your mortgage requirements with you. They are required by law to provide you with an Initial Disclosure Document detailing who they are; who regulates them; their scope of permissions; whether they are restricted to a small lender panel or ‘whole of market’; any fees and costs involved including any charged for advice or consultation. This document also advises how to complain if you are unhappy (now or in the future) with the advice provided.

A good advisor will complete a financial fact find ensuring that they fully ‘know and understand their client’s financial position and requirements.’ This is necessary before any ‘advice or recommendation’ can be provided. Be patient as this process can be lengthy. It is in your best interests however, ensuring that you receive the best possible advice designed to meet your personal mortgage needs and requirements.

Once you’ve agreed the best mortgage for you, a decision in principle (DIP) will be completed, usually on-line with the chosen lender. This involves brief personal details, income disclosure and a credit search. Be wary here as too many credit searches will have a negative effect on your credit score. Ensure that the product and lender are right for you before a DIP is conducted.

DIP decisions are normally instantaneous. Assuming success, it is then upgraded to full application. Payment for valuation is made (sometimes free) and the valuer confirms to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more detailed in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost. That said, for older properties it should be considered a worthwhile investment as it could save you thousands in the long run.

The chosen lender will require information on income, identity, proof of residency as part of their due diligence requirements. Assuming no issues arise, a mortgage offer should be issued. Then, subject to the solicitor’s conveyancing process, you are now on the road to completion and, if it is a purchase, you should soon pick up the keys to your new home!

Enjoy the long weekend!

It's good to talk!

2011-04-21T09:49:00.000+01:00

We’ve been bombarded with visitors over the last few days as hoards of children embark on the Great Easter Bunny hunt, organised by the Rotary Club of Horsham. It’s wonderful to see so many people taking part and obviously its superb fun for the children as they are spoilt with chocolate, if they find the bunny and carrot! We’ve also had some great enquiries from those who have been dragged, I mean accompany, the children on their tour of the participating shops! This event has certainly been worthwhile for all involved and created a great community spirit.

The Buy to Let market has welcomed back an old name - Mortgage Trust has relaunched this week with some great mortgage rates and their products are only available via mortgage brokers/intermediaries. Mortgage Trust were a major player in the Buy to Let market some years ago and their new product range, some with free valuation and free legal costs, give the impression they want to achieve that status once again.

The “fix or track” debate goes on! With inflation down to 4%, many pundits are now predicting that the Bank of England base rate will not change for the remainder of the year. Therefore, a good low base rate tracker mortgage over a short term could be beneficial. However, there are also some great fixed rates on offer too. Who knows what is right and what is wrong!? Most agree that rates will increase. It’s a case of when and whether or not you are prepared to gamble your biggest monthly expenditure on a ‘could be this month’, ‘could be next month’ scenario. You will almost definitely find that by the time the Bank Base rate does start to rise, the cost of fixed rate monies will have already risen.

It’s good to talk, and we don’t charge for conversations! If you are worried out the cost of your mortgage or especially what would happen to your individual monthly payments should rates increase, please do come in and see us. On an average £100,000mortgage, a 1% interest rate rise could cost an extra £83 per month. AToM is totally independent and offers advice on mortgages for the whole market.

Wishing you and your families a very Happy Easter!

17% of UK adults failed to pay one bill in last 12 months.

2011-04-14T14:32:00.000+01:00

The sun is shining, kids have broken up for Easter, inflation is down to 4%, The Bank of England base rate remains at 0.5% for the 25th consecutive month and the Council of Mortgage Lenders confirm that lending for house purchases climbed by 8% in February. Perhaps I should end my column now, on a positive!

The worrying trend seems to be the public perception of what will happen when, not if, bank base rate rises. Moneysupermarket.com has established that an alarming 17% of people surveyed feel they will be unable to afford their mortgage payments when interest rates do rise, while 6% have already put their home on the market.

According to the UK Payments Council, at the end of 2010 there were an estimated 63m credit and charge cards in the UK compared with around 62m people in the country. Total credit card debt in February 2011 was £58.5bn and the average interest rate on credit card lending is currently 18.84%, which is 18.34% above bank base rate (0.5%)!

Creditaction suggest 1 in 10 UK adults are permanently overdrawn. One third of people have moved into the red during the last 12 months and 17% of UK adults (almost 8 million people nationwide) failed to pay at least one bill over the last year, potentially putting their credit profiles at risk.

We enjoyed the company of a work experience student from a local school last week. A well educated young man. Although he knew about credit and debit cards, he had little knowledge (as is the case with many of his generation) what would happen if he missed a payment later on in life to any credit agency or even a mobile phone provider. It was a real eye opener for him!

Finally, if you have not yet nominated a local business/individual in the WSCT Business Awards 2011, please make sure you do! All businesses, large or small, need a ‘pat on the back’ and recognition for their hard work and efforts. The closing date for nominations is Friday (15th April), so be quick and vote wisely! As an aside, did you know, I have been writing this column, every week, since November 2008...?!

Lenders are restricting the Interest Only option.

2011-04-08T09:31:00.000+01:00

There has been much hype recently regarding Interest Only versus Capital and Interest (Repayment) mortgages. With an Interest Only mortgage, you only pay interest, so, at the end of your chosen term, you still owe the lender the same amount as when you began. Normally with this method, it is recommended that you contribute to a saving or investment vehicle to generate funds to repay the mortgage. This is generally optional but the Financial Services Authority (FSA) are paying great attention to this as they do not want to see customers with large debts remaining later in life.

With a Repayment mortgage, you pay both capital and interest each month. Initially, this is more expensive, but it does mean that you pay back the full loan by the end of the term, assuming you meet the lenders required payments on time.

We are seeing more and more lenders tighten their requirements on Interest Only mortgages. Nationwide and Lloyds Banking Group (including Halifax) have recently limited the maximum loan available on an Interest Only option to 75% of the property value. Above this level, Repayment is mandatory.

Some lenders charge higher interest rates if you take an Interest Only mortgage and many are trying to persuade customers to switch from this method to Repayment. Some no longer offer Interest Only at all!

Why the recent attention to these repayment options? Simply, because many borrowers who have stepped onto the property ladder chose the cheaper option promising to review their payment plans at a later date. The problem is, the ‘later date’ never seems to arrive! As we all know, people generally live to their means. Many borrowers on this scheme have no savings or viable plans to pay back the debt and this is worrying!

However, Interest Only mortgages remain practical for certain professions - people entitled to annual bonuses - the fluctuating income of self employed - employments where lump sums are received after a number of years in service are some examples.

Some lenders offer a part and part option, enabling the customer to pay some of their loan on Repayment and some on Interest Only. This serves to help many borrowers and keeps monthly payments at a lower level yet the underlying issue still remains. At the end of the mortgage term, the Interest Only element still needs to be repaid! Seek professional advice.

If you can, overpay!

2011-04-01T09:58:00.000+01:00

For those lucky enough to be on a very low bank base rate tracker mortgage, you may have enjoyed a couple of ‘comfortable’ years with the bank base rate being at an all time low. However, are you one of the few on tracker rate mortgages who have taken advantage and overpaid on their monthly payments? Barclays recently carried out a survey of over 1,000 borrowers and found that only 10% were currently overpaying and 6% are planning to start overpaying this year. For those who have not yet started, this could be a missed opportunity on shaving a number of years from the term of the loan, or reducing the interest paid each month, even by just overpaying small amounts.

The Buy to Let market (investment properties) looks set to be the most competitive sector of the mortgage market as further lenders signal their intent to offer products to this area. Metro Bank, Santander and Yorkshire Building Society are just a few that have signalled their interest for later in the year. Skipton Building Society has also this week re-launched in to the Buy to Let marketplace. As First Time Buyers continue to struggle to get on the property ladder (the government First Buy Scheme may assist a few), the rental market is expected to continue its rapid growth. Interest rates for investment properties have tended to be slightly higher with larger lender fees charged for arranging these types of mortgages. However, with more lenders already competing, both rates and fees are already starting to reduce and will fall further as the market becomes crowded.

Finally, larger loan availability is also on the return. Having been somewhat restricted over the last few years, obtaining loans of £1m + have been slightly more difficult to achieve. This is set to change as Nationwide have recently increased their maximum loan to £2m at 75% of the property value and 70% above £2m on an individual case by case basis. Bank of China will also consider loans of up to £10m for the right applicants. All steps in the right direction and one might even start to get slightly excited at the increasingly positive nature of the mortgage news circulating the market of late!

Complex Mortgages are not frowned upon these days!

2011-03-25T14:01:00.001Z

Some while ago, I mentioned that AToM had re-launched its ‘Complex Prime’ proposition. Complex Prime looks at mortgage applications which, for whatever reason, do not fit the normal high street credit scoring/tick box mentality or need something of a more complex underwriting nature.

A recent example we came across was a young chap at the age of 76. Obviously well into retirement and enjoying a pension of around £75k per annum. Very nice! He wanted to move properties and needed a loan of around £150k to purchase a property valued at £700k. Because of his age many lenders had turned him away. And because he, according to many lenders, had no ‘earned’ income, found most doors shut. However, we were able to offer a mortgage over a 10 year term on a Capital Repayment basis, on the understanding that his wife would receive 60% of his pension income, should the unfortunate happen to the husband. The rates were competitive and fees attractive.

Another example was a gentleman looking to re-mortgage a holiday home that was only allowed to be let out for 11 months of the year. Many lenders prefer second properties to be let out on an Assured Shorthold Tenancy agreement, usually contracted for 6 months at a time and renewable. However, with holiday lets, the agreements tend to be weekly. So, again, the lenders available were restricted, but we managed to place with a small building society offering attractive rates and fees.

Other examples include applicants with no credit: too much credit: a desire to pay up front or add additional security in the form of another property increasing their ability to borrow more.

These are just some of the benefits of using an independent mortgage brokerage and especially if they are ‘whole of market’, and who can deal with any lender and are not restricted to a panel of lenders.

AToM now has seven lenders on its Complex Prime panel already looking exclusively at these scenarios, with other lenders shortly to join. These lenders may not be household names, but you’ll probably find they are extremely helpful and will look at most scenarios, manually, with no credit scoring and have an appetite to lend!

....then we had a budget!

2011-03-18T10:21:00.000Z

Outside AToM HQ, in the Carfax, we have a distribution box for the WSCT ‘Property Today’ pages. These have been taken in huge numbers over the last few weeks, which give us the impression that people are looking for properties or are monitoring house prices. It’s also been a very busy few weeks in the mortgage market, with rates fluctuating and lenders appearing to be actively lending. Many financial institutions recorded a great month for new business in February, for both purchase and remortgage applications.

Any perceived mini-recovery could possibly stall though, as we approach the forthcoming budget from Chancellor George Osborne.

The pundits have been hard at work trying to predict what the outcome will be and it is a fact that, like it or not, the Government is still faced with a huge task in getting the country back on track financially.

Figures from creditaction for March report:

- £120,660,000 is the interest the Government has to pay each day on the UK’s net debt of £2,244.2bn (which includes financial interventions).
- 212 mortgage possession claims will be issued and 163 mortgage possession orders will be made today
- 337 people every day of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 59 seconds during a working day.
- 1,603 Consumer County Court Judgements (CCJ's) were issued every day during Q4 2010 and the average judgement amount was £3,245.

Mortgage lenders took 7,900 properties into possession in Q4 2010 according to the Council of Mortgage Lenders. This equates to 87 properties being repossessed every day. In terms of payment difficulties, 169,600 mortgages ended Q4 2010 with arrears equivalent to at least 2.5% of the outstanding mortgage balance.

There are more credit cards in the UK than people according to the UK Payments Council.

The typical first-time buyer deposit in December was 23% (£35,020).

Yes, some of these figures make for grim reading, but they give an idea of the pressures the Government has to deal with in the upcoming budget and balancing the already fragile economy with the impact they will present.

Why use a Mortgage Broker?

2011-03-11T10:14:00.000Z

There are many mortgage lenders actively looking to increase their volume business by offering superb products and rates, but there’s also some who have good PR companies who portray a positive lending attitude.

You would think in the current climates, with mortgage volumes reasonably low, that new applications submitted to lenders would fly through and come to a quick and easy completion. Unfortunately, in some cases, it’s not so.

These are the daily trials and tribulations of dealing with some major mortgage lenders who simply do not appear to want to lend.

We’ve heard many stories recently from customers who have initially gone direct to a high street lender, but then wished they had not! Should your application meet all the requirements and the lender has no further questions or requirements, then a mortgage offer should be quickly produced.

However, if, for whatever reason, a lenders underwriter decides to request one further bit of information, or needs additional clarification, then the fun begins.

You may receive a call or an automated email detailing additional requirements and once you’ve provided the information, you enter a service standard queue (usually 48 hours) and assuming of course that the information returned does not get lost and is directed to the right department! Should the lenders underwriter decide they are happy with the additional information, your application may proceed. But, the new information provided could provoke further questions or requirements, and so the cycle begins again!

They say buying a house is the second most stressful event in your life after having children. I’d say that it’s nearly on level par in the current market conditions.

What this all demonstrates is the value of dealing with a specialist independent mortgage brokerage as we will take this painful flack on your behalf. In most cases, we will have a relationship with the lender, understand their requirements and ensure all the correct information is submitted from day one. There really is no better time to utilise the expertise and staffing levels we can provide for you. Let us take the strain on your behalf to push the mortgage through to an early completion. And, if a lender does decline to proceed, we can quickly try to find an alternative lender to suit your requirements, with the minimal of fuss.

Fantastic February!

2011-03-04T09:54:00.000Z

The Bank of England’s January lending figures report that the number of remortgages rose to 33,498. This is nearly 10% above the six month average. These statistics suggest an increasing wariness of future mortgage rates and in addition, the fact that fixed rate mortgage interest rates were relatively low in January.
Mortgages for property purchases also increased, to 45,723, slightly below the six month average of 46,686. Total lending to individuals increased by £1.5bn.

I suspect these figures to be vastly different for February as some lenders increased fixed rates due to the fluctuation in the money markets and many customers will have raced to secure low rates before they were withdrawn.

Nationwide has reported that house prices increased by 0.3% in February with the average UK house price now standing at £161k. This is 0.1% lower than this time last year. The lack of first time buyers and easily accessible mortgages are still major factors with regards to prices and activity in the housing market.

AToM had a fantastic February for new business received. Applications were up 68% compared to February 2010 and resulted in our best month since June 2009 for new business. This was mainly due to our top four lenders – GE Money, who offer mortgages to the employed with some allowance for previous credit problems. Bank of China, who had a market leading lifetime tracker rate residential mortgage (they also cater for Buy to Lets). Platform (part of the Co-operative Bank Plc) who are actively lending in the Buy to Let market, with small arrangement fees. And AToM’s “Complex Prime”, a number of funders who look to assist those who have been declined by the high street lenders credit scoring systems for no apparent reason. This could include not being on the voters role, having to little (or too much) credit, securing a charge on more than one property, lending into retirement and many other reasons. Whatever your mortgage requirements, speak to an independent mortgage adviser!

Fixed rates are on the up!

2011-02-25T09:56:00.000Z

The mortgage market has been very volatile over the last few days and the cost of fixed rate monies (SWAP Rates) have increased rapidly. This has meant many lenders have withdrawn products with little notice and subsequently increased their rates. The most notable being Nationwide who increased fixed rates by 0.30%. Others are expected to follow suit.

So it begs the question, if fixed rates are on the increase and inflation is on its way to an estimated 5% (was 4% in January), when will the Bank of England increase its base rate? The pressure is certainly on to contain inflation and avoid larger and more damaging rate rises in the future. The pundits had previously predicted a rise in May; however, this could now be bought forward. One member of the MPC (monetary policy committee) has even suggested this week that there should be an immediate small rise. Keep an eye on the press, but if you’re looking to change your mortgage onto a fixed rate, don’t delay!

The Financial Services Authority (FSA) has been flexing their muscles with lenders recently. DB Mortgages, part of the Deutsche Bank Group have been fined £840k for irresponsible lending practices and unfair treatment of those who fell in to arrears. DB Mortgages specialised in the sub prime arena offering mortgages to customers who had CCJ's, Defaults, etc. It is understood that £1.5m has been put aside for customers redress. Despite the sub prime lender crash of 2006/7 (lenders effectively withdrew entirely from assisting those with financial issues), there are lenders today actively lending in this arena assisting those with credit impairments (albeit with stricter lending regulations than in 2007!).

Finally, if you are a Halifax mortgage holder, and took a mortgage between September 2004 and September 2007 via their Bank of Scotland brand, you might be interested to note that Lloyds Banking Group, their parent company, is making a provision of £500m for goodwill payments in relation to an agreement with the FSA over wording that could have caused confusion in mortgage offers sent out during this period. I won’t go in to the specific details but suffice to say you don’t need to do anything as, from April, they will be contacting over 600,000 customers who may have been affected.

Still tough for First Time Buyers...or is it?

2011-02-18T10:25:00.000Z

First Time Buyers are hitting the press again, with reports from rightmove.co.uk suggesting that first timers now account for less than a quarter of all potential house purchases in the UK.

However, lenders are beginning to take on this problem. Many are launching products specifically aimed at First Time Buyers and some of the major builders are also looking at ways to get people on to the property ladder. Even the government has recognised that there is an issue and is holding talks with Lenders, Builders and other industry leaders this week to try and find a solution. Although, with the recent major financial cuts across the country, one wonders how this area might be financially supported.

First Time Buyers will usually require a minimum 10% deposit. Some lenders will allow a 5% builders deposit, but this must be confirmed as a gift and non repayable. Some lenders will allow the deposit to come as a gift from the Bank of Mum and Dad, again as long as it is confirmed this is non repayable.

Rates have reduced lately, with the likes of Santander, NatWest, and a few others lowering interest rates on their 90% products in a bid to assist. However, you are still looking circa 6% interest rates for a fixed rate and most lenders now require the mortgage repayment method to be capital and interest, rather than just interest only for those borrowing more than 75% of the property value.

Some lenders will allow a loan of up to 95% of the property value, if parents or another immediate family member will act as guarantor. Those guaranteeing, in the main, will need to show evidence of affordability for both their current residential mortgage and the one they are intending to guarantor.

Even some Building Societies are offering 90% loans, with possibly higher levels to existing long term account holders. Customers, in the main, need to be located near to the branch of the lender. Variable and tracker rates are also being offered (circa 4.5%) depending on the lender. Income multiples tend to be slightly restrictive though with some offering 2.50 to 3 x joint income, or up to 3.75 x single income. However, they are showing a willingness to assist First Time Buyers and in the current market, that can only be a good thing.

Buy to Let increased to 85% LTV

2011-02-11T10:03:00.000Z

Kensington mortgages have launched an 85% loan to value product for Buy to Lets (investment properties for letting out). They will consider First Time Buyers looking to become first time landlords and now also allow applications on new build flats. Good niches and a bold statement of intent to lend! They are currently the only lender requiring a 15% deposit for Buy to Lets, but I expect others will follow suit shortly.

I was astounded to see recent figures from creditaction reporting that Banks and Building Societies had written off £9.9bn of loans to individuals over the last 12 months (end of Q3 2010). That’s nearly £20m a day! In addition, the Government is paying a jaw dropping £120m a day in interest alone on the UK’s net debt (£889bn excluding financial interventions). These are scary figures indeed. But to add to the reality, individuals currently owe more than the entire country has produced during the last four quarters. It’s therefore no wonder that the lending market is in the state it’s in and provides some understanding in to the pressures facing the Government and Bank of England when considering rate changes.

As I write this article a few days before the paper is printed, I am unable to comment on this week’s Monetary Policy Committee (MPC) decision on whether or not to increase the Bank Base Rate. However, out of the nine MPC members for January, two voted for an increase. This is an increase on previous months and we may not be too far away from seeing a rate increase. Some estimates suggest May.

Finally, there has been speculation in the financial press lately regarding the Mortgage Market Review (MMR) which is an FSA initiative to make, in their words, the mortgage market more professional and transparent. Much of this, together with another of their initiatives is the Regulatory Distribution Review (RDR) part of which is designed to encourage our sector towards a fee charging route in all financial advice areas whereas, today, most income for advisors is from introductory fees incorporated in the product sold, paid by the providing financial institution. Watch this space in months to come but it seems fair in many ways that, given the professional qualifications mortgage advisors now need to obtain to give advice, a fee reward is not unreasonable for the amount of work and research undertaken in advising and recommending a mortgage product.

New mortgage business up 83%

2011-02-04T10:48:00.000Z

The Bank of England has reported that mortgage lending in December dropped to the lowest level in two years and Nationwide has reported house prices dropped by 0.1% in January, the first fall recorded by the lender since Aug 2009. Neither of these articles is worth further comment though as there are many positives to concentrate on!

The Buy to Let market was given another boost this week with Platform (the intermediary lending arm of the Co-operative Bank) revamping rates and launching new products. If you’re looking to purchase a property for investment purposes, this lender is well worth a look. Tracker rates start from 3.89% (APR 5%) and only have a £995 arrangement fee (some lenders charge up to 3.5% of the loan amount). These products also have free legal costs for those looking at re-mortgaging existing Buy to Let properties. AToM is one of a small number of distribution partners in the UK chosen by this lender to offer these products.

On the Residential side, one of our local Business Development Managers, from a major high street lender informed us that their remortgage business had increased 7% over the last week and now accounted for 46% of their business. At the same time, those who applied for mortgages requesting a fixed rate product were up 9% on previous weeks.

And finally, January’s new mortgage business received at AToM amassed to an 83% increase, compared to the same period in 2010. Many customers are fixing their rates in anticipation of a possible bank base rate rise, but some are also taking advantage of the attractive bank base rate trackers currently available. Others have more complex scenarios that they needed assistance with, which the high street lenders would not normally entertain. Despite what you read in the national press, we are seeing an appetite from lenders to lend, an increasing willingness to be helpful and, most importantly, approval of applications. Long may that continue!

What about a secured loan?

2011-01-28T10:50:00.000Z

With all the recent headlines appearing in the national press on mortgage rates, are you looking to remortgage? Most lenders look to attract new customers, but are less likely to offer attractive options to stay with 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. So don’t feel loyal, if a better option is with another lender; think of number one!

However, we’re still stuck with the fact that many lenders do not want to lend in huge volumes. Therefore, you may find that actually getting a mortgage becomes the main obstacle and you may have to stay with your current lender anyway!

The other option, if you’re looking to raise cash for home improvements, to consolidate debt (although not encouraged) or for another legal purpose, is a secured loan.

A secured loan is a 2nd, or subsequent charge, designed for homeowners which allows the equity in their property to be used as security. Loans are usually between £3.5k and £100k. There are also no 'up-front' fees to find.

We tend to find that many 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.

The secured loan is usually repaid over a shorter term than a mortgage, circa 3-7 years, but the term can be longer, although this will increase the amount of interest repaid. Rates vary depending on the customer’s circumstances and current level of borrowings.

As with all finance, seek advice and think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other loan secured on it!

Under pressure...!

2011-01-21T10:08:00.000Z

SWAP rates (mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have risen sharply over the last week. As a result, some lenders have withdrawn fixed rates and launched new products with higher interest rates. Many are predicting that whilst tracker rates (following the Bank of England Base Rate, BBR) will remain pretty low, fixed rate products, once raised, will not come back down. This is despite the BBR remaining at 0.50% for yet another month. The pressure of rising inflation (3.7% in December) is said to be worrying the money markets and pushing up SWAP rates. In addition, rising inflation puts pressure on to the Bank of England to raise interest rates to curb spending. Are we set for a BBR increase in February? Should you fix before it’s too late?

We are three weeks in to the New Year and that can only mean one thing - the arrival of bank statements, credit card bills, store card bills, and so on, showing the Christmas spends. Depressing, I know! But I can’t stress how important it is to make payments, even if it’s the minimum required. If you miss a payment to any financial institution, this will affect your credit score and could affect your ability to obtain a mortgage, whether you are a first time buyer, home mover or looking to remortgage.

Specialist lenders will look at those with missed payments (to unsecured credit), defaults, and/or CCJs, however these lenders price for risk and as such their interest rates are somewhat higher than those offered on the high street.

These lenders tend not to be household names and carry out a manual underwriting approach, rather than a credit scoring decision. Deposit requirements are a minimum of 20% depending on the customer’s credit issues. The higher the financial issues, the higher the deposit required and the higher the interest rate offered. Rates range from early 5%s and go right up to and over 10%. Each application is assessed on its own merits and individual circumstances may differ. For further information and detailed terms and conditions, speak to your local independent mortgage brokers!

Lenders are showing an appetite to lend!

2011-01-14T10:23:00.000Z

2011 has started with a bang! The Bank of China have reduced their Residential Life Time Tracker rate to just 1.80% above the Bank of England Base Rate. Currently, the pay rate is 2.30% (APR 2.50%). This is available to home movers, those re-mortgaging and also to First Time Buyers, up to a maximum loan of 80% of the property value. A very good rate and a positive step forward from this lender.

BM Solutions, part of the Lloyds Banking Group, have launched some fixed rate Buy to Let mortgages with arrangement fees of just 1.5%. Compared to some in the market, the fees alone might save up to 2% in costs! Many believe the Buy to Let / Investment property market will boom in 2011.

However, with regards to fixed rates, we’ve seen some lenders already increasing their product rate offerings. Whether ‘to fix or not to fix’ your mortgage rate, will be an ongoing debate throughout 2011.

Lenders are showing an appetite to lend. One lender on the AToM panel has allocated a tranche of £10m in funding to be distributed in January. This is great news for the market and in addition, this lender does not credit score. So if a high street lender has declined your application due to a low credit score, or because you don’t fit their particular requirements, you may be exactly the type of customer our lender is looking for. However, please note that they are not looking for those who have had previous credit issues.

Finally, First Time Buyers are likely to be in need of most support throughout 2011. So far, there have been some small glimmers of hope with a couple of lenders revamping their 90% loan to value products, so requiring just a 10% deposit but this is still not enough! The interest rates are relatively high and as such the monthly payments on this type of mortgage won’t be attractive to many prospective borrowers. Those with a higher deposit will attract a lower interest rate. But in current climates, that tends to be difficult to achieve. More still needs to be done to help first timers get onto the property ladder and I hope that lenders take action to assist. Sooner, rather than later.

A positive start to 2011!

2011-01-07T09:26:00.001Z

A very Happy New Year to you! This is my first day back in the office following the festive period and already I’m struggling to keep up with the number of product changes from various lenders. They are positive changes though!

The Bank of China have reduced their Residential Life Time Tracker rate to just 1.80% above the Bank of England Base Rate. Currently, the pay rate is 2.30% (APR 2.50%). This is available to home movers, those re-mortgaging and also to First Time Buyers, up to a maximum loan of 80% of the property value.

The Coventry has focused on Buy to Lets. With rates from 4.25% and zero arrangement fees, they are well worth a look if you are considering taking a step into the Buy to Let arena in 2011. Many believe this will be a buoyant area generally as First Time Buyers continue to struggle to get onto the property ladder and surrender to renting instead.

The Bank of England has released lending figures for November, stating that re-mortgaging levels increased by some £400m compared to that of October. Approvals stood at 34,262 compared to 30,429 in October with a six month average 28,210. Purchase approvals amounted to 48,019, higher than Octobers figures, but below the six month average of 48,145.

And finally... if there is one New Year resolution to maintain, resulting from the dire year that was 2010, it is to be on top of your finances! By this, I don’t just mean mortgages, although as this is inevitably your biggest debt it should be a priority! Do you have enough life cover? Have you made financial provision to cater for an unfortunate redundancy? Have you written a will? These are all matters that may seem small in isolation but which could prove to be very worthwhile at a later date.

Let’s hope that 2011 see's the beginning of a recovery in the financial world. Last year was depressing financially and this year will be tough too but there are some good signs that the property market, at least, will hold its own. Let’s hope so!

Goodbye 2010.....and 2011 - 'bring it on' !

2010-12-23T10:03:00.001Z

For my last column of the year, I thought I’d start with the obligatory round up of 2010!

It’s been another year of highs and lows, with many businesses struggling to survive and some major players leaving the market. The beginning of 2010 saw mortgage rates rise, despite a low Bank of England Base Rate (BBR). Yet, a reversal in the second half of the year saw lender rates drop as they chased volume business. Abbey, Bradford & Bingley, Alliance & Leicester, etc re-branded and become Santander. Metro Bank was the first new high street Bank launch in 100 years! A coalition government now steers us on the road to recovery (!) and the Financial Services Authority is to be disbanded. In reality, it is a name change (Consumer Protection and Markets Authority) with a new owner and location (BofE)! I won’t mention the world cup! And, despite consistent ‘mortgage approvals in decline’ stories, there has been increased mortgage activity and lender appetite in recent months.

So what for 2011? There are predicted signs of growth with total mortgage lending estimated to be approaching £140bn, compared to the £136bn estimated for 2010. Tesco Bank are due to launch. House prices are predicted to dip slightly. Who can guess what will happen to BBR although, at a recent conference, a well respected commentator suggested that BBR would not move until 2012 at the earliest. Another major question revolves around interest only mortgages, with many lenders removing this option at certain levels, are its days numbered? Don’t forget the VAT increase due in January. The repayment by Banks of the Specialist Liquidity Scheme, a mere £200bn+, is due towards the end of 2011 and early 2012. We expect to see this as a lender priority late into the year.

So, the reality is another year of highs, lows and a small mix of uncertainty for us all. Let’s also hope someone rushes to help first time buyers…

Thank you for reading my column throughout 2010. It has been a hard task trying to deliver a positive spin in a negative market. There are no plus points for ignoring the truth! 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, your family and friends a very Merry Christmas and a relaxing New Year. We look forward to being of assistance to you during 2011.

Sort your finances today, not 'tomorrow'!

2010-12-17T09:16:00.000Z

A time for giving, a time for receiving and a time to keep a close eye on your finances! I know, boring and Bah Humbug! However, a little bit of your time, and sifting through old paperwork over the Festive period, could save you money in the New Year!

It always surprises me how few people actually know what rate they are on, the type of mortgage, i.e., fixed rate, tracker rate, etc, and whether they are paying interest only, or capital repayment. Unsurprisingly, almost everyone knows what it costs per month to the nearest penny! They will haggle for a £10 discount on a new washing machine whilst letting ‘sleeping dogs lay’ when it comes to their mortgage!

It’s very easy when the promotional rate period comes to an end to keep your mortgage with the same lender, ‘brush it under the carpet’, and deal with it ‘tomorrow’. But, we all know tomorrow never comes. A review of what’s on offer from other Lenders could give you a nice start for 2011, especially if you’re currently on a Standard Variable Rate, or equivalent.

Many Lenders are offering superb remortgage opportunities with minimal costs to change, including free standard valuations and legal costs. Rates are competitively low and mortgage product choice is at it’s highest for some time.

With the Festivities just around the corner, there really is no better time to think about finances. Available credit is in somewhat short supply and the price people will be prepared to spend on Christmas this year may well receive much more thought than in previous times.

It could go two ways - firstly, people could put their cares to one side, forget the 2010 trials and tribulations and flex the credit cards with any spends being forgotten until later. Or secondly, the purse strings will be drawn and funds will be tightly managed.

The important thing is to remember to only spend what you can afford and, if you are a mortgage holder, look to see what savings you can make (it could be hundreds per month) to prepare for a better year in 2011.

A good finish to 2010!

2010-12-10T12:58:00.000Z

The end of the year is turning out to be quite a positive affair! AToM towers enjoyed a stunning October superseded by a better November for new business applications, as consumers reviewed their finances and looked to secure deals in time for the Christmas break. Many wanting to fix their mortgage payments for 2011, and beyond. Surprisingly, new purchase applications nearly matched the remortgages in number. Although the actual volume of loan amounts decreased by nearly £2m!

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 upfront 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.

Finally, the FSA (Financial Services Authority) has deferred implementing its approved persons' regime until 2012/13. As part of the Mortgage Market Review (MMR), the FSA announced that it would be extending the approved persons’ regime to include anyone who advises on or sells mortgages (mortgage advisers/brokers and Bank staff). The FSA says it remains committed to making these changes to the approved persons’ regime, but as part of its ongoing reprioritisation of work, it is deferring introduction of the changes from 2010/11 to 2012/13.

The MMR may be a controversial proposition, but the approved persons regime is one which most people agree could genuinely benefit the consumer and will be a positive step towards a better industry. The cynics question might be to ask, who’s not ready for these changes? The FSA internally, or the Banks in being able to train their staff in time?

Mortgage approvals down, but product choice increased

2010-12-03T09:55:00.000Z

The official line from the Bank of England is that mortgage approvals declined for the sixth month in a row. A reduction of` 0.4% in October compared to September. However, despite these headlines, nearly 100,000 people were approved for a mortgage and total lending amounted to over £11bn! We still appear to be trying to relate to 2007 figures (£30bn+ per month) and it is unlikely that we will be at that level again for some years yet. We really should be thankful that financial institutions are lending at all!

In comparison, as predicted in an earlier column, mortgage products are rapidly on the increase as we move towards the year end. Moneyfacts report that the number of mortgage products now available to borrowers has grown significantly, with mortgages at 80% LTV, or more, seeing the biggest improvements. At the same time rates continue to fall, with the average two, three and five-year fixed rates all standing at the lowest level seen since records began. At AToM HQ, we’ve seen an increased number of consumers switching from current deals to secure a low long term fixed rate. Some are even opting for a short term low rate tracker. Many lenders are offering free valuations and free legals on remortgages, so the cost of change can be minimal. Some lenders have even re-launched exclusive products via certain mortgage distributors in order to attract new business before the year end. These products tend not to be available on the high street, and a review with an independent mortgage advisor could be time well spent.

Finally, no one really knows what is going to happen to house prices month on month in the current climate, but two separate sources have predicted what they think 2011 will bring. Hometrack, an online automated property valuations company, suggest that house prices will drop by 2% whilst a fall of 3.1% is predicted by the Office of Budget Responsibility, an independent assessment body. Although these are only predictions, and are subject to change, the underlying message appears to be consistent for next year…

Credit is easy to obtain, but you have to pay it back!

2010-11-26T10:23:00.000Z

With reports of snow on the horizon and rising energy prices hitting the press recently, uSwitch estimate that 61% of households are worried about the cost of their energy bills this coming winter.

According to creditaction, more than four in ten adults in Britain struggle each month to make it to ‘payday’. And 41% of consumers feel worse off now, than they did this time last year, according to Gocompare.com

In terms of payment difficulties, the UK Payments Council suggest there are more credit cards in circulation in the UK than people and the average rate of interest is currently around 18.86%, which is 18.36% above the current Bank of England Base Rate! uSwitch estimate that 14 million consumers now use credit cards for day to day spending, whilst confused.com estimate that 26% of credit card holders have been charged at least once in the last year for missing a minimum payment.

If credit cards or other unsecured payments are late or missed, your credit report will be affected and only a limited number of lenders will look to assist when applying for a mortgage, but at a premium interest rate. This extends to insurance and mobile phone providers. You may not even know a default has been registered against you, until you apply for further products.

178,200 mortgages ended Q2 2010 with arrears equivalent to at least 2.5% of the outstanding mortgage balance and 9,400 properties were taken into possession, according to the Council of Mortgage Lenders. The equivalent of 1 property being repossessed every 14 minutes. In comparison, the US amassed a record 102,134 repossessions in September alone.

These are stark figures indeed, but the reality is, if you miss one mortgage payment, or secured loan payment in the last 6 months, your chances of getting a new mortgage are almost zero.

I make no apologies for showing the stark figures above as we move in to the Christmas period. Credit is very easy to obtain, but a) you need to pay it back and b) if you get it wrong, it could affect any future financial applications for a considerable period of time.

Track and then Switch!

2010-11-19T10:23:00.001Z

The remortgage market is on the increase! Customers are taking heed of the low mortgage rates currently available and are reviewing their finances in the run up to Christmas and in preparation for 2011. Many lenders are offering free valuations and free legal costs (using the lenders solicitors) in order to attract new customers. However, the conundrum on whether to take out a fixed rate mortgage continues. With more pundits predicting that the Bank of England Base Rate (BBR) will remain relatively static throughout 2011, one could say a short term mortgage product that tracks the BBR is attractive. At the same time, a fixed rate could be more beneficial over the medium to long term when, it is estimated, the BBR will increase.

So, to cater for both, some lenders have launched a ‘switch and fix’ option, offering the best of both worlds. The products tend to track the BBR over a period of two or three years. Within this period, you have the option to switch to one of their fixed rates (at any time after 3 months) with minimal costs to pay. A clever and innovative way to attract new business! Although, if this is of interest, you need to accept that you will only have the option of the fixed rates available at the time from that lender, and they may be substantially higher at the time of switching, than those on offer today. If only we had a crystal ball…!

The other thing to think about when taking out a new mortgage is the reversion rate of that product (the rate at which the mortgage reverts to, once the incentive fixed, discounted, tracker rate period expires). Some lenders tend to revert to a tracker rate at an amount above BBR. Others revert to their own Standard Variable Rate (SVR), and even in the current climate, they can be high (5.99% +). Always do your homework and make sure you understand all the elements of your mortgage before signing on the dotted line. Ensure that you have no cause for regret later.

Market leading rates for a very limited time!

2010-11-12T10:30:00.001Z

With Bank Base Rate held for the 20th month at a record low of 0.50%, the question on everyone’s lips continues to be, when it will it rise? We all believe it will, but have no idea when. Many pundits are suggesting that the BBR will now stay low for at least 12 months. However, a few, believe it will rise much sooner and even one of the Monetary Policy Committee has pushed consistently for a raise over the last few months, although they were out-voted by other members. So, the real conundrum in the run up to Christmas and New Year remains…to fix or not to fix?

We are seeing some really competitive rates being offered and some lenders are even providing market leading products with minimal costs for a mere number of days – fire sales! Two lenders recently launched fantastic products only available for a period of 8 days! This causes mayhem and pandemonium within the industry as intermediaries race to submit customer’s applications in time to meet the deadlines and secure these rates.

The BBR being held is good news for anyone with a mortgage on a base rate tracker or discounted rate facility. Bad news for savers though and particularly those who geared their investments and savings to provide for them in retirement. It is hard to know how this can be overcome as the only route for better savings income is higher rates. It is a Catch 22 situation!

This week sees the great and the mighty of the mortgage industry meeting together at Olympia 2 for Mortgage Business Expo 2010. This two day event consists of lenders and ancillary businesses showing their wares and seeking to establish increased business relationships and volumes. The Financial Services Authority will be there and they will be presenting their report on the forthcoming Mortgage Market Review. This is their latest initiative designed to provide the consumer with yet greater protection and more qualified advice and choice. I suspect that the presentation will be 'lively' as not all in the profession, particularly those who are set in their ways, are happy with the changes proposed. Watch this space!

New lender comes to market!

2010-11-05T10:19:00.000Z

Each week in this column I attempt to explain what happens behind the scenes in the world of mortgages and try to keep you, the consumer, updated on information that is not readily available to the general public. At the same time, trying to keep the detail clear, concise and, where I can, positive! Although the latter has been very difficult of late!

As you know, the mortgage market is heavily regulated by the Financial Services Authority (FSA). But even I find it difficult at times to understand the breadth and depth of legislative requirements which are becoming an everyday way of life in the mortgage and financial services sector.

I am an unashamed supporter of consumer protection, but now, it seems, Brussels are to get in on the act and are looking to issue regulatory impositions which will steamroller the FSA. One of its stated initiatives is to insist on a ten day cooling off period on all mortgage business. This is fraught with potential problems, not the least of which being the additional time added to an already lengthy house buying process.

Our own regulator has issued such strict rules and restrictions that mortgage lenders are already constrained on what they can and cannot do and this is being felt in every area of mortgage lending. Impositions on mortgage types such as interest only, lending into retirement, self employed and (thankfully) self-certification have already had a major impact. The thought of further restrictive regulation is frightening! Watch this space..

On a more encouraging note, October was a fantastic month for new business for AToM. Not since July 2009 have we seen those levels of new business. We have also seen a new mortgage lender come to market. Portal Portfolio is to provide secured second charge mortgages specifically to people with pension portfolios. AToM is the sole launch distributor for this lender. And Precise Mortgages have recently launched in to the Residential mortgage sector, having previously been in the Buy to Let arena. Both lenders have their own niches and I will explain more in the coming weeks. Suffice to say though that their launches have given the sector a much needed boost.

Buy to Let is a growing arena.

2010-10-29T11:32:00.000+01:00

Political and economic commentators seem to be divergent over the outcome of the recent Spending Review, though it is likely to be some time before its full impact reaches the high street. The doomsayers predict that much damage to confidence may have already been done, psychologically at least! I prefer to look at a more positive outcome. If the overall reduction was intended to be 8% that leaves 92% still to spend! It seems more sensible to major on that number now and discuss how best to use it to the benefit of the country as a whole.

There may well be some pain to come but, as the saying goes, no pain, no gain and we cannot ignore the financial mess that the country is in. So far, investment markets have not meandered much suggesting that the details of the review have been well received, in principle anyway! The current base rate structure is good for those with mortgages on base rate trackers, but it is not so good for savers or pensioners who look to higher rates to boost their income. I have regularly encouraged readers to be ahead of the mortgage rate game and, putting my reputation on the line, I am leaning towards a rate rise sooner than many pundits predict.

One area of the mortgage market which continues to gain momentum is Equity Release. Put simply, this is a scheme through which the asset rich can release funds from the equity in their property. This scheme normally applies to applicants approaching the twilight of their life although it is not uncommon for the newly retired to participate. Equity Release is highly regulated to ensure no high pressure selling and we always encourage offspring involvement. After all, the equity is likely to form a major part of their inheritance and they should always have the opportunity of finding alternative methods of funding their parent’s lifestyle first.

Another rapidly growing mortgage arena is in Buy to Let and lenders are introducing more competitive products almost daily. As problems for first time buyers continue, the Buy to Let area is wide open for investors, especially as rental incomes become increasingly attractive. Whatever your interest, talk to an independent mortgage advisor.

It's nearly 3 years on...

2010-10-22T12:54:00.000+01:00

Just think, in two months time, we’ll be winding down for Christmas! So I thought I’d get in quick as most of the shops already have decorations to hand and even some of the advertisements on TV are now Christmas orientated! I think most would agree that this year was a year of hope and expectation that we’d see some light at the end of the tunnel. But unfortunately it has remained lacklustre despite all the effort and I for one will certainly look forward to closing the door on it !

However, as we enter the final months of the year, we are starting to see positive movement from some lenders as they relax their strict underwriting criteria and are lending slightly more. One lender this week, on a conference call, asked us if we could help them double their business volumes. There is an appetite to lend, hoorah! I suspect others will make a last ditch attempt to end the year on a high by offering lower rates to attract decent volumes of business in order to hit targets. Watch this space!

Finally, can you believe it’s nearly three years since the first public signs of a credit crunch/major recession were emerging? Northern Rock was the first real public player to go in to financial difficulties in late 2007, with many others following thereafter (many had already vanished from the radar prior to public awareness!).

Long term rates, in 2007, were considerably higher than where they are now. If you are on a long term fixed rate, in excess of 5%, then it may just be worth having a review to see if remortgaging now could save you money. With many lenders offering low rates and some offering fee free remortgage deals, there’s no harm in reviewing your current mortgage product to see if money can be saved. Even if you are to incur redemption penalties to change lenders, a new mortgage could still work out financially beneficial. Speak to your local independent mortgage advisers to find out more. It could be a very worthwhile conversation in the run up to Christmas and looking to the future!

Don't be fooled by the 'Bar room adviser' !

2010-10-15T13:31:00.000+01:00

A report from the Halifax has suggested that house prices dropped in September by a huge 3.6%. According to the lender, the average price of a home in the UK is now £162,096. The fall equates to an average drop in price of £6,000.

Despite this disappointing, but unsurprising report, one National Mortgage Brokerage reported that mortgage applications were up 14% in September and numerous lenders have recently reduced rates, including the Coventry who reduced some products by up to 0.9%.

The Royal Institute of Chartered Surveyors (RICS) also reported an influx of new valuation instructions in September. RICS say this was due to homeowners testing the market ahead of further public spending cuts, or trying to sell before a possible deterioration in the economy.

Readers will appreciate that we regularly meet with all types of clients and endeavour to find the right mortgage for their particular needs. We are amazed how often clients advise us of the fantastic offerings which are apparently available according to 'a mate in the pub'. A story we recently heard about was the client who was selling and buying and who was advised by their 'friend' not to make the last two or three mortgage payments. Allegedly, it didn’t matter because they were leaving that lender anyway! Very worrying, totally incorrect and certain to place a big black mark on their credit file and stop any chance of getting a new mortgage!

Another recent instance included a client who was advised to surrender their life and savings plan early, when it was within touching distance of maturity. This has lost them the opportunity of a potential maturity bonus, the continuation of life cover and, in our view, there may have been other and better ways of making use of their plan when their full circumstances were known.

Qualified advisors have to stand behind the advice they give. Will you be able to sue your 'bar room adviser’ if the advice they give turns out to be faulty! I doubt it, so play safe and only listen to the professionals who have the qualifications to back up their advice and recommendation which will only be made after a full and thorough examination of your circumstances.

Understand the different types of mortgages?

2010-10-08T17:17:00.001+01:00

A worrying report was recently released by First Direct, the online lender of the HSBC group. Following a survey of 2,000 customers, 92% of those planning on taking out a mortgage during the course of the next year don't understand the difference between the types of deal on offer. Only 26% of existing mortgage borrowers said they completely understood how the main types of mortgages work and, on average, only 22% completely grasped the difference between fixed rates, variable deals and tracker mortgages. The research also concluded that men are more likely to appreciate the difference between types of mortgage than women, at 26% compared to 18%. In short, the cynic in me would suggest that this shows the severe lack of advice taken and understanding provided for customers who buy mortgages online, or from a source only offering their own brand products.

Confidence amongst homeowners about the outlook for the property market has fallen sharply amid growing concerns over the availability of mortgage finance, say Zoopla.co.uk. According to the survey of 6,149 homeowners, the average growth predicted for house prices in the next six months has also dropped to only 3% from 5.5% three months ago. And the number of respondents who expect property prices to fall over the coming six months is up sharply to 1 in 4 (25%) from 1 in 10 (11%) only three months ago.

According to creditaction, at the end of June, there were 1.25 million buy to let mortgages outstanding, accounting for 12% of all mortgages, the highest proportion since records began. In addition, the lettings market remains buoyant, reports the latest RICS Residential Lettings survey, due to increased tenant demand and a shortage of properties pushing rents higher.

First Time Buyers accounted for 52,200 mortgages between April to June, up from 43,400 from January to March, according to the Council of Mortgage Lenders. The typical first time buyer deposit in July was 24% (£39k). The average loan was £123,711 and the average first time buyer borrowed 3.14 times their income.

Lender re-enters the market!

2010-10-01T10:00:00.000+01:00

Good news this week! One lender who stepped back from new business lending back in February 2008 is lending again. Paragon Mortgages were renowned specialists in the buy to let arena with professional landlords, houses of multiple occupancy and properties in limited company names. Their re-emergence in the market is positive news, especially for landlords with an established portfolio of properties. Paragon offer a non credit scoring approach to prudent lending, design their products to attract experienced landlords and, even better news, they are initially launching through a limited panel of distributors including AToM.

In the residential market, remortgage applications appear to be on the increase. Borrowers tend to be looking to secure long term fixed rates. Others are releasing equity to acquire Buy to Let properties in the current cheaper climate or releasing funds to help siblings step on to the increasingly tough property ladder. Whatever the reason, make sure you do your homework. As we move in to the final quarter of the year, some lenders will be looking to end the year on a high and attract volume business. There are some great rates available to cater for all requirements, whether you require a fixed rate, tracker/discounted, or a capped rate, etc.

I’ve said this before, but it needs constant review. If you have plans to apply for a mortgage in the not too distant future, keep your eye on your credit. Don’t miss or make late payments to any provider. All financial institutions will base their decision initially on your credit history. If you have missed or late payments, or even a lot of recent searches (from multiple finance/mobile/car/home insurance applications), this could be detrimental to your ability to obtain finance, at a competitive rate. If you have not reviewed your credit search before, get it for free (30day trial period) from Credit Expert (see www.atomltd.co.uk for a link). It’s well worth a review and a good insight on how attractive you may, or may not, look to a lender.

Lenders are tightening up!

2010-09-24T11:55:00.001+01:00

The Council of Mortgage Lenders has reported that gross mortgage lending reduced by 14%, to £11.4bn, for August. This is the lowest August lending figure since 2000 reducing from £13.3bn in July. Further signs that restrictive lending is rapidly becoming the norm!

The buoyant Buy to Let market has been dealt a blow this week as Lloyds Banking Group (LBG) have restricted the number of Buy to Let mortgages a single applicant can have within the group to just 3 properties with a maximum lending of £2m. This is a reduction from 9 properties and £3m previously. Portfolio owners within the group, which includes Halifax, C&G, BM Solutions, Bank of Scotland and Lloyds TSB, are now restricted to the 3 properties rule and have to look elsewhere to increase their portfolio. This move puts further pressure on the few remaining lenders offering Buy to Let mortgages and some of these are already creaking with the pressure of increased business, announcing delays of up to 20 working days.

The Bank of England has issued its justification as to why lenders have not passed on the full benefit of low interest rates to consumers. In its quarterly bulletin, the Bank indicates that some new lending rates have actually risen whilst base rate has fallen! They blame this on lenders seeking to build larger financial reserves, funding costs and credit risk balances, among other things. The report says lenders are seeking to rebuild net interest margins achieved, in part, through higher mark-ups on new lending. Perhaps one word could more easily describe these. Profit! We have seen billions of profits reported for the half year from many lending institutions so perhaps it is fair to question if this is now greed? Someone needs to get tough! The question is, if the Bank of England is happy to stand behind banks making extortionate profit: if the FSA are now to be part of the Bank and the Government has taken a side step, is there anyone left to champion the consumers cause? No doubt we will see the bankers refusing their Christmas bonuses this time in order to help the cause..

The adviser should know rules and criteria

2010-09-17T09:58:00.000+01:00

A lot of people ask me “how do you know what to write each week, it must be difficult?” But actually, there’s so much going on, I could easily fill more than my 350 word column consistently. Despite all the recent negative press, the mortgage market is vibrant with activity!

The bottom line is that a mortgage is the biggest debt you’re likely to ever take on, so you need to do your homework and understand more than just what the national press decide to publish about the Bank of England base rate being held at 0.5% again, or how much profit the banks are currently making!

Advice is crucial and ideally from a company who can offer ‘whole of market’ mortgages, not just products from a limited panel of lenders, like some Estate Agency chains or a Bank/Building Society who only offer their own products.

Most lenders have a set of rules and criteria that need to be met even before requesting a decision in principal (stage at which you are credit searched for pre approval). For example, one lender has a debt utilisation rule at 70%. So, if you had a credit card with a £1k limit and you had a balance of £701, divide the latter by the previous and your utilisation amounts to 70.1%, which means you would be ineligible for this lender. Another stipulates you can have no more than 8 unsecured credit cards or loans at the point of application. We tend to see customers have a number of debts within this ruling, but keep open old debts with zero balances, which push them over the stipulations. Others won’t look at unencumbered properties for remortgages, or assist where the customer sold their house within the last year and are renting, so falling between a first time buyer and a residential home owner and so on.

All of these are little idiosyncrasies that should be known by anyone advising on a mortgage. These save time and probably unnecessary credit searches being carried out. Remember, the more credit searches you have against your name, the more likely your credit score will decrease, which may affect your ability to obtain finance. Whoever you talk to about your financial requirements, make sure you say at the outset that you do not want to be credit searched, unless you give them the authority to do so.

Better options for customers.

2010-09-10T07:48:00.000+01:00

The Bank of China this week has increased the amount they will lend compared to the property value. Residential mortgages are now offered to 80% Loan to Value (LTV), Buy to Lets up to 75% LTV and Commercial mortgages up to 70% LTV. Positive moves from a lender who distribute their mortgage products through their branch network and only five other distributors in the UK, of which AToM are one. They will also consider First Time Buyers, Home Movers and Remortgage applications. Unlike some other lenders, Bank of China will also look at flats above shops, houses of multi occupancy, new build properties and freehold flats. Some (good) potentially useful niches. We find them incredibly helpful to deal with and they have some very competitive rates.

The Nationwide House Price Index has suggested that house prices dropped by 0.9% in August, with the average house price now at £166,500. This is the second month in a row Nationwide have reported a house price decrease. Let’s hope this is not the start of a trend and stabilises shortly; although it is probable that the lower level of activity over the summer is reflected in these reported figures.

The number of mortgage products appear to be on the increase. New products being launched in August far exceeded the same period last year according to one of the industries leading sourcing systems, Mortgage Brain. In August 2009, just 5 new mortgage products were launched, however in August 2010, some 1,500 products were launched. This is good news and despite some products being withdrawn and re-launched with revised rates, 350 products were completely new. Fixed rate product offerings increased by 31%, whereas Tracker products decreased by 5%. The system also reports the total number of products available to the mortgage market now stands at around 7,600!

Is the appetite for mortgage lending beginning to reappear? Despite the inevitable doldrums reported by the national press, we’re hearing some great rumours that lenders will make a big push to lend in the last quarter of this year. Fingers crossed!

Kids are back to school - make use of your spare time

2010-09-04T13:40:00.001+01:00

The kids are back to school, the holidays are over and you may (or may not) be looking forward to peace and quiet and having some time on your hands. However, as the final few months of the year race towards us, maybe it’s time to start thinking about 2011 and what trials and tribulation this may bring. Without doubt, the only certainty in the current financial markets is uncertainty. When will bank base rate rise? Who really knows what is happening with house prices? Will 2011 lending become further restricted as the banks scrape and save(!)to pay back the £300bn lent to them via the Special Liquidity Scheme? All of these lean towards ensuring you review your current financial arrangements and ensuring you are on the best deal to see you through the medium to long term. Whether you require the security of fixing your payments for an amount of time, or whether you are a bit of a risk taker and might look at a short to a medium term tracker or discounted option, right now, both are available at attractive rates in the mortgage market. A quick review with an independent mortgage advisor who has access to the whole of market mortgage rates could be time very well spent.

On the other hand, we’re also seeing a vast increase in those purchasing a property for investment purposes. The Buy to Let market is rapidly increasing again as people turn to renting rather than purchasing in the current climate. Mainly due to their ineligibility to obtain a mortgage for whatever reason. Investors see this as a great opportunity to increase their investment property portfolios and taking advantage of the great rates in the market. Be advised though, if this is something of interest, lenders tend to charge large arrangement fees for setting up the Buy to Let mortgage and you may be eventually be subject to Capital Gains Tax at a later date, on any profit made on disposal of the property.

Your credit history is the lenders decision maker.

2010-09-04T13:37:00.002+01:00

27/8/10 - Dale is away on holiday this week so it has fallen to 'the old man' to scribe and comment on the market. So here goes........

All of the mainstream lenders tend to use a system of credit scoring when deciding if they want to lend to new applicants and even the smallest of 'blips' can cause a lender to decline even best cases. It is crucial that you make all payments to any provider on time. Be it mobile phone, utility provider or lender. They are all prone to putting a black mark on your credit file if you are just a few days late. Some will do so even if you are one day late. So be vigilant, as any such misdemeanour can affect your credit rating. Whilst on this subject, we suggest to clients that they consider subscribing to one of the credit report providers such as Credit Expert or Equifax. Why? Well, a good friend recently applied to a bank to support his son as guarantor. The bank declined my friend who was certain that he had a pristine credit rating. Upon examination, it was found that someone had cloned a credit card and was using credit in his name but not paying back! We managed to resolve this, eventually, but it was a sobering exercise.

Some financial commentators are again talking about a double dip recession. Is this going to happen and if it does, where will it leave the financial services market? There is no doubt that much of the recession was exacerbated by well known TV pundits who seemed to delight in the fame that it brought them. My take on this is that confidence breeds confidence so lets hope that this time we see presenters talking the market up.

The Buy to Let market is enjoying resurgence. Landlords have more tenant applicants than houses available. Of course, this is geographically spread with some areas faring better than others. In turn, first time buyers are still finding it difficult to get on the ladder and parental support is more necessary than ever before.

A lot of mortgage activity!

2010-09-04T13:33:00.001+01:00

20/8/10 - Despite being in the midst of the holiday season, there is certainly a lot of mortgage activity happening! AToM have seen a huge increase in enquiries for re-mortgages as customers look to refinance existing deals on to better rates or raise capital to purchase other properties or for home improvements. There’s no better time to review the market as there are some competitive rates currently available. Especially fixed rates which cater for those looking to stabilise their monthly mortgage payments for a specified term. We have recently been allocated a tranch of fixed rate funds at 3.99% for 3 years (5.2% APR) by one lender. This includes free standard legal costs on re-mortgages, or £250 cash back on purchases with no early redemption charges payable after the fixed rate term. This product is available up to 80% of the property value. Terms and conditions apply and please feel free to request full details from us.

We have also seen a vast increase in customers looking to consolidate debt or even look at debt management plans. Both can sometimes cause issues. If you consolidate unsecured credit in to your mortgage, although your monthly payments may be lower, you may be paying more for your debt over a longer term. And with debt management plans, or Individual Voluntary Arrangements(IVA), etc, again, the lower monthly payments may help in the short term, but you may well find it hard to gain an approval from a lender to refinance at a later date. Lenders tend to shy away from debt management plans and may not touch anyone who has been in an IVA unless it has been discharged for more than four years. Advice should always be sort before entering in to these types of arrangements.

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.

Whatever you do remember to check what terms and conditions apply and also remember that your home may be repossessed if you do not keep up repayments on your mortgage.

House Price Confusion

2010-08-13T16:36:00.001+01:00

First Time Buyers have taken another battering this week as the Coventry Building Society scrapped the option for interest only mortgages for those getting on to the property ladder for the first time. Any First Time Buyer applying for a mortgage with this lender will now only be offered a repayment mortgage. This follows recent moves and changes of criteria for Interest Only mortgages from various lenders including Northern Rock and Lloyds Banking Group in reaction to the FSA’s Mortgage Market Review which includes commentary on this subject. I don’t think the days are numbered for this type of mortgage, however we are seeing many lenders urging and some would say ‘pushing’ customers to a repayment option from day one.

Despite the restrictive lending nature of the mortgage market over the past year or so, lenders are still reporting massive profits for their half year. £1.1bn here and £3.95bn there, the list goes on. Although I’m sure the profits would have been more, had some of the excessive bonuses not been paid. Although unknown currently, I’m sure we won’t be surprised to learn these will be in very high numbers too! Just think, if these vast numbers had been reinvested in to actual lending figures, I may not have anything to whinge about!

Finally, the confusion over house prices continues. The Royal Institute of Chartered Surveyors (RICS) reported that house prices dipped in July. RICS says difficulty in securing mortgages and increased uncertainty about the prospects for the economy may have contributed to caution from potential home buyers. Nationwide also reported a 0.5% fall in average property prices in July, the first drop in five months
However, Halifax disagrees in that their House Price index suggests that prices increased by 0.6% which was an upturn on the decrease reported in June. With such differing figures from various respected sources, it’s no wonder that the whole house buying process remains confusing for one and all, discouraging some from wanting to rush to market.

Foreign Mortgages? AToM win BMA!

2010-08-06T10:24:00.000+01:00

Lenders seem to have been the focus of my articles more recently and in more of a positive light! Having had lengthy talks with many lenders over the last few weeks, I believe we will see more aggressive products in the coming months as lenders aim to finish the year on a high and with volume business. Fingers crossed and watch this space!

We’ve seen a huge increase in foreign mortgage applications over the last 10 days or so with people purchasing abroad, some for residential purposes, but in the main for investment or as a holiday home. As we emerge from a global recession, many countries have been hit just as hard as the UK has, if not more. We recently had an enquiry from an individual purchasing a residential property in Spain. They were re-mortgaging their UK property to raise the deposit and were letting this out. The real eye opener was that the Spanish appear to be very proactive for house sales and the Spanish lender offered an 80% loan to value and gave them the first 3 years interest free! Scary!

Back in the UK, there have been positive movements by some specialist lenders. Although not necessarily household names, most of them have large parents. Such an example is a company called igroup (owned by GE) who have recently increased their loan to value from 75% to 80% on some products. They have some superb rates of interest and an appetite to lend. They will also allow first time buyers but will only deal with the employed. However, they will take a view on any historic minor financial problems and price to risk accordingly.

And, finally…I’m delighted to announce that AToM have picked up our fourth major industry award of 2010! We were thrilled to be awarded a British Mortgage Award at a recent event held in the London Hilton, Park Lane. Attended by over 500 mortgage professionals, AToM came top of the class in the Specialist Mortgage Distribution category and the award was presented by Sir Geoff Hurst MBE. This is a great accolade and testament to the great team we have here at AToM.

Bank of China choose AToM

2010-07-30T11:45:00.001+01:00

The debate on where mortgage interest rates are going took another stumble this week. For many months, various economists had predicted that the Bank of England base rate would rise towards the end of 2010 with further rises throughout 2011. However, Ernst & Young have suggested that if the impending spending cuts come through, the BBR will remain at 0.5% until 2013! Another sign that although we all believe rates have to rise, no one really knows when this will occur.

With this in mind, AToM towers has seen a vast amount of people requesting long term fixed rates over the last 3 to 4 weeks. Uncertainty seems to be the only certainty in the market and, quite rightly in my opinion, people want the guarantee of a long fixed rate term on their mortgage so they can plan for the next few years in confidence. There are some great rates to be negotiated currently and some include free valuation and solicitor’s costs, so that re-mortgaging fees are kept to a minimum.

We’ve also seen lenders expanding their distribution. AToM was delighted to be appointed to the Bank of China distribution panel last week. We can now offer lifetime tracker rates for Residential, Buy to Let and Commercial properties. Bank of China have only been in this area of the market for a year and AToM is now one of only five distributors in the UK to offer their products, outside of their branches. Please contact us to find out more.

And finally, I’ve mentioned this before, but its back on the radar. Many dormant lenders are offering customers a discount of up to 30% off their mortgage to move lenders. If your current lender is one of these, then it’s worth a call to see if you qualify for a discount. Normally, they will give you a deadline in which to complete the transfer of your mortgage but I’m sure it’s a timescale that AToM could meet. Just think, up to a 30% reduction on your mortgage - it could be a financially beneficial telephone call!

The final curtain for Self Cert..and so long Mercury FM!

2010-07-23T10:31:00.001+01:00

The final curtain appears to have been drawn on Self Certification and Fast-Track mortgages. With preparations in place to amalgamate the Financial Services Authority (FSA) into the Bank of England in 2012, the regulator is clearing up what it considers to be a few outstanding projects. The Mortgage Market Review papers were distributed late last year and the FSA has now launched its consultation papers, following feedback from various parties.

One major proposal is that all lenders will have to prove affordability on all loans. Therefore, every mortgage applicant will be required to provide accounts or payslips and possibly bank statements so that the lender can deem the loan affordable to the consumer. With the old Self Certification mortgages and on some current ‘Fast Track’ mortgages, proof of income was not necessarily required by the lender.

Other changes also include providing proof of affordability into retirement and on interest only loans (which will be assessed as though they were on a Repayment basis). House price inflation or downsizing to a smaller property will no longer be acceptable as a suitable repayment option.

These, and a myriad of others points, are now at the consultation process and are planned to be implemented later in the year.

The Council of Mortgage Lenders has reported a great month for new lending in June, some 15% up on May and a 7% increase on June 09. However, whilst the market remains delicate, the power appears to be turning from the sellers to those who can actually raise mortgage finance. Whilst market products remains constrained, this could be very much to the benefit of the buyer. Remember, take independent advice before agreeing to proceed on a mortgage.

And finally…it’s the end of an era as Mercury FM changes to Heart FM. I’d like to personally thank all of the staff at Mercury FM for delivering a great local radio station in recent years. They certainly assisted in growing AToM’s exposure in the local area. I wish them all the very best for the future.

Time being called on Interest Only?

2010-07-16T09:45:00.000+01:00

There has been much hype recently regarding Interest Only and Repayment mortgages. With an Interest Only mortgage, you only pay interest and no capital and so, at the end of your chosen term, you still owe the lender the same amount as when you began. Normally with this method, it is recommended that you contribute to a saving or investment vehicle to generate funds to repay the mortgage at the end of the term. However, this is usually optional.

With a Repayment Mortgage, you pay both interest and capital each month. Initially, this appears more expensive, but does mean that you pay back the loan with no debt outstanding at the end of the term assuming you meet the required payments on time.

Many lenders have recently tightened their requirements on Interest Only mortgages. Some will not allow this method above certain loan to value levels. Others charge higher interest rates and many are trying to persuade customers to switch from interest only to repayment.

Why the recent attention to these repayment options? Simply, because many borrowers have stepped onto the property ladder choose the cheaper option promising to review their payment plans at a later date. The problem is that the ‘later date’ never seems to arrive! As we all know, people generally live to their means. Many borrowers on this scheme have no savings or viable plans to pay back the debt and this is worrying!

That said, Interest Only mortgages can be right for certain professions - people entitled to annual bonuses: the fluctuating income of self employed: or employments where lump sums are received after a number of years in service.

This debate is gathering pace so expect to read more in coming months.

Finally, do you know the full details of your own mortgage? A recent Consumer Financial Education Body report suggests that 15% of mortgage holders are unaware of their current repayment style or interest rate! As this is the largest debt you are likely to take, it seems crazy not to understand it! We are quick to change mobile, broadband or utility provider the minute rates start to increase. This mentality should also be applied to mortgages. Always be on top of your mortgage. Otherwise it could cost you a small fortune.

June was a great month, but was it a fluke?

2010-07-12T08:08:00.002+01:00

AToM can report a bumper month for new business in June. Our best month for mortgage applications and completions for over a year! Fantastic news which shows that, even in a dire market, consumers are turning to independent mortgage advisers for assistance for advice and support. Now, more than ever, independent advice is key. There are many mortgage options available, but finding the right one to suit your requirements can be difficult, especially as some lenders only offer their special mortgage products through a select panel of distributors, like AToM.

Despite such positive news, market conditions, and national debt statistics for June, from creditaction, do not paint a pretty picture. In brief:

- 107 properties were repossessed daily during Q1, 2010
- 203 mortgage possession claims will be issued and 158 mortgage possession orders will be made today
- 391 people are declared insolvent or bankrupt every day. Equivalent to 1 person every 51 seconds during the working day.
- 1,000 people seek some form of formal debt rescheduling every working day.
- 1,896 people were made redundant every day during the 3 months to end April 2010.
- £131.5m is the interest the Government pays each day on the UK’s net debt of £903bn. Estimated to rise to £182m a day in 2015-16!
- Shelter estimate that more than one million householders have used credit cards to pay their mortgage or rent in the last 12 months and moneysupermarket.com advises that almost 5m UK adults regularly use their credit card to pay household bills. Another 2.5m withdraw money using their cards!

Scary figures! The recent emergency budget is trying to tackle the scale of some of these and only time will tell if it succeeds.

In the meantime, remember that financial institutions evaluate your mortgage application based on your credit history. In fact, insurance companies will also credit search you before agreeing to cover you. Most will use either Experian or Equifax to review your financial status. In short, every financial outlay you have, or have had, will be reported. If you have too much credit, not enough credit, or missed payments on any credit or utilities (including Gas bills or Mobile phones), you may find that mortgage availability to you will be limited.

Are you loyal to your current Lender?

2010-07-03T09:35:00.002+01:00

The Bank of England has released figures reporting that 49,815 loan approvals for house purchases occurred in May, slightly lower than April’s figures and below the last six month average of 51,856.

May’s remortgage approvals were also lower than Aprils at 25,759, and below the six month average of 26,443.

Neither report is much of a surprise due to the uncertainty of the emergency budget held in early June and the limited availability of attractive long term mortgage products. I suspect Junes figures may be little better.

The Land Registry House Price Index has confirmed that house prices dropped by 0.2% from April to May this year despite an annual rise of 8.2%.
The average property price in England and Wales is now £165,314 with all regions experiencing increases in their average property values over the last 12 months. London has had the biggest increase of 14.2% while the North East saw just 1.8%. The South East also had the biggest monthly rise at 0.9%. Great news for sellers, not so much for purchasers.

However, now that we know the full details and probable impact of the emergency budget, the pundits are predicting that we could see a bank base rate rise in the 3rd quarter of this year.

So, with rates relatively low and some longer term fixed rates being launched recently, now is probably a good time to review your current mortgage and see what options are available.

Most lenders want new customers, but are less likely to offer you attractive options to stay with 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. So don’t feel loyal, if a better option is with another lender, then think of number one!
However, we’re still stuck with the fact that many lenders do not want to lend in huge volumes. Therefore, you may find that actually getting a mortgage becomes the main obstacle and you may have to stay with your current lender anyway! Seek advice……

The Mortgage Process...

2010-06-28T14:27:00.000+01:00

The mortgage process when purchasing a property, first time buyer or home mover, will be roughly the same. The selling agent will seek to agree a number of deadlines including the arrangement of mortgage finance. At this point you should speak to an independent mortgage brokerage who will assess your overall financial position and mortgage requirements with you. They are required by law to give you an Initial Disclosure Document detailing who they are; who regulates them; their scope of permissions; whether they are restricted to a small lender panel or ‘whole of market’; any fees and costs involved including any for advice or consultation. This document also advises how to complain if you are unhappy (now or in the future) with the advice provided.

A good advisor will complete a financial fact find ensuring that they ‘know their client’. This is necessary before any ‘advice or recommendation’ can be provided. Be patient as this process can be lengthy. It is in your best interests however, ensuring that you receive the best possible advice designed to meet your personal mortgage needs and requirements.

Once you’ve agreed the best mortgage for you, a decision in principle (DIP) will be completed, usually on-line with the chosen lender. This involves brief personal details, income disclosure and a credit search. Be wary here as too many credit searches will have a negative effect on your credit score. Ensure that the product and lender are right for you before a DIP is conducted. Possibly choose one adviser to work with you right through the process!

DIP decisions are normally instantaneous. Assuming success, it is then upgraded to full application. Payment for valuation is made (sometimes free) and the valuer confirms to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more detailed in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost.

The chosen lender will require information on income, identity, proof of residency as part of their due diligence requirements. Assuming no issues arise, a mortgage offer should be issued. Then, subject to the solicitors conveyancing process, you are now on the road to completion and should soon pick up the keys to your new home!

The task ahead is not to be envied...

2010-06-18T17:13:00.000+01:00

With less than a week to go before the new coalition emergency budget is announced pundits, all and sundry, are in full flow trying to predict what the Chancellor will implement to try and correct the country’s financial nightmare. The task ahead is not to be envied!

On the mortgage side, there are many potential issues on the horizon. Not least the fact that a certain small sum of around £300bn was advanced to a number of banks over the last 2 years and which is due to be repaid in the next two years or so. To put this in to perspective, circa £300bn was the total amount lent in the UK by financial institutions in 2007! With quantitative easing a distant memory, banks and financial institutions are working out ways to ensure their loans via the Special Liquidity Scheme are repaid within the deadlines. Could this mean we see further restrictive lending, on an already tight market, in order to meet these demands? In comparison to the 2007 figures, it is predicted that 2010 will show gross lending figures in the region of just £140bn…

With this in mind, mortgage lending in May saw a reduction in the number of First Time Buyers. Figures from the Council of Mortgage Lenders advised that First Timers accounted for 35% of house purchasers in May, down from 39% in March and 38% in April. Although many lenders are targeting First Times Buyers, the actual reality of them obtaining a mortgage is still problematic and depends heavily upon the amount of deposit, the interest rate and affordability, all of which can be potential issues.

In addition, according to Marketguard, if and when the Bank of England base rate starts to increase, some 7% of mortgage holders are already saying that won’t be able to meet their required mortgage repayments. If correct, this is a frightening statistic!

The Chancellor has a huge task ahead of him trying to reverse the UK’s ever increasing financial deficit whilst at the same time keeping consumer confidence high and ensuring the Banks and Financial Institutions continue to increase their lending. With such an inherited nightmare, personally, I think he has more chance of winning the lottery!

Volumes have been increasing but the World Cup may slow it down..

2010-06-11T10:11:00.002+01:00

Signs that the market is still not fully on the road to recovery have been reaffirmed this week as both Northern Rock and NatWest Intermediary Solutions reported that circa 600 jobs are to go. The cut backs are further proof that although positive signs have been outweighing the negatives recently, we cannot overlook the underlying financial instability issues endemic within the financial industry. And, of course, we all wait with baited breath to see what impact the forthcoming emergency budget will bring. The coalition government have been left with a huge debt/financial crisis to pick the bones out of and it appears to be much worse than we all imagined. No doubt we will get to know the full picture on the 22nd June.

In the meantime, we have been receiving a higher volume of mortgage applications for purchase transactions from across the country. The removal of HIPS does appear to have had some impact. Those looking to sell seem to be more active and yet there are some great deals to be had for purchasers whilst house prices remain relatively low in some areas.

However, with this in mind, market activity is predicted to lull during the World Cup and just as the market is showing signs of momentum. This is something we could do with out in the current climate. Obviously, I hope England win the tournament, but it would be nice if the housing market rides on the wave of success too! That said, pundits are predicting an increase in activity of up to 8% after the World Cup has finished.

Finally, as market activity has been buoyant over the last few weeks, so has the underhand tactics of some of the corporate Estate Agency chains in the area. We hear first hand from customers who have been ‘told’ to use to the internal Mortgage Adviser (who may not offer whole of market products) or their mortgage offer will not be put forward to the vendors. This is a clear breach of the Code of Practice for Residential Estate Agents. To review all the Rules and Code of Practice, visit www.naea.co.uk . They are an interesting read and certainly something you should review before entering the house buying process so you know your rights.

Are you eligible for a discount on your mortgage?

2010-06-04T09:30:00.000+01:00

During the last few weeks, we’ve noticed a marked increase in customers approaching us having been offered a discount on their mortgage by their current lender to move to an alternative lender. The customers current lender may be one that has closed their doors to new business and which is looking to re-capitalise to bring funds back in-house. We have seen some mortgage customers who have been offered discounts of up to 30%! This is great for the customer, especially if they have had clean credit and have maintained repayments on all of their financial liabilities for more than twelve months. It is definitely worth exploring this route if the lender you currently hold your mortgage with is no longer actively trading. Up to 30% off your current mortgage amount could be very beneficial in the current financially strained climate.

Even if you have had financial issues, there are lenders who will look at your purchase or remortgage requests. One in particular, only directly accessible through a few mortgage distributors such as AToM, is ‘igroup’. A company owned and funded by the American giant GE. igroup recently re-launched their product proposition to the mortgage market for those who are employed. They are offering mortgages up to 75% of the property value for both first time buyers and home owners. Some of their products will allow for credit issues which happened more than 24 months ago, including CCJs and Defaults. Some of their products will allow for more recent issues and as a result, they reduce their offerings to 70% of the property value. However, with only a few lenders currently in this are of the market, they are one of the most proactive with rates starting from as little as 3.49% (APR of 5.1%) variable. They also have two and three year fixed rates available. Conditions apply.

There are other lenders who are active in this arena so, whatever your circumstances, do come in and see us, or call the number above for a free confidential conversation and see what options are available to you.

New lenders are very welcome

2010-05-28T11:48:00.000+01:00

The sun’s been shining, two new lenders have opened for business, many interest rates have been reduced and Home Information Packs (HIPS) have been suspended! What a super week it’s been!

Aldermore have entered both the residential and buy to let mortgage markets. They are offering mortgages up to 80% loan to value on residential mortgages but, unlike most lenders these days, they will not credit score. Buy to Let mortgages will be offered at 75% of the property value and the lenders main target will be experienced landlords.

Precise Mortgages also launched into the Buy to Let market targeting high quality loans for prime customers up to 75% of the property value.

Both lenders are a welcome addition to an under funded market and in the Buy to Let sector, in particular, supports my previous articles advising that this area appears to becoming buoyant once again (although this may change if there are any dramatic changes to Capital Gains Tax in the forthcoming emergency budget).

A number of residential lenders have lowered rates during the last few days. There are some attractive long term fixed rates available, specifically over a five year term. If your mortgage is due for renewal in coming months, it’s worth exploring now to ensure you do not miss some fantastic opportunities. That said, no one can accurately predict what will happen with mortgage rates in the short term. However, most seem to agree that rates will go up, it’s just a case of when.

Finally, if you are contemplating selling your home, this has recently become cheaper following the suspension of Home Information Packs (HIP’s). On the 20th May, an order suspending HIP’s in England and Wales was imposed with immediate effect, pending primary legislation for a permanent abolition. Sellers will still be required to commission, but won’t need to have received, an Energy Performance Certificate (EPC) before marketing their property. Let’s hope this news will stimulate the market for those who were reluctant to sell due to cost, time and effort in getting a HIP arranged. Although this is great news, spare a thought for the large number of people in the HIP sector who may now lose their jobs and, of course, those poor soles who paid for their HIP on the day of the suspension announcement....let’s hope they get their money back!

Is the Buy to Let market seeing a resurgence?

2010-05-27T13:47:00.001+01:00

21/5/10 - Is the Buy to Let market seeing a resurgence? The Mortgage Works (the specialist lender arm of Nationwide) increased the amount they would lend against the value of a property to 80%. As First Time Buyers struggle to raise deposits to climb onto the property ladder and some turn to, or continue to rent, the Buy to Let market is buoyant. Such increases to the loan to value levels are a huge step forward and demonstrate that lenders have confidence in this area of the mortgage market. Although TMW are the only lender offering 80% currently, it is anticipated that other lenders will soon follow suit. This can only be good for both prospective and current landlords as competition returns to the market.

Purchasing a property for investment purposes, with property prices relatively low, is quickly becoming an alternative source to traditional long term investment vehicles. Obviously, tax implications should be reviewed with a professional adviser, but with some payment terms ranging from 5 to 40 years, and interest rates competitive, this is an option well worth investigating in some detail.

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 25% and, after costs such as managing agents this should leave some spare cash to cover repairs, maintenance and landlords insurance. It should also enable a fund to be established to cover the mortgage payment in the event that there is no tenant in situ for a while. Remember that the mortgage still has to be paid!

Generally, Buy to Let should be considered as a long term investment. That said, it is a popular sector of the market and can provide a source of income (after expenses) and capital appreciation over time. Remember though that the value of property can fall as well as rise and you will need to take this into account in your planning.

Mortgage approvals on the increase.

2010-05-04T12:43:00.001+01:00

30/4/10 - Mortgage and financial markets are rife with news. Here is a quick review of those items which might be of interest:
Some 34,905 mortgages were approved in April, a slight increase on the March 33,360 figure according to the latest figures from the British Bankers Association. It suggests that the effect of the year-end change to Stamp Duty has now worked through, so although numbers appear subdued compared to the latter months of last year, house purchase approvals were 20% higher than in March last year.
The Financial Services Authority has found weaknesses in five banks over their handling of customer complaints and has referred two of the banks to enforcement for further investigation. The review looked at several banking groups responsible for over 70% of the complaints firms received and reported to the FSA and over 60% of those resolved by the Financial Ombudsman Service. Incidentally, the Daily Mail recently reported that one lender received over 1600 complaints every day between July and December last year!
Almost two-thirds of borrowers on tracker rate mortgages have failed to take advantage of low interest rates to overpay their mortgages, says unbiased.co.uk. Their research shows that 63% of borrowers have not overpaid even though charging rates are usually much lower than historically. The previous figure was 53% of borrowers in May 2009. Only 11% indicated that they were making occasional payments on top of current monthly payments.
Finally, Investec Specialist Private Bank says that increased lending restrictions from banks and building societies has resulted in a growing number of high net worth individuals finding it difficult to secure mortgages of £1m or more. It says many of these people are successful entrepreneurs who are being refused credit because their finances and wealth are not straightforward, and often other lenders are bound by rigid lending criteria which do not accommodate this. This is exactly the type of customer that can be helped by the smaller, specialist lenders who are not necessarily household names. Some private banks are really keen on this type of borrower as long as they can prove affordability beyond doubt. It is worth checking with your local and independent mortgage brokerage as they will have access to such institutions.

Mortgages with a barcode?

2010-04-24T12:05:00.003+01:00

Homeowners rate buying a house more stressful than having a child. House buying tops the table of most ‘stressful life experiences’ with one in four (24%) homeowners finding it the most demanding and worrying thing they have done, according to research from Unbiased.co.uk

It is still First Time Buyers who are particularly hard hit needing a substantial deposit merely to get on the housing ladder and a significantly larger deposit to access the best rates.

According to creditaction, the typical first time buyer deposit in January was 25% (£38,348), with the average first time buyer loan being £115,044 and at an average of 3.08 times their income.

The reality continues with a YouGov survey revealing that 86% of 18-30 years olds could not currently afford to buy a home if they wanted to, despite recent falls in house prices. A massive 83% of 18-30 year olds also thought buying a new home was now more a pipe dream than a reality.

It shouldn’t be so. We have witnessed the suspension of Stamp Duty below £250k, lower property prices, more lenders looking to assist First Time Buyers with higher loan to value mortgages and other options, including Guarantor mortgages and Shared Ownership schemes. You really need to research and explore all the options available to make that important first step on to the property ladder a reality.

Meanwhile, house prices increased by 1.1% in March, partly offsetting February’s 1.6%fall, according to the latest Halifax House Price Index. This rise was the eighth rise in the past nine months. The average price is now £168,521, 9.1% above last Aprils low point.

House price confidence appears to be on the increase; if only the mortgage financing available could support such levels of optimism.

Let’s not be despondent though at the continuing tough market. Tesco Bank has confirmed plans to launch a mortgage range by the end of 2010 as it looks to build the brand into a fully-fledged retail bank. So whilst picking up your cornflakes, butter, bananas and sausages, you can also throw a mortgage in to your basket. I wonder if it will have a barcode so you can scan it in at the self-service check out?

The value of dealing with a Mortgage Specialist

2010-04-16T13:51:00.001+01:00

There’s a new sound certain to gather volume in coming weeks and rapidly overtaking the wailings of politicians on the hustings! It’s the plaintiff sound of heads banging against a wall in frustration! These are the daily trials and tribulations of mortgage intermediaries dealing with some major mortgage lenders in the current climate.

As staff reductions and consolidations continue, mostly below the radar of national press, teams of underwriters, who brokers have established solid relationships, are being replaced by telephone ‘no can do’ teams and who, in most cases, to put it bluntly, are not helpful in the slightest. In fact, one of my colleagues has chased a lender for a response on an application for the last four days being constantly told “we are within our 48 hour service standards.” Perhaps they mean 48 working hours, so nearly seven business days? Some lenders have recently confirmed backlogs are in excess of ten days!

If, for whatever reason, a lenders underwriter decides to request one further bit of information, or needs additional clarification, then the fun begins. It is really frustrating to learn that some underwriters are not allowed to call and establish an answer which might take 30 seconds to resolve. Instead, we receive an automated email detailing requirements and once we’ve provided the information, we re-enter the ‘48 hour’ service standard queue and the cycle begins all over again. Assuming of course that the information returned does not get lost and is directed to the right department!

Whinge over! It could have been much worse (really!) but here I am, hanging on to the phone (20 mins so far) waiting for someone to talk to me. But, they keep saying that I am really important to them, so I will hang on for just a little while longer…!

What this all demonstrates is the value of dealing with a specialist mortgage intermediary as we will take this painful flack on your behalf. Imagine you are dealing with the lender direct and this happens to you! There really is no better time to utilise the expertise and staffing levels we can provide for you. Let us take the strain on your behalf to push the mortgage through to an early completion.

Few consumers really know what it would cost to replace all of their household goods

2010-04-12T08:42:00.000+01:00

So now it’s confirmed. The election will be on 6th May. I will step back from commenting on political issues. There will be enough elsewhere! So, this week I thought I would review home building and contents insurance.

Buildings insurance is compulsory wherever a mortgage is in place. Whilst contents insurance is optional, it is often packaged together with buildings insurance, generally representing better value for the homeowner and value is more important than ever. According to the AA’s benchmark BIP index, quoted premiums in this area have risen for eight successive quarters.

So, why the rise in buildings insurance when house prices have been depressed? Claims experience affects pricing. The harsh winter and last year’s floods has led to an upsurge in claims for buildings damaged by snow, ice and water. The cost of rebuilding and repairing homes to the higher standards required by building regulations has been steadily rising – and it’s the cost of rebuild, not market value, that dictates the sum insured - and the most that an insurer is likely to pay out.

The homeowner has responsibility of ensuring that the sum insured is right. There is a real danger of both over and under-insurance as most homeowners don’t know the full rebuilding cost of their property. A lenders mortgage valuation will provide an estimated rebuild cost, but you should always consider a second opinion.

When it comes to contents insurance there is a persistent issue with under-insurance. Few consumers really know what it would cost to replace all of their household goods, and very few have a full inventory of their possessions. It is worthwhile systematically visiting every room – remember the garage and loft - and listing everything. People naturally think of the bigger ticket items, like furniture, TV and jewelry, but it’s amazing how many forget to include other pricey items like clothes and tools.

When assessing, it is important to identify the valuable items. Most insurers include a reasonable limit for unspecified high risk and valuable items, but do check that it will be adequate and that the single item limits are appropriate. If in doubt, speak to your local independent and whole of market mortgage and insurance provider.

Guarantor Mortgages, great for First Time Buyers

2010-04-02T11:53:00.001+01:00

First time buyers are still struggling to get on to the property ladder. So, this week, I thought I would evaluate an option available to first time buyers in the form of guarantor mortgages.

Some lenders will allow a family member to act as a guarantor. Usually, the guarantor will need to prove they can afford their own residential mortgage and also the proposed mortgage they wish to guarantee. For example, if their mortgage was £100k and the proposed mortgage was £100k, the lender would look to ensure the guarantor could afford the total £200k loan. So, based on standard income multiples of, say, 4 x income, the guarantor would need to prove income of £50k. There are many ways of calculating affordability and every mortgage case is different. Lenders income multiples vary. Some assume the guarantor has no other loans. Some lenders offer a limited liability guarantee, so guaranteeing a smaller proportion of the loan. Although a guarantor mortgage is traditionally associated with first time buyers, there are products in the market that cater for those looking to move home or re-mortgage. You will probably need a minimum deposit of 15%.

The Post Office has confirmed that they will shortly be lending 90% mortgages aimed at first time buyers. At the moment it has not given any more details about the product, but says it wants to target those on low incomes. Let’s evaluate. I’ll make assumptions that they mean £20k (and below) and four times income, so £80k. Add in a 10% deposit (plus solicitors and valuation fees) and you are looking at a purchase price in the region of just £90k! This move was announced by a Government spokesman so the cynic in me asks if the headline was designed to win votes? Rates are likely to be quite high and, interestingly, the funding line is from Bank of Ireland.

Nationwide have confirmed that house prices rose by 0.7% in March, compared to a 0.8% drop in February. Prices sit 9% higher than a year ago, say the lender.

Finally, the WSCT Business Awards 2010 voting deadline is drawing close (9/4/10). If you have not voted yet, please take 2 minutes to do so. Local companies have had a rough ride over the last few months and need your support and your votes!
Have a great Easter!

He giveth....he taketh!

2010-03-26T11:46:00.002Z

The Chancellor had every opportunity to win votes and give the housing market the important boost it needed in this weeks pre-election budget. Did he? That’s for you to decide.

The budget has helped first time buyers with the abolishment of Stamp Duty on all properties under £250k to the end of 2011. Great news for those looking to join the property ladder, but raises confusion within the mortgage market. What is a first time buyer? Most lenders class a first time buyer as someone who has not had a mortgage for, say, one to three years. Under the new offering will these purchasers be counted out? There is a need to define who will and who won’t still fall foul of stamp duty (unclear at the time of writing this article). Watch this space!

Whatever the ruling, it is a welcome boost to the market. That said, he giveth, and he taketh away! Those purchasing above £1m will now ‘enjoy’ a 1% increase in stamp duty which will be 5% from April 2011.

There is still a lack of property for sale in the market and where are the incentives for those who want to sell and trade up? Let’s be realistic……in the West Sussex area, the gap from a two bed to a three bed property is quite substantial and sits right around this threshold. So if the latter are to sell (at say £225k) and have to pay 3% stamp duty on their new purchase (say £260k) in addition to estate agency fees and the cost of a HIP, whilst their purchasers pay minimal fees, could this deter home movers? Is this a ploy?

A fundamental budget flaw seems to be the continued reliance on the housing sector to drive the economy forward. Whilst banks continue to lend at the bare minimum (their clever advertising paints a different picture) and with few really attractive first time buyer mortgage packages, there were other areas Mr Darling might have looked at to stimulate the market. The stamp duty ‘nudge’ is a sop to catch votes and needs to recognised as such.

The return of Exclusive mortgage products!

2010-03-19T15:50:00.001Z

Lenders are returning to the market! Hooray! Importantly, they are also providing exclusive products again. AToM has an exclusive 2 year fixed product at 3.35% (5.2%APR) up to 75% of the value of the property for both purchase and remortgage. We have £5m to allocate, so if this is of interest, please contact us for terms and conditions. Move quickly as £5m will not last long!

A new lender entered the market last week. Drawbridge Financial have a real appetite to lend and will look at applications on a case by case basis. They specialise in HMO’s (houses of multiple occupation such as student lets), refurbishment loans, short term bridging finance, commercial finance and more. With loans from £50k up to £15m available, this is an attractive portfolio.

The Building Societies Association has reported that only 49% of consumers think now is a good time to buy a property. The barrier seems to be the lack of mortgage finance. With funds easing, I would argue that it is a good time to get onto the housing ladder. What we can be sure of is that house prices are currently low in most areas. Mortgage interest rates are low currently but are likely to rise towards the end of this year and, probably, throughout next year too. So, to purchase a property when prices and rates are on the low side looks like a good prospect.

Meanwhile, credit scoring is creating havoc 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 your credit history is clean, if you want a loan to value of 75% or less and you can prove income, there are lenders who do not credit score, but will manually review and underwrite clean and affordable applications on an individual basis. AToM has access to six 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.

A lenders mortgage valuation may not go far enough.

2010-03-12T17:55:00.001Z

Mystique surrounds mortgage and property valuations, so, firstly, here is a brief overview on the options…….

Lenders require a valuation to be carried out, by their approved valuers, on every mortgage. This report is for the lender only and should not be relied upon when purchasing a property, as it does not go far enough. It only responds to the questions lenders ask relating to the property being suitable security for mortgage purposes. They have no obligation to tell you what is in the report, or give you a copy! Therefore you should always consider the benefit of an independent survey on the property you are purchasing to ensure all defects are noted before signing contracts. There are two main types of survey available, aside from the mortgage valuation.

A Building Survey – an in-depth survey for all properties built pre-1900: listed buildings: buildings that have had extensive alterations, or of an unusual construction. The surveyor will examine all accessible parts of the property and advise on technical information: the condition relative to age: further special investigations required, and provide extensive information on major or minor defects.

Homebuyer Report - a standard format set out by RICS (Royal Institution of Chartered Surveyors). This will not focus on every aspect of the property as will a building survey, but will advise on urgent matters needing attention. It may advise if items might have an adverse affect on the value of the property.

Both will comment on whether the agreed asking price is reasonable and whether it reflects the condition of the property. AToM can recommend local providers for either service.

Lender news includes: Northern Rock’s posting losses of £257m for 2009, a vast improvement from the £1.4bn losses for 2008.

‘Abbey for Intermediaries’ have reduced rates by up to 0.4% on four year fixed products and now have some very attractive offerings. These are only available through intermediaries, so talk to your local independent mortgage advisers!

Finally, Microbiz takes place at the Drill Hall, Denne Road tomorrow (13th) and is a must for any small business or start up. A treasure-trove of information and it’s free! AToM will be there. Come and see us.

AToM win mortgage industry 'Oscar'

2010-03-05T16:04:00.001Z

AToM attended the Mortgage Strategy annual awards ceremony at the Grosvenor House Hotel in Park Lane last week. These awards are the ‘Oscars’ of the mortgage world and an opportunity for those who have managed to survive the incredibly tough climate in the mortgage market, to meet and be recognised. I was aware that AToM had been short-listed but was pleasantly shocked to hear the host, Alun Cochrane (8 out of 10 Cats) announce to the 650 attendees, that the award for “Best Specialist Distributor 2010” goes to…….. AToM! Wow! Two major industry awards in the same week with the latter being the big one! Superb news and really well deserved by all the team at AToM.

Coming back down to earth with a bump, other news this week reveals lenders look like they are starting to enter into price wars. BMSolutions (part of Lloyds Banking Group) recently reduced their Buy to Let rates and, only a few days later, The Mortgage Works (Nationwide) also reduced theirs. These two lenders probably write the majority of Buy to Let mortgages currently and, with both owned by larger organisations, this shows that their appetite in the investment property arena is warming up. Without doubt, there is a huge rental market out there and this is enhanced as more first time buyers struggle to raise deposits to purchase their first properties. With no other options, renting becomes their priority whilst trying to save deposits.

With this in mind, the Council of Mortgage Lenders this week released a report indicating that 80% of all under 30 year olds now need financial help from parents or relatives to make that first step on to the property ladder. With today’s first time buyer needing around £34k deposit, which also tends to be the average annual household income, there seems to be no end in sight for the first time buyer and their ambition to get onto the property market. Whilst there remains no remedy or demonstrable assistance from lenders, the Buy to Let market will continue to flourish.

So much more behind the scenes!

2010-02-26T10:27:00.001Z

I am delighted to commence this week’s column with the fantastic news that AToM has received another national mortgage industry award! We have been voted the ‘Best Mortgage Packager’ by MYIntroducer.com 2010. These awards are amongst the only ones in the industry truly determined by customer votes. Most awards have a panel of judges who vet and nominate. This is our second award for 2010 already having received the ‘Treating Customers Fairly’ accolade from the Mortgage Finance Gazette. We have a super team at AToM and this award is real credit to the hard work the staff have put in during the recent tough market conditions.

As a Mortgage Packager, AToM sticks out from the crowd somewhat. A Mortgage Packager not only works with the general public, but nationally too with many Accountants, Mortgage Brokers, Independent Financial Advisers and Estate Agents. As a Mortgage Packager, with over 10,000 registered introducers on our databases, lenders use AToM to offer their mortgage products seeking quick distribution and marketing to all of the above. This often means that we see exclusive deals, new lenders and product innovations, ahead of the general marketplace. As a Mortgage Packager, we also collate information for the lenders, obtain employer or accountant references, instruct valuations, obtain mortgage offers and in some cases go right through to requesting funds and instructing completions.

Some of these lenders will work through limited distributions, enabling them to control their business volumes. In other words, it’s up to AToM to identify the cases that may, or may not, fit the lenders criteria quickly and direct them accordingly. As a result, lenders may not need to employ as many staff to man the phones or underwrite cases. Thus containing their costs. Some lenders choose to distribute through just nine sources, of which, thankfully, AToM are one. Others will use preferred Mortgage Packagers to distribute specific tranches of their products, and so on.

So in short, we are a little bit like Doctor Who’s Tardis. The AToM shop front opens onto a business which has much, much more going on behind the scenes!

New products and lower rates - Confidence returning?

2010-02-19T12:01:00.000Z

Numerous mortgage rate changes have occurred during the last week or so. Some up, no surprise there then, and some down. Many innovations remain in the mortgage market with lenders offering switch and fix type products enabling you to initially take a low cost Bank Base Rate tracker and, at any time during the term of the mortgage, switch to a fixed rate at no extra cost. Great products, although beware that the switch to a fixed rate will be based on the rate at the time. If tracker rates are on the increase, you can almost certainly guarantee that the fixed rates will also have risen.

One lender has recently re-launched their Buy to Let offerings for properties owned in Limited Company Names and also Houses of Multiple Occupancy (HMOs), including student lets, etc. With Buy to Let rates starting from 4.34% (tracker) and up to 70% loan to value, this is really positive news and signs that confidence in the market is on the up and lenders appetites for volume business is returning.

Further good news as the Co-operative Bank has launched a securitisation deal worth £2.5bn. The residential mortgage-backed securities (RMBS) deal is due to close at the end of February. What does this mean? In short, it's a volume of mortgages, bundled together and sold off to investors as a package. On this basis, it dilutes the downside of any one borrower defaulting. For the industry, it means that the Co-op, once this book is sold, should be able to lend a further £2.5bn in new lending. Others, including Lloyds and Nationwide, have recently completed similar transactions. If these type of deals can once again become more standard, it will be great news for the market and economy.

Microbiz, the HDC initiative for small businesses, takes place on 13th March at the Drill Hall in Denne Road. Please support this – AToM will be there!

Finally, the WSCT Business Awards are just around the corner and if you have not yet voted for your chosen company of the year, then please do (hint hint!).

Why am I being declined a mortgage?

2010-02-12T12:56:00.001Z

So! You have no credit problems: you have a good income: no debts and you are looking to buy a property or maybe remortgage. But then, your bank, with whom you’ve been a loyal customer to for many years, reports back that you have a low credit score and the computer says “no”. They will not offer you a mortgage. This is a dramatically increasing scenario. The world of credit scoring (tick box mentality) has taken over and there’s no arguing with the lender once their technology has made the decisions.

Fear not! There is light at the end of the tunnel. AToM recognised that good clients were being rejected by lenders for no apparent reason and has built up exclusive relationships with five lenders who will assess an application manually and seek to offer assistance to such customers. This is our alternative to ‘the computer says no’ and have found an avenue for the right deals working with lenders that not only manually underwrite cases, but who have an appetite to lend. We call this Complex Prime and it does not just include those turned away by their bank for low credit scores. It could be a case scenario that needs a bit of lateral ‘out of the box’ thinking by an underwriter keen to say ‘yes’. This could include cross collateral security for clients who are asset rich: a sympathetic view for those who have trouble in proving ‘real’ income: customers who need guarantors or maybe just need someone to sit down, review the whole picture and advise on the best route to take.

I have always suggested that you speak to an independent mortgage broker with access to whole of market mortgages. Banks may only advise on their product range. Estate Agents ‘in-house’ mortgage advisers may only be able to offer mortgages from a select panel of lenders. Therefore, in order to get best advice, make sure you do your homework, speak to a whole of market mortgage broker who can advise on the most appropriate mortgage in the market to meet your requirements.

Properties appear to be selling quickly..

2010-02-05T18:18:00.001Z

A customer visited AToM last week to arrange a mortgage for their new property purchase. We obtained an agreement in principle, subject to the lenders normal underwriting, and the clients left ‘very happy’ with the speed at which this agreement was obtained. However, they still had to sell their own property. Most lenders “agreements in principle” are valid for anything between 30 and 90 days. The client left the office content in the knowledge that they had a new mortgage in principle and could confirm this to the vendor’s agents. Their own property was placed on the market the same day. This is usual practice and we then awaited the clients further instruction with regards to proceeding, once sold. The following afternoon, we had a call from the customer confirming that they had received four viewings that day and had accepted an offer nearly ten thousand pounds more than the asking price! One day on sale, two offers and one accepted! Proof, locally, that the market is returning especially if the property and, more importantly, the price is right. Consumer confidence is rapidly on the increase, a lot more properties are on the market and as mentioned above, they appear to be selling!

I attended a product launch in London last week and one of the points of particular interest was the predictions on where the Bank of England Base rate will be in the next 12 to 18 months. Some large banks and building societies contributed to the predictions, including luminaries such as Goldman Sachs, HSBC and Nationwide. The general consensus was that, as we expect, BBR will rise in this time period. The lenders in-house specialists, economists and analysts have predicted that by the end of this year, the BBR will be 1-1.5% rising to around 3.5% by the middle of 2011. Interestingly, despite the same people being unable to predict (in advance) the recession or duration of the ensuing market turmoil, these predictions may just be worth taking note of and maybe a short term tracker rate is worth a look after all….

Out of recession and SVRs on the increase!

2010-01-29T09:12:00.001Z

Mortgages - an interesting world! Gross mortgage lending is quoted to be up 12.5% year on year. Product offerings are increasing. Moneysupermarket.com indicates 384 products are available to those looking for an 85% loan and 165 for those looking for 90%. The UK is officially ‘out’ of recession! Superb news, so perhaps confidence will start to return in the mortgage sector now?
One point of concern surrounds the activities of some mortgage lenders and their reversion interest rates (rates which apply at the end of an incentive rate period). It appears that, despite mortgages being sold with a quoted interest rate ‘ceiling’ at the end of the incentive term, there may be options in the lenders small print allowing increases above this, and at no notice!
One lender which appears to have made such an increase is Skipton Building Society. Their offers ‘allegedly’ quoted a ceiling of 3% above the Bank of England Base Rate. Their new SVR (from March) will be 4.95%, an increase of 1.45%. This is blamed on “exceptional market conditions”! Ouch! Skipton’s actions have suffered the wrath of the national press and now the floodgates are open for others to follow if they have similar ‘get out’ clauses in their mortgage offers. Nationwide have increased some SVRS through their specialist arms UCB Homeloans (0.30%) and The Mortgage Works (0.50%) respectively. Two smaller lenders have announced a 0.35% increase from February.
What does this mean for you? Check carefully the details of your original mortgage offer. If the reversion rate is the lenders SVR, then it’s likely this will be increasing shortly. If it is a Bank Base Rate Tracker then you are likely to move onto an attractive reduced rate, at least for a while! Whichever, it is a good time to review your contract paying specific attention to the sections relating to reversion rates.
The re-mortgage market is reviving and it is a good time to review the market to see what’s available to you. Lenders seem to display little or no loyalty to you, so you have no moral obligation to them. There are plenty of lenders willing to compete for your business. Call AToM for a no obligation review.

Credit Card + Mortgage = not good.

2010-01-22T18:33:00.001Z

A recent report from housing charity Shelter has suggested that as many as one million households are using their credit cards to meet their monthly mortgage or rental payments. This figure represents 6% of homes in the UK, with the charity adding that the problem is growing amongst the middle classes. Without doubt, this is a worrying trend as not only will you be increasing your current debt, you’ll probably be paying interest payments on both your mortgage and your credit card! Shelter have called these figures a “shocking discovery” and warned that in some cases if people were to default on their credit card payments, their homes could be repossessed.
In addition to these striking revelations, Creditaction has reported that 9,300 new debt problems are reported to the Citizens Advice Bureaux and 1,000 people are seeking some formal debt rescheduling plan every day. Therefore, it is unsurprising that in the same report, it is highlighted that a property is being repossessed every 11.2 minutes throughout the UK.
My advice would be not to let the situation get so bad that there is no way back. In the current climate, mortgage arrears are frowned upon as the worst possible misdemeanour. Worse than CCJs, Defaults and other missed payments on credit. Make sure you review your circumstances and take action before it happens. Once mortgage arrears, CCJs or Defaults are registered, every financial institution (including insurance & mobile phone companies) will see these when making decisions on whether or not to lend to you. At the same time, it is likely that any online internet application will fail should you have one of these issues registered against you within the last 12 to 24 months, as nearly all lenders use credit scoring and these inevitably will have a detrimental affect to you score.
To continue the scare mongering, there are only three or so lenders left in the market who will assist clients with adverse credit. The best case scenario is rates around the mid 5%s for historic adverse. The worst case is rates starting from 9.90% with eight, yes eight years redemption penalties to pay if you want to leave them. Therefore, the moral of the story is a simple one. If the going is beginning to look tough, speak to AToM for assistance. Sooner, rather than later!

Rates down and Lenders are attractive!

2010-01-15T15:46:00.001Z

Two weeks into the working year and the mortgage market is looking incredibly positive! Many lenders, including Abbey, Chelsea, Coventry, Halifax and Nationwide have reduced their fixed rates recently. Others have increased the amount you can borrow against the value of the property and another lender has launched an 80% tracker rate with no redemption penalties, meaning you can leave when you like at no extra cost. It appears the active lenders are becoming somewhat nervous at the ‘alleged’ number of applications received by the FSA from prospective new lenders as well as the competitiveness appearing between those already there! As a result, increasing market share has become priority and lower rates and competitive products can only be good for all!

We have also noticed a number of lenders becoming somewhat more relaxed in arranging mortgages that don’t fit the normal credit score mould. Some while ago, I mentioned that AToM had re-launched its ‘Complex Prime’ proposition. Complex Prime looks at applications which, ‘for whatever reason’ do not fit the normal high street mentality or need something of a more complex underwriting nature. A short list of examples include applicants with no credit, too much credit, a desire to pay up front or add additional security in the form of another property increasing their ability to borrow more. We have five lenders on our panel already looking exclusively at this scenario for AToM. One has awarded AToM a £10m tranche of funds, so there is no better time to visit our offices in the Carfax, Horsham, to see how we can assist you.

Finally, why not visit our website at www.atomltd.co.uk and review all of our financial offerings. These range from the ability to apply online for mortgages from the whole of market, secured loans, credit cards, right up to switching your mobile phone, gas and electricity bills or simply to review your current insurances. Give it a try, you’ve got nothing to lose, but a possibly a lot to save!

2010 - time to be positive!

2010-01-08T13:08:00.001Z

Firstly, a very Happy New Year to one and all! What a way to start……..VAT is back to 17.5%, the Stamp Duty threshold has returned to £175,000, and the fluffy white stuff is causing havoc (and great fun!). As 2010 emerges from the grey of 2009, what portends for the mortgage market as we head towards the Spring? A General Election, more regulation and greater confusion for those looking to step onto the property ladder, or change their mortgage?

The challenge we face in 2010, as a mortgage intermediary, is being able to compete on a level playing field against those organisations that conduct non-advised sales (especially the banks) or who are not independent and do not remotely offer even a representative ‘whole of market’ offering. Whatever your scenario, you need and deserve to be given advice for all products available in the market, not just a chosen few!

The other challenge facing us all is the national debt! The myriad of press and TV coverage will have ensured that we are all fully aware that, whoever wins power in the forthcoming elections, there will be financial pain meted out to the community to engender recovery of this issue which has spiralled massively out of control.

Good news this week in that one of the larger property websites has allegedly reported that, on Monday alone, they received more hits than in the whole of January 2009. Positive news and greatly received so early in the year!

We too, had a positive end to 2009 with more new applicants than for many months. If this is a sign of returning confidence then that is good news all round in the home mortgage sector. Confidence is contagious and is a good thing. Let's start the year that way and, who knows where it might lead us?

Something to ponder..

2009-12-18T17:07:00.000Z

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

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

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

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

AToM launch 'Complex Prime'

2009-12-14T09:29:00.000Z

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

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