23 June 2009

Fixed rates at the beginning of a steep hill?

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

17 June 2009

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

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

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

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

02 June 2009

Sale and Rent back...back?

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