14 September 2009

Lender delays....although properties are selling!

SWAP rates (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 3.30% mark. The Lender then provides the product to you, the customer, at rates currently in excess of 5%. Add in an arrangement fee of circa £999 and you will understand my sceptical view that huge profit figures will be released by the Lenders later in the year when they report on their 2nd half of 2009 figures!
The surprising bit is that despite such comfortable circumstances some lenders find themselves in, they’ve not replaced staff that were sadly laid off over the last 18 months and, as such, are incurring service issues! Some are in excess of ten days behind! With property prices competitively priced and deals in need of a quick completion, before the chain collapses or someone gets gazumped, such delays could not be incurred at a worse time.
Despite these issues, some lenders are following swap rates and have reduced rates this week. Good news for those looking to purchase or remortgage (bad news for those in a hurry!). Others have tried to curtail their volume of business by tightening up on criteria, or by increasing the deposits required on their mortgage product portfolio.
First Time Buyer enquiries continue to engulf ‘AToM towers’, exploring all avenues in order to get on to the first rung of the property ladder. With rates reducing, we are also predicting that remortgage applications will increase over the next few weeks as people look to secure decent rates and ensure monthly expenditure is fixed for the foreseeable period. We’re also informed that properties are selling like hot cakes, although supply is still somewhat sparse.
Many experts are predicting the worst is over and a slow recovery has started. How slow, no one knows, but it’s not just positive talk in the market any longer, small signs are beginning to show.

07 September 2009

First Time Buyers will get the ball rolling again...

First time buyer confidence is increasing. We are seeing healthy enquiry levels from first timers either on their own or using a shared ownership scheme. Lenders historically agreed mortgages based on income multiples. Some would lend up to 3.75 x income, some up to 5.1. On joint applications similar style calculations applied. Most lenders now base their decision on affordability along with a review of your credit history which details financial liabilities, previous addresses, financial associations you have with other people and much more. Credit searches provide a full financial picture to lenders, enabling them to decide if you have a good risk profile. You can access your own Experian report via the AToM website and we recommend this to any applicant looking at the mortgage market. It is well worth understanding what details a lender will be using to assess your potential borrowing capacity.
Despite the school break coming to an end with many of us breathing a sigh of relief to have survived it safely without losing too much hair, Christmas is just around the corner and will creep up quickly! Have the last few weeks been costly? Have you been ignoring your finances hoping they will go away? Are there financial decisions looming? If so, now is a good time to start reviewing them.
Recent figures from Credit Action suggest that 33,600 applications for credit have been turned down daily during the past six months. 3,036 people became redundant daily in the 3 months to the end of June. In the same period 125 properties were repossessed daily and, today, 362 people will be declared insolvent or bankrupt. Stark figures indeed!

An Equifax survey recently reported that almost 30% of consumers are turning to parents or close family members for help with debt repayments or finances. More than 50% will openly discuss their financial situation with friends and family. This being the case, it really is time to seek independent professional advice.

Undervalued. Lenders in control! Never....!

28/8/09 - Houses are being undervalued by mortgage lenders causing sales and re-mortgages to fall through according to research by the National Association of Estate Agents. Discrepancies between agreed sale prices and valuations are having a detrimental effect on the number of property transactions, says the association.
These revelations are perhaps not entirely unexpected as many of the large lenders either own their own valuation companies or employ in-house valuers. They insist on using their own valuers to assess a property for mortgage purposes receiving revenue for both mortgage and valuation! Those who take a cynical view might say that this allows those large lenders to have an element of control over house prices and this now appears to be a cause of concern for the NAEA. Does it also raise the spectre of conflict of interest and good governance?
Additionally, some surveyors appear to be predicting that house prices will rise over the next three months, partly due to the current lack of supply on the housing market. RICS (Royal Institute of Chartered Surveyors) indicates that the number of properties left on estate agents’ books remains low, despite a rise in the number of new instructions for the first time since May 2007. However, they also warn that if the availability of mortgages remains constrained there is a risk that prices will fall again as the potential dual prongs of rising mortgage rates and unemployment take hold.
The Council of Mortgage Lenders points towards signs of stabilisation in the mortgage market but says that lending levels remain weak. House purchase loans accounted for £5.9bn in lending, up 23% from 36,500 in May to 45,000 in June. The CML points out, however, that this is less than half the average number of loans recorded in June over the last seven years.
That said, there are still some good deals out there so if you decide to review your own mortgage position over the weekend please do call us! Have a great Bank Holiday weekend!

Sale & Rent Back

21/8/09 - Lets start this week with some statistics: Mortgage lending is at its lowest level since March 2001 (source British Bankers Association). By the end of 2009, 360,000 mortgages are expected to be in arrears and 65,000 homes will have been repossessed (source: Council of Mortgage Lenders). Unemployment will top 3 million before this recession comes to an end (source: British Chambers of Commerce). The Government’s Mortgage Rescue Scheme, designed to help 6,000 families avoid repossession, has so far helped just 6 (source: HM Government).
So what does this all mean? Simply that there are large numbers of mortgage borrowers who may struggle to keep their heads above water, financially, during the year ahead. However, not all news is bad news and, even for those who find themselves in deep trouble, there are some options which might help them keep a roof over their heads. Out of the gloom are some positive facts which might help them relieve their position:
The UK's first ethical sale and rent back scheme was launched in May this year and which, subject to criteria , gives homeowners the ability to avoid repossession and keep a roof over their heads. The RPS Home Rescue & Buyback plan offers tenancy agreements for up to 5 years, the option for tenants to buy back property and share in any increase in market value and the added benefit of having no application or administration fees to pay. The prospective clients are not pressured into making a decision. Indeed, they are encouraged to take independent advice and are given £500 towards any legal costs this may incur. Whilst, historically, Sale and Rent Back schemes have had bad press, RPS have gone the extra mile and encouraged the Financial Services Authority to regulate their product giving potential clients additional comfort value. Contact AToM if you would like more detail on this offering.