27 November 2009

"bedside manner" counts, even from Brokers!

Mixed messages from lenders this week! One major high street lender is apparently 10% below its projected business target. This is great news as, shortly, we should see some highly competitive rates launched to attract new business, as we move towards the year end. Another lender who suspended lending last year is back, albeit with a limited product offering. But again, this is great news.
Conversely, some lenders are experiencing severe service issues and, despite being low on intake, have tightened criteria which curtails new business whilst offering a better service to customers. What you can get today, may not be available tomorrow.

As I reported recently, the last remaining self cert (no proof of income) lender withdrew from the mortgage market. They also took with them some great adverse product offerings. This has resulted in just a handful of lenders offering products to those who have incurred CCJ’s, defaults, bankruptcies/IVAs or who have poor payment profiles. The volume of business submitted to the remaining lenders has increased their exposure in this sector and one lender has already suspended certain products in order to stem the intake of new applications.

It really is becoming tougher to get a mortgage in the current climate and now, more than ever, you should do your homework and speak to a ‘whole of market’ mortgage adviser and compare all mortgages available. Even Martin Lewis, of moneysavingexpert.com, writes on his website “Ask ‘em – Are you Whole of Market”. If the person you are speaking to is not offering “whole of market” advice, i.e. they just review a panel of selected lenders, you may not be getting the best product for your needs and/or requirements. And remember, you can place your mortgage with whoever you like. You are under no obligation to anyone, despite what some may say! Everyone covets your business and there appears to be some underhand (and not necessarily compliant) tactics going on. Again, to quote Martin Lewis – their “bedside manner” counts! If you don’t like their stance, or they’re ‘forcing’ you to use them, walk away….!

20 November 2009

Another year yet..

Every year, the mortgage industry holds an exhibition for all providers in London. The event lasts two days and it’s a good chance to meet lenders, discuss business with competitors, and review new product providers, etc. However, this year, it was somewhat of a small affair held at Olympia and only five or six out of the 60 exhibitors (normally 200+) were lenders happy to invest in promoting themselves and their product offerings! I still decided to visit and met with those who were participating and the general consensus was buoyant and one of optimism. This was until day two, when the last remaining Self Certification (no proof of income) lender withdrew from the market. If there’s one thing the market needs right now, it’s more lenders, not less! Although only lending a small amount compared to the high street names, a couple of billion is still a lot of lending in the specialist markets! Less than a week later, we’re already seeing a gap in the market which Self Cert used to fill.
The other message, repeated by various sources, was that the expectancy for new lenders to arrive and for lending to increase dramatically is still another year away. What does this mean? In short, the lenders currently lending can control the market between them. They have limited competition and, as long as they hit their own internal targets and profitability, need not reduce rates and/or fees to attract more customers. They can also keep criteria controlled and have a limited appetite to review applications that don’t quite fit their standard mould.
I’ve said it before, but it needs re-iterating again and again - if you have plans to apply for a mortgage in the not too distant future, keep your head above water. 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 (for 30days) from the AToM website. It’s well worth a review and a good insight on how attractive you look to a lender!

13 November 2009

You could be stuck in your current property...

It has been a very mixed week in the mortgage market! Recent reports suggest that the FSA have admitted to putting increasing obstacles in front of potential new mortgage lenders. Superb! So we’re left with the small number of current lenders, and their inability to share Quantitative Easing monies received from the Government. So much for competition in the mortgage markets and the much trumpeted instructions from the Government and Bank of England for lenders to lend!

As predicted a few weeks ago, the Self Certification (no proof of income) mortgage market has been dealt a major blow. Of the two lenders left, one withdrew last week and it is likely that the ‘last man standing’ will not remain so for long. I’ve no doubt that they will withdraw possibly before the FSA’s mortgage market review request to ban Self-Cert comes in to effect earlier next year. Whilst it is probably true that there has been some abuse of this product, and lenders are not immune from responsibility, it is still suitable for the right people in the right circumstances, especially the self employed. I am concerned that the forced demise of this sector has not been carefully thought through.

UPDATE - since submitting this article on 11/11 for publishing on 13/11, the last lender offering self cert mortgages has now also withdrawn from the market.

2.5 million homeowners are living in their current properties for longer than they had originally planned, reports Unbiased.co.uk. Of those surveyed, one in four homeowners are stuck in their current property due to the fact that they have been unable to sell at the price they envisaged. Another quarter are staying longer than planned because they cannot afford the increased mortgage repayments on their next home!

And finally, with Bank Base Rate remaining at 0.5% for the umpteenth month in a row and with some attractive products available in the mortgage market, this really is a good time to look at a new mortgage. Remember, you can deal with whoever you want to! Speak to your local and independent mortgage brokerage as soon as possible to ensure you don’t miss the right product for your specific requirements. You know who to call!

06 November 2009

The run up to Christmas bargains!

Competition is rearing its head in the mortgage market as lenders start to flex their muscles, lowering interest rates in order to attract volume business before the year ends. Both fixed and tracker product rates have been reduced of late. Base Rate Trackers seem to be back in favour with many as pundits predict that the Bank of England base rate will remain low throughout 2010 (at least) with rises predicted at some point in 2011. Many re-mortgage deals are now being offered with free valuations and free legal costs. Although purchases continue to outstrip re-mortgages by some margin, this might be a good time to consider a re-mortgage bargain in the run up to Christmas with little or no cost involved to change lenders. With product availability on the increase, it’s certainly a time to review all the options and speak to an independent mortgage brokerage to ensure you don’t miss out on the right product. They may not be around for too long in this still fragile market!
October saw a 0.4% rise in average property prices - according to Nationwide – the sixth consecutive monthly increase, taking the value of an average home to £162,038. However the society warned that the pace of monthly increase is slowing and this aligns to other predictions that the first quarter 2010 may prove to be static or possibly even deliver a decreasing house price market.
So, having encouraged banks to get together, and funded them with billions of our hard earned cash, HMG is now looking to break them up! Not only that, but they are going to give them another huge chunk of cash too! How does that work? Well, apparently this edict is from our European masters who have decided that perhaps our banks are too large! I may have a simple outlook, but is this not what many of us said at the time worrying that there was a great danger that too few banks would have too great a control? Its beggars belief that we would willfully waste such large sums of money in such a short period of time and all at the expense of the UK taxpayer! Or is it just me?

03 November 2009

Are you invisible to Financial Institutions?

30/10/09 - When applying for finance, if you don’t appear on the electoral roll or don’t have any credit, some lenders may consider that you don’t exist financially! This has been the bain of our lives over the past few months! In current climates, it seems that lenders only need to find the smallest of excuses to not agree a mortgage request. Historically, lenders were often more amenable if an applicant could not be located on a credit search. Today, if you have no regular credit commitments or do not appear on the electoral roll at your current address, be prepared for a knock-back.

The market has been pretty quiet this week, with only a few lenders making headlines and reducing rates. I suspect the market is still coming to terms with the impact of the FSA’s proposals for the mortgage market, as reported in last weeks column.

AToM is experiencing large numbers of ‘complex prime’ enquiries lately. One example is for an expatriate living abroad and who are working for a non international company seeking to re-mortgage a property which is currently rented out in the UK. Another example - for tax purposes - customers seeking to purchase a number of investment properties in a Limited Company name with their company structure designed purely to hold properties.
These are live examples which certainly can be placed. They just need a bit of extra thought and the location of lenders who don’t fit the normal credit scoring mentality.

Santander’s UK Banking arm, who own Abbey, Alliance & Leicester and Bradford & Bingley has confirmed a profit for the first 9 months of 2009 of £1.16bn, an increase of 58% compared to the same period last year! This is positive news and indicates that the market is turning. I am sure that we will see others reporting huge profits before the year end!