So much more behind the scenes!

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?

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?

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..

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….