26 March 2010

He giveth....he taketh!

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.

19 March 2010

The return of Exclusive mortgage products!

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.

12 March 2010

A lenders mortgage valuation may not go far enough.

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.

05 March 2010

AToM win mortgage industry 'Oscar'

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.