23 December 2010

Goodbye 2010.....and 2011 - 'bring it on' !

For my last column of the year, I thought I’d start with the obligatory round up of 2010!

It’s been another year of highs and lows, with many businesses struggling to survive and some major players leaving the market. The beginning of 2010 saw mortgage rates rise, despite a low Bank of England Base Rate (BBR). Yet, a reversal in the second half of the year saw lender rates drop as they chased volume business. Abbey, Bradford & Bingley, Alliance & Leicester, etc re-branded and become Santander. Metro Bank was the first new high street Bank launch in 100 years! A coalition government now steers us on the road to recovery (!) and the Financial Services Authority is to be disbanded. In reality, it is a name change (Consumer Protection and Markets Authority) with a new owner and location (BofE)! I won’t mention the world cup! And, despite consistent ‘mortgage approvals in decline’ stories, there has been increased mortgage activity and lender appetite in recent months.

So what for 2011? There are predicted signs of growth with total mortgage lending estimated to be approaching £140bn, compared to the £136bn estimated for 2010. Tesco Bank are due to launch. House prices are predicted to dip slightly. Who can guess what will happen to BBR although, at a recent conference, a well respected commentator suggested that BBR would not move until 2012 at the earliest. Another major question revolves around interest only mortgages, with many lenders removing this option at certain levels, are its days numbered? Don’t forget the VAT increase due in January. The repayment by Banks of the Specialist Liquidity Scheme, a mere £200bn+, is due towards the end of 2011 and early 2012. We expect to see this as a lender priority late into the year.

So, the reality is another year of highs, lows and a small mix of uncertainty for us all. Let’s also hope someone rushes to help first time buyers…

Thank you for reading my column throughout 2010. It has been a hard task trying to deliver a positive spin in a negative market. There are no plus points for ignoring the truth! Please let me know if there are any specific issues/areas you would like me to cover in coming months. You can email me at dale.jannels@atomltd.co.uk, or call me on the above number.

The directors and staff at AToM wish you, your family and friends a very Merry Christmas and a relaxing New Year. We look forward to being of assistance to you during 2011.

17 December 2010

Sort your finances today, not 'tomorrow'!

A time for giving, a time for receiving and a time to keep a close eye on your finances! I know, boring and Bah Humbug! However, a little bit of your time, and sifting through old paperwork over the Festive period, could save you money in the New Year!

It always surprises me how few people actually know what rate they are on, the type of mortgage, i.e., fixed rate, tracker rate, etc, and whether they are paying interest only, or capital repayment. Unsurprisingly, almost everyone knows what it costs per month to the nearest penny! They will haggle for a £10 discount on a new washing machine whilst letting ‘sleeping dogs lay’ when it comes to their mortgage!

It’s very easy when the promotional rate period comes to an end to keep your mortgage with the same lender, ‘brush it under the carpet’, and deal with it ‘tomorrow’. But, we all know tomorrow never comes. A review of what’s on offer from other Lenders could give you a nice start for 2011, especially if you’re currently on a Standard Variable Rate, or equivalent.

Many Lenders are offering superb remortgage opportunities with minimal costs to change, including free standard valuations and legal costs. Rates are competitively low and mortgage product choice is at it’s highest for some time.

With the Festivities just around the corner, there really is no better time to think about finances. Available credit is in somewhat short supply and the price people will be prepared to spend on Christmas this year may well receive much more thought than in previous times.

It could go two ways - firstly, people could put their cares to one side, forget the 2010 trials and tribulations and flex the credit cards with any spends being forgotten until later. Or secondly, the purse strings will be drawn and funds will be tightly managed.

The important thing is to remember to only spend what you can afford and, if you are a mortgage holder, look to see what savings you can make (it could be hundreds per month) to prepare for a better year in 2011.

10 December 2010

A good finish to 2010!

The end of the year is turning out to be quite a positive affair! AToM towers enjoyed a stunning October superseded by a better November for new business applications, as consumers reviewed their finances and looked to secure deals in time for the Christmas break. Many wanting to fix their mortgage payments for 2011, and beyond. Surprisingly, new purchase applications nearly matched the remortgages in number. Although the actual volume of loan amounts decreased by nearly £2m!

For the employed consumer, mortgages are relatively easy to come by. For the self employed, where net profits, drawings and dividends have been generally low over the last 24 months, it’s becoming slightly more difficult, despite the number of mortgage products being on the increase. There are many alternatives than can assist in these types of scenarios. Some lenders will look at adding additional properties as security for mortgage purposes; others will look at investing two or three years upfront mortgage payments as additional comfort for the lender where income is not necessarily easily provable. Whatever the scenario, and no matter how complex, there may well be a lender willing to assist.

Finally, the FSA (Financial Services Authority) has deferred implementing its approved persons' regime until 2012/13. As part of the Mortgage Market Review (MMR), the FSA announced that it would be extending the approved persons’ regime to include anyone who advises on or sells mortgages (mortgage advisers/brokers and Bank staff). The FSA says it remains committed to making these changes to the approved persons’ regime, but as part of its ongoing reprioritisation of work, it is deferring introduction of the changes from 2010/11 to 2012/13.

The MMR may be a controversial proposition, but the approved persons regime is one which most people agree could genuinely benefit the consumer and will be a positive step towards a better industry. The cynics question might be to ask, who’s not ready for these changes? The FSA internally, or the Banks in being able to train their staff in time?

03 December 2010

Mortgage approvals down, but product choice increased

The official line from the Bank of England is that mortgage approvals declined for the sixth month in a row. A reduction of` 0.4% in October compared to September. However, despite these headlines, nearly 100,000 people were approved for a mortgage and total lending amounted to over £11bn! We still appear to be trying to relate to 2007 figures (£30bn+ per month) and it is unlikely that we will be at that level again for some years yet. We really should be thankful that financial institutions are lending at all!

In comparison, as predicted in an earlier column, mortgage products are rapidly on the increase as we move towards the year end. Moneyfacts report that the number of mortgage products now available to borrowers has grown significantly, with mortgages at 80% LTV, or more, seeing the biggest improvements. At the same time rates continue to fall, with the average two, three and five-year fixed rates all standing at the lowest level seen since records began. At AToM HQ, we’ve seen an increased number of consumers switching from current deals to secure a low long term fixed rate. Some are even opting for a short term low rate tracker. Many lenders are offering free valuations and free legals on remortgages, so the cost of change can be minimal. Some lenders have even re-launched exclusive products via certain mortgage distributors in order to attract new business before the year end. These products tend not to be available on the high street, and a review with an independent mortgage advisor could be time well spent.

Finally, no one really knows what is going to happen to house prices month on month in the current climate, but two separate sources have predicted what they think 2011 will bring. Hometrack, an online automated property valuations company, suggest that house prices will drop by 2% whilst a fall of 3.1% is predicted by the Office of Budget Responsibility, an independent assessment body. Although these are only predictions, and are subject to change, the underlying message appears to be consistent for next year…