Each month I shudder as various statistics arrive on my desk - £130m daily increase
in Government national debt (PSND); 1,600 people made redundant daily; 99 daily
property repossessions and the suggestion that every UK adult owes £29k (122%
of average earnings). This, in addition to the global issues currently taking up the daily headlines and adding immense pressures to the various financial markets, does not paint a pretty picture of
what might lie ahead.
However, we can take some small positives as current lending markets see a little Retail
Mortgage-Backed Securities (RMBS) action occur. 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 Lender,
once this book is sold, should be able to lend a further amount in new lending. Competition with product pricing is also more active than of recent months and appetite for volume lending is apparent with a few exciting exclusive product launches.
One thing to think about when taking out a new mortgage is the reversion rate of that product (the rate at which the mortgage reverts to, once the incentive fixed, discounted, tracker rate period expires). Some lenders tend to revert to a tracker rate at an amount above Bank Base Rate (BBR). Others revert to their own Standard Variable Rate (SVR), and even in the current climate, they can be high (5.99% +). Always do your homework and make sure you understand all the elements of your mortgage before signing on the dotted line. Ensure that you have no cause for regret later.
Finally, next week sees the great and the mighty of the mortgage industry meeting together at Olympia 2, London for Mortgage Business Expo 2011. This exciting two day event consists of lenders and ancillary businesses showing their wares and seeking to establish increased business relationships and volumes. Many presentations occur over the two days, but the most anticipated
will be the ‘update on the mortgage market by The Financial Services Authority’. I suspect that this one will be standing room only and I’ll update you on their thoughts and views in the coming weeks.
in Government national debt (PSND); 1,600 people made redundant daily; 99 daily
property repossessions and the suggestion that every UK adult owes £29k (122%
of average earnings). This, in addition to the global issues currently taking up the daily headlines and adding immense pressures to the various financial markets, does not paint a pretty picture of
what might lie ahead.
However, we can take some small positives as current lending markets see a little Retail
Mortgage-Backed Securities (RMBS) action occur. 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 Lender,
once this book is sold, should be able to lend a further amount in new lending. Competition with product pricing is also more active than of recent months and appetite for volume lending is apparent with a few exciting exclusive product launches.
One thing to think about when taking out a new mortgage is the reversion rate of that product (the rate at which the mortgage reverts to, once the incentive fixed, discounted, tracker rate period expires). Some lenders tend to revert to a tracker rate at an amount above Bank Base Rate (BBR). Others revert to their own Standard Variable Rate (SVR), and even in the current climate, they can be high (5.99% +). Always do your homework and make sure you understand all the elements of your mortgage before signing on the dotted line. Ensure that you have no cause for regret later.
Finally, next week sees the great and the mighty of the mortgage industry meeting together at Olympia 2, London for Mortgage Business Expo 2011. This exciting two day event consists of lenders and ancillary businesses showing their wares and seeking to establish increased business relationships and volumes. Many presentations occur over the two days, but the most anticipated
will be the ‘update on the mortgage market by The Financial Services Authority’. I suspect that this one will be standing room only and I’ll update you on their thoughts and views in the coming weeks.
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