And 200 mortgage columns later....

Way back in November 2008 I was engaged in an interesting conversation about the parlous state of the mortgage world and enjoying a coffee with a friendly WSCT manager, when I inadvertently agreed to write a weekly column specifically geared to the mortgage market and its impact both locally and generally.  Who would have thought that, four years later I would still be writing it, the paper would still be publishing it and more importantly, you are still reading it! 

As I reach the 200^th column milestone, it is fair to say that it has been an enjoyable and rewarding task enabling me to express a personal view of the mechanics as well as the financial issues which affect us all in our everyday lives.  Sometimes not for the fainthearted, it has to be said, but hopefully useful nevertheless.

The last four years has seen seismic change in the mortgage sector and this has included a high street lender or two hitting the wall in late 2008. Since then I have commented on detail including a dip, a double dip and even the possibility of a triple dip recession.  None of us have any firm indication either way on the latter at the moment!  We have seen times when mortgage availability was so limited that we were almost back to the days my father sometimes refers to when mortgages were rationed and you had to have sufficient savings with a lender simply to gain an interview! 

Lenders have come, lenders have gone.  Quantitative easing, Swap rates, LIBOR Rates, Funding for Lending and many other ‘jargon’ titled mortgage terms have been regular features in my articles. In more recent times we have seen a gradual increase in mortgage product availability and more so in product innovation designed to help gaps in the market. These have included niche First Time Buyer products and the dramatic increase in Bridging Finance.  In the last few weeks I have been able to report on the fantastic rate price war in all areas of the market, which now proudly boasts over 4,000 products.  Still some way to go from the boom time of 07, but the light at the end of the tunnel may no longer be the headlights of an oncoming train!

On reflection, the last four years has been a roller coaster ride in the mortgage marketplace and I envisage that there may still be a rocky ride ahead but with a more positive outlook than at any time during that period.  I look forward to continuing to report on developments as they occur and I hope that 2013 will bring further competitiveness within the mortgage sector.  This can only be of huge benefit to the end consumer.

Finally, for this article at least, thank you to the WSCT for printing my column each week and an even bigger thank you to you for taking interest in them.  Here’s to the next 200....!

Active lenders are not just a household name or brand!

I might even be bold enough to start this week’s column by saying the market has turned a huge corner and is on a substantial climb out of the doldrums!  Wow, what a week it has been.  Competition is rife amongst all lenders, from well known high street names; right through to lenders you’ve never heard of; to those funding commercial mortgages; to those specialising in secured second charges; to those looking at investment properties / buy to lets and to those who offer mortgages for complex scenarios that need a little thinking about, outside of the box.

Rates are reducing all across the market and headline grabbers are now sub 2% for a two year fixed and around 2.7% for a five year fixed.  T&Cs apply obviously, but watch out for the fees.  They range from £1,500 to £1,999 and although the rates are great, they might not be the best in the market, if priced over the term period.  For example, a slightly higher rate, with lower fee and free remortgage package (free valuation and solicitors) might work out more cost effective over the same period.   Always review the APR, the rate your mortgage reverts to after the promotional period and always seek professional advice. 

Active lenders are not just those with a household name or brand.  Many smaller funders / lenders located in various parts of the country have money to lend, and at good rates, if you know where to find them.  So don’t be drawn to a lender just because you know their brand.

With this in mind, figures released recently suggest that lending via Building Societies rose 30% in 2012 with net lending of £6.5bn.  And it’s not just for those with a large deposit as almost half of the sectors lending was against 75% of the property value and above.  In addition, Building Societies are more flexible than banks and can manually assess cases, taking a view of the whole scenario rather than a tick box decision.  First Time Buyers, Self Build, Shared Ownership, Home Movers, Buy to Let, Credit Repair and Let to Buys, are just some of the active areas for such institutions. 

It's all 'go' in the Mortgage market!

There are many changes in the mortgage market to report on this week!  I start with those who have cut rates or launched new products!  These include Halifax (some rates reduced by 0.5%), Barclays (some rates cut by 0.5% across residential and Buy to Let ranges), Aldermore Mortgages (some Buy to Let rates cut by 0.8%) and Precise Mortgages (some rates cut by up to 1%).  Others including HSBC, Tesco Bank and the Post Office have all launched very attractive low fixed rates.  However, always make sure you read the small print as although the rate may be attractive, the attached fees to the product may not be so and the deposit required is probably quite substantial.  Another important point to check is the rate you will revert back to when the product fixed rate ends.  You don’t want to have a ‘payment shock’ at the end of the term if the rate you revert to turns out to be substantially higher than your initial rate.

Saffron Building Society have launched a superb innovative product in to the specialist sector aimed at those who have had a slight blemish or two on their credit history.   Called the ‘Credit Repair Mortgage’, the product, which has no early repayment charges at all, is looking to assist those who have had financial issues in the past obtain a mortgage with a view to repairing their credit score and eventually getting them back on to high street rates.  The product caters for First Time Buyers as well as home movers and is initially for those who are employed.  The real win win on this product is that the longer the customer is with the lender, the lower their rate becomes.  For example, one product tier reduces annually by 0.4% for the first three years.  This is great innovation!  Terms and conditions apply…

Secured loans have also had a positive week as Shawbrook Bank launched a 95% LTV (loan to value) home owner product.  Loan sizes range from between £3,000 and £25,000 and are secured against the property as a second charge.  This is a really great move by the lender and will service a considerable gap currently in the market when mainstream high street lenders won’t allow a high LTV loan to a customer as a first charge.

Mortgages for the Self Employed or Over 65s

Mortgages for the self employed have, over the years, sometimes been as difficult and as scarce as those for First Time Buyers.   Lenders have noticed this and a few have taken action.  Over the last couple of weeks, we’ve seen some lenders launch products just for the Self Employed.  Specifically aimed at those newly self employed and with minimal accounts.  Although not household names, specialist lenders have funds to lend and a desire to create products to assist gaps in the mortgage market.  For instance, the usual requirement on the self employed is 2 or 3 years accounts and possibly the SA302 returns from the Inland Revenue.  The specialist lenders, for the right deposit, will allow just 1 years accounts to prove income, normally with an accountant projection for the second full year and probably up to six months personal and business bank statements.

Product innovation is key in the current climates, when volume is not necessarily the be all and end all.  As mentioned, specialist products to fill gaps are high in demand.  We’ve seen some lenders insisting on repayment of their mortgage around age 70 regardless of the clients circumstances and others will no longer allow 'sale of property' to be an acceptable repayment option at the end of the term for those currently with interest only.  Customers are seeking solutions.

One lender, through AToM, has provided one solution to the ‘lending in retirement’ conundrum. Often, retired people have managed their finances successfully over the years and enter retirement mortgage free.  At the same time, many, whilst having no mortgage, also suffer from reduced income and there is a saying in our profession that it is not always wise to have everything tied up in bricks and mortar and yet have nothing to spend.  Others may wish to continue their mortgage passed the normal lender retirement age, whilst they may still be working.  There are schemes where equity can be turned into a mortgage (not equity release) and where off-spring may be able to assist with the repayments in order to secure and protect their inheritance whilst also ensuring a comfortable retirement for their parents.  This is not right for everyone but it is certainly worth talking to a qualified advisor to review all possibilities.