28 November 2013

Activity on the increase. So is development!

With activity on the rise, I’ve been travelling around a lot recently and enjoying the countryside whilst trying to avoid the M25 Car Park!  What I have seen is an amazing amount of building work and renovations / extensions being carried out.  Many home owners appear to be improving their current residence rather than taking the big leap of selling and moving up (or down) the ladder.  This appears consistent with the general view that there is a shortage of properties up for sale and in fact, some agents have told me that they are becoming really quite worried about stock levels in the early part of next year.

Other consumers might be making the next step, but are then renting out their current property on a Buy to Let basis rather than selling it.  Nice if you are in that lucky position!  The rental market is certainly buoyant and showing no signs of slowing down over the coming months. So a Buy to Let might provide you with a modest return for your investment and may be the start of building a little portfolio nest egg for later on life. We have noticed that this is a growing desire for many who fear that their pension arrangements may not be sufficient and that rental income may be a suitable supplement.

Lenders are still competing for business even as we move in to the final stages of the year.  Over the last week we’ve seen further launches in the 95% mortgage arena for first time buyers, lenders lowering rates in the Buy to Let sector and the specialist bridging / short term lending market has seen movements in both criteria and rate decreases. 

There are many opportunities whatever your circumstances and lenders are willing to have a conversation in order to do the right deal.  These are not always high street names, so do speak to someone who has whole of market access and not just a limited panel of lenders.   Finally, remember to always read the small print and understand all fees involved.  The lowest rate on offer may not always be the most cost effective over a period of time for you.

21 November 2013

Funding Christmas is not for life! Are rates to go up sooner than expected?

Christmas lights are up, Christmas trees are up, Christmas adverts are on the TV and Christmas songs are being played in the shops.  Christmas really has come early this year.  I’m not a total bah humbug but just remember that if you intend to fund Christmas on credit, it will have to be repaid at some point!  I’m currently being bombarded by 0% balance transfers on credit cards and increasing credit limits, when I’m not even using them.  The temptation is huge.  The problem is, these companies need you to use their cards and they will do everything to tempt you.  However, they are also the quickest to jump should a payment be missed or late.  Be wary that one or two late or missed payments could result in a default registered against you that you may not even know about until you next apply for credit, insurance or some other financial requirement.  Christmas is for Christmas, make sure it’s not for longer..
There is a 40% chance that rates will go up in 2014, according to the new Bank of England Governor Mark Carney.  Following recent comments that rates would not rise until unemployment fell below 7 per cent, a recent report suggested that national unemployment had fallen to 7.6 per cent in the three months to September.  The Bank’s quarterly inflation report forecast now suggests that there is a 40% chance of a rise in 2014, a 60% chance in 2015 and a two-thirds chance in 2016.  
Nationwide Building Society has reported its best half year of lending for five years.  The lender advanced £14bn in the first six months up to end of Sept.  This is 37 per cent up compared to the same period in 2012.

Finally, one of the mortgage trade magazines suggests that the Financial Conduct Authority is in talks with 21 firms ahead of them applying for full bank licences.  Although at ‘informal pre-application’ stage, this is positive sign that funding is available and competition is likely to return to all sectors of the market.   This can only be good news for the end consumer!

14 November 2013

Age is not an issue when it comes to mortgages.

You may have seen last week’s Watchdog where an article covered the maximum age that most high street lenders will allow customers to keep their current mortgage to.   The report, in the main, suggested that on the high street the term of a mortgage must finish when a customer’s age reaches 70.  A small number of lenders went slightly higher with one allowing a maximum age of 80.  But what happens when that age is reached and there’s still a debt outstanding?  Although the top six lenders have these stipulations, there are a further sixty other lenders who offer different criteria.  For example, we recently arranged a traditional style of mortgage for a 92 year old!  If the case is good, affordable and has a good amount of equity in the property, then there is every reason for a lender to carry on to lend to that customer.  You just need to know where to look and be happy to deal with a non – household named lender!

The rate price war has continued this week with a number of lenders lowering their two year fixed rates.   These are now at an all time low and some, for those with a 40 per cent deposit, can now offer rates in the late 1% range!

Finally, we’re seeing a lot of first time buyers turn to the bank of Grandma and Granddad as the bank of Mum and Dad appears to be running a little dry!  There are various ways in which the older generation are helping the first timers.  Some are gifting deposits, to help those get on the property ladder.  With most products, the larger the deposit, the lower the interest rate.  Others have agreed to the placement of a collateral charge on the parents or grandparents property.  This gives a lender more security and maybe a better credit risk rational to the deal, than originally might have been the case.  In some cases the parents have joined in to provide additional income support and bolster the overall application.  Whichever way required, always explore the options and have a conversation with a professional as there may just be an alternative way to do the deal.

07 November 2013

Product innovation is welcome

Product innovation is once again at the top of my news column this week.   A company has launched a very interesting proposition for those in the Buy to Let mortgage sector.  They will allow a 20% equity withdrawal opportunity.  This can be for any legal purpose and there are no monthly repayments.  Instead, this amount is repayable on the sale of the property and any increase in property value shared with the lender.  They will allow the total loan, including the amount with the first charge lender to a maximum of 85% of the property value.   Already this has created a lot of interest by those looking to buy further properties wanting to release funds for the deposit by raising monies on existing property.   Obviously T&Cs apply, but this is another example of lenders looking to be niche suppliers!
The Nationwide House Price index has reported that UK house prices increased by 1% on October and were 5.8% higher than October 2012.  They further report that house prices, at a national level, are only now around 7% lower than they were in the height of 2007.  Confidence boosting news!

And it is so across the market.  Rates are still decreasing!  Especially in the Near Prime sector for those who have had previous financial issues with their credit.   Many lenders are in this arena and they will cater for a missed mortgage payment in the last 12 months, historic defaults, County Court Judgements (CCJs).  A limited few will also consider those who are discharged bankrupts, had IVAs or who are in a debt management plan.
There’s no denying that this area of the market took a battering back in 2007 as many, many lenders who offered these types of mortgages were shut down or mothballed.  However, the regulatory lending restrictions are now more stringent than back then and the new breed (some never really left) have a whole new outlook on the term ‘responsible lending’. But where there is demand, there will always be supply.  Rates range from late 3%s, right up to double figures depending on individual circumstances.   

Finally, the Near Prime lender tends to be a ‘stepping stone’.  Most issues usually disappear from a credit search after a few years. Therefore, the aim would normally be to cater for current requirements on a short to medium term basis with the longer term outlook being structured to enable the customer to get back onto high street mortgage offerings, as quickly and cost effectively as possible.  Terms and conditions always apply and always best to seek professional advice.