29 May 2014

Rumours are rife on a Bank Base Rate increase soon.

Following on from the Bank of England Governor's recent comments on a Sunday TV programme, and in fact some time beforehand, the rumour mills are rife trying to guess when we will see a Bank of England base rate rise.  The economy is so buoyant that it needs a little slowing down, apparently!  I was recently in attendance at a seminar in which five notables gave their views on when the increase may occur and the general consensus was that it could be later this year and, if not, then most definitely in the first quarter 2015. 

With this in mind, have you checked your rate and product recently?  Now might be the time for a review.  However, be wary that your local bank of building society, in some cases, are taking up to four weeks to see customers!   Some are a number of days behind on underwriting.   And the most bizarre scenario we had this week was from a surveyor.  They were happy to visit the property to carry out the normal mortgage lender valuation.  However, they were also required to carry out a homebuyers report, a more in-depth survey for the customers benefit and, to great concern, they could not conduct this at the same time and would have to return, possibly four weeks later.  Frustrating for the customer who wanted to buy quickly.  Generally the whole market is incredibly busy yet the current staffing levels just can't cope. 

Further impositions were seen this week as the Lloyds Banking Group slapped on a maximum income multiple for all loans over £500k. With immediate effect, the lender will only allow a maximum of four times income on all loans in this segment.  Described as a “targeted policy change” to address inflationary pressures in the housing market, especially London, the change applies to mortgage lending through Halifax, Lloyds, Bank of Scotland and Scottish Widows Bank.   Thankfully, there remain other opportunities in the marketplace and we are hopeful that other lenders don't feel that they have to follow the Lloyds lead. Only time will tell. 

22 May 2014

Parental support might help achieve your dream home

Horsham is a popular location and as a result scores highly in the property price stakes. That said there are many 'would be' homebuyers with an appetite more expansive than their budget and this can be a deal breaker if income and deposits do not meet lender criteria. This is where parental support can help.

The traditional route has been through a parental guarantee, so parents guarantee the full amount lent to the siblings with the lender.  Although lenders no longer favour this so much on a stand alone basis.  Often a lender will prefer a parent to actually join in using their income to support affordability until such time as the original borrowers income has grown sufficiently to assume full responsibility.

Alternatively, the parents may gift the siblings the deposit toward the purchase of the new property. The parents must confirm that there are no monthly repayments, it is a non repayable gift and that they will have no interest in the new purchase.  

Finally, a lender may sometimes accept a charge taken on the equity of a parental property thus alleviating the need for such a large deposit.

It may well be that a hybrid of all three may work too.

Another potential stumbling block may be age with some of the high street lenders still working off a retirement age of 65. So what about the growing population of people working into their 70's and further?  Well there are options and not all based on Equity Release although there are hybrid options are available to cater for most needs.  Many will lend long in to later years, but these will be specialist lenders and not high street names.  In the current climate this is not an issue and you should not be shy of dealing with a non-household name.  Some of these are small regional building societies who have been established over 100 years!

As with any mortgage type you need to ensure that you take proper and in-depth advice before you commit.  Who knows, that dream property in the Horsham area may well be available to you.

15 May 2014

Volumes continue to rise, but so do delays..

The market is creaking as delays strike lenders, valuers, solicitors and ultimately the end consumer.  Volumes continue to rise, rates remain low and attractive, but the new regulations are biting in to the processes and thus these are taking longer than normal.  Some lenders are taking over an hour to answer their phones whilst taking up to ten days to look at mortgage applications.  In addition the already apparent shortfall in surveyor numbers is becoming more apparent as customers seek quick turn-arounds in order to compete deals, but the reality is that although volumes are increasing, staff  number increases across the sector can't keep up.  AToM has had first hand of this as we've been recruiting over the last three months.  But finding the right person with the right experience and/or qualifications has been tough!   Whatever transaction you are looking to do, especially with purchasing, be aware that the market is experiencing these delays and the processes are taking much longer than expected.

However, I won't spend to much time on the lows of the market as the fact we have so many lenders offering so many fantastic products across all areas of the market is superb and more people are buying houses than have been for some time, albeit supply might be faltering a little.   Certainly makes it more enjoyable working in our industry with 11,000 product offerings, than when there were fewer than 2,000 not so long ago!
With this in mind, the average two year fixed rate rose by 9 basis points, from 3.52% on 1 April to 3.61% by the end of the month, according to moneyfacts.co.uk. This was the largest one month increase since February 2012, when two year fixes rose 0.13%.  Not time to hit the panic buttons yet, but be aware that there is rate movement occurring.

Finally, the Halifax House Price index suggests that house prices are up 8.5% over the last year with the average property price standing at £178k.  It is also suggested that while London and the South are fairing well and seeing some increases, the North and Wales are still static.  

08 May 2014

Not many lenders will not look favourably on Payday Loans

We’ve seen an increase in enquiries from those who might have used a Payday loan over the last twenty four months.   I need to reiterate that these are classed as an ‘adverse entity’ with most lenders (not that some would admit it!).  However, even the lenders who accept customers with historic CCJs, defaults, or missed mortgage payments registered against them, MAY NOT accept someone who has taken out a payday loan.  So, although these may be right for a customer in certain circumstances, they will almost definitely limit the number of lenders available to you when you come to apply for or change mortgages.  Seek advice.

With this in mind, lenders will look closely at an individual’s payment profile, how many recent credit searches have been incurred by financial institutions and more. The more credit searches you have on your profile, over a recent amount of time, the more likely your credit score will be lower as a result.  Try and ensure there’s no missed or late payments as these will also decrease your credit score.  In short, your credit search / score are the basis on which most lenders will initially decide whether to lend to you or not.  If you’ve not checked your credit file before, it is well worth a review. Experian, Equifax and Noddle tend to be the main providers used in our market with some offering free initial trials and you can find links to these on the AToM website.

But don’t be put off, 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.  Of course, rates and terms will vary depending upon the type of mortgage written. Lenders have varying degrees of risk assessment calculations and this will determine the loan to value and charging rate levels.  Finally, remember to always read the small print and understand all fees involved.  The lowest rates on offer may not always be the most cost effective over a period of time for you.

01 May 2014

Interviews over 2 hours and keep an eye on your Interest Only mortgage..

So the new MMR (Mortgage Market Review) regulations are now in force and the mortgage market has not ground to a halt, despite what some pundits insinuated it might!  It’s business as usual, albeit a little more intrusive and the process may be taking a little longer than before.  Some customers are reporting that the high street lenders mortgage interviews are taking well over two hours and more than a week to book appointment (no such problem with your local independent mortgage advisers!).  Others are reporting some absurd questions being asked such as how much do you spend on alcohol per month, how much on pet food and have you got a national lottery direct debit?  As with all things, whilst the new rules settle in, there will be some teething problems, but be patient with them as they are here to stay and for everyone’s protection.   Just ensure that you have all your monthly costs laid out accurately from the outset and ready for when requested.  If you spend £500 a month on food, then that’s the figure to advise.  If you don’t and the lender reviews your bank statements and finds discrepancies, this will not be looked upon favourably.
Coincidently, we have seen some rates increase over the last week.  Both NatWest and Santander have increased rates on their Help to Buy Mortgage Guarantee schemes.  NatWest increased some of their 95% loan to value rates by 0.4% on two year fixed deals.  Santander increased their 5% deposit rates by 0.1%.

The British Bankers Association has confirmed that purchase figures for March 2014 were up 45% compared to March 2013.  Gross lending amounted to £6.4bn.  

Remortgaging amounted to £2.9bn for the month, the same as in February, but an increase of 32% compared to the same time in 2013.
Finally, I’ve mentioned this matter a number of times, and make no apology for doing so again!  If you have an Interest Only mortgage, do make sure you keep reviewing the options for repaying it back. Where a customer reaches the end of their mortgage term still owing exactly the same as when they took it out, with no form of repayment apart from selling their property, this creates a major headache for the lender. Especially when they want their money back! This is a major aspect of the new regulations which are now implemented, so be on top of your options, before the lender calls! If in doubt, seek professional advice.