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....!

What if 'the computer says No'?

A flurry of activity in the mortgage market this week as a number of lenders reduce their rates.   Virgin Money, Natwest, Accord Mortgages and Platform are a few of the lenders who have cut various rates in their product offerings.  This follows decreases in both LIBOR and SWAP rates (in the main, measures against which banks lend each other money).  This is good for the end consumer and I’ve even heard whispers that this could lead indirectly to a Bank Base Rate cut shortly.  Who knows, as uncertainty seems to the only certainty in the financial sector!  Personally, I’m not sure a cut is a good thing right now, but with many companies struggling to survive and some big casualties (JJB the most recent noticeable), it will be welcomed by all those on sitting on a bank base rate tracker.

I mention credit scoring/searching quite a bit, but it really is so important in the current financial world when deciding to lend to you, or not!  Most lenders credit score applications based upon the amount of credit you have, whether you are on the electoral role and your recent payment profile on any existing credit.   The number of recent credit searches you have on file will also have an impact.  Nearly all financial institutions will register a search against you.  So, if you have recently updated your car insurance, home insurance, taken out a mobile contract and just got a new credit/debit card, that’s probably four searches in a short amount of time!

If the computer says ‘no’, you will tend to find most high street lenders doors shut to you.  But fear not, if you have a reasonable deposit and can prove all income, there are lenders who do not credit score, but will manually review and underwrite affordable applications on an individual basis.  AToM has access to a number of these lenders so don’t despair if the high street lender’s computer says no, give us a call to see if we can assist.

A serious lack of consumer confidence...

Where do I start this week!?  So much negative news surrounding the world of financial services.  As I write this column, the Breaking News is that Bob Diamond has resigned as Chief Executive of Barclays, following his Chairmans departure some hours earlier.   Both following Libor (London Inter Bank Offered Rate) and Euribor, the interest rates at which banks lend to each other, fixing and interest rate swap miss-selling scandals.  Also, in relation to last week’s fine of £290m by the FSA and US authorities after it admitted that their traders manipulated Libor.  This now leaves a rather large ship with no captains to steer them.  No doubt the board will act quickly and more light will have been shed on the matter by the time this is printed.  However, the bottom line is that, allegedly, a number of other banks are also under investigation and thus, this could be just the first of many, and in addition, it‘s a further act of mistrust and will bring an increased lack of confidence to an already fragile market.

This comes in the wake of the technical issues at Natwest/RBS, which affected many customers across the country.  Despite the bank confirming all issues had been sorted last week, the bank still has issues and some customers, allegedly, were hit with incorrect duplicate payments on their mortgages this week.   Does make you wonder how we ever functioned without technology and, more worryingly, how totally dependent we have become on it…

And finally…the Bank of England’s latest figures suggest that gross lending secured on dwellings hit £12.2bn in May up from £11.6bn in April.  Repayments also rose from £11.4bn in April to £11.7bn in May.   House purchases fell to 51,098 in May from the 51,627 figure recorded in April and remortgage approvals also dipped from 30,799 in April to 29,244 in May.  All signs of a reduced availability of mortgage credit and with the Eurozone crisis still in the mix, and a serious dent in consumer confidence, we might not see these figures change dramatically any time soon.

Credit Rating Downgrades...

Lots of news this week surrounding banks and how some have had their credit ratings downgraded by ratings agency, Moody’s.  These moves are a consequence of the on-going Eurozone crisis and weak economic performances.  Despite low interest rates and falling LIBOR (London InterBank Offered Rate), the impact on the costs of borrowing funds, for the banks that have been downgraded, will increase.  And of course, the increase will only be passed in one direction - the end consumer.

Royal Bank of Scotland, Barclays and HSBC were three banks in the UK among the downgrades, which ranged from one to three notches.  Moody’s also downgraded 28 Spanish banks, including giant Banco Santander.  Three were downgraded by one notch, 11 downgraded by two notches, 10 banks by three and six banks by four notches! 

The Council of Mortgage Lenders has reported that the number of first-time buyer loans dropped by 48% in April, compared to March.  They put this as a result of the Stamp Duty concession coming to an end.   According to the latest figures, 12,600 loans were advanced to first-time buyers in April with the average loan being £98,000 and first-time buyers typically borrowed 3.12 times their income (down from 3.34 in March).

According to zoopla.co.uk, it’s cheaper to own than rent!  It now costs 14% more per month on average to rent a home compared to servicing a mortgage on an equivalent property, say the property website.

And finally…. AToM has been heavily involved in the local Set4Success initiative.  Working in partnership with Horsham District Council, Horsham Rotary Club, Horsham Schools and local businesses, Set4Success assists Horsham District’s young sportspeople with funding for training and competing.   It was great to see so many people at South Lodge recently as the sporting achievements of 21 young local sports people were celebrated, with special guest Sophia Warner, Paralympic sprint champion, presenting the Awards.  AToM are delighted to be a founding business sponsor of this charity.  Patrons include Chris Nash, Gemma Spofforth, Sarah-Jane Honeywell, Dave Benson-Philips, Lord Lytton and others!  To find out more or to see how you can get involved, visit www.set4success.org

Discount to leave your current lender?

The FSA (Financial Services Authority) has published its latest Mortgage Lending Data for the UK covering the second quarter of 2011. The key areas of interest are -
- The proportion of lending for house purchase, which includes buy-to-lets, increased from 54% in Q1 to 59% in Q2,
- Lending to first-time buyers rose from 14% in Q1 to 16% in Q2.
- New lending at fixed rates increased in Q2 to 56%.
- The average rate on new advances rose from 3.65% in Q1 to 3.81% in Q2, which the FSA puts down to the increase in fixed rate lending and a rise in the average fixed rate from 4.24% in Q1 to 4.43% in Q2

Despite the latter, fixed rates are really very competitive in the current climate and well worth a review.

Other figures released this week show that mortgage lending may top £40b which would be £3b more than the last quarterly predicted figures. This is very positive.
However, be aware that we have just seen an increase in the three monthly LIBOR rate (London Interbank Offered Rate) which has increased to 0.90%. This is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London (effectively a measure of confidence between banks). Reports suggest that the European debt crisis is pushing up LIBOR rates as banks start to eye each other with suspicion again. Watch this space!

Finally, I’ve mentioned this before, but its back on the mortgage lending radar. A few dormant lenders are offering customers a discount (some up to 30%) off their mortgage as an encouragement for them to move away. If your current lender is one of these (and is not actively lending) then it’s worth a call to see if you qualify for a discount. Normally, they will give you a deadline in which to complete the transfer of your mortgage but I’m sure it’s a timescale that AToM could meet assuming you meet all of the new lenders criteria requirements!