Rate rises with only one hours notice!

A number of lenders have increased rates over the last few days with one in particular only giving us one hours notice to save the existing rates for potential new customers.  Normally a lender will send round a notification advising of the impending rate increases and the timing for withdrawal of the current product offerings.  We will then need to submit a full application and pay any fees to secure the existing rates.  Most lenders will give twenty four hours notice, some a couple of days.  But one high street lender only allowed one hour to secure their rates. This meant that they did not see a 'spike' in business as people rallied to submit cases as this left no time to secure the lower rates.  In the main, these rates increased by 0.2%, but an increase is an increase.  And if a customer was not able to be contacted and engage within that hour, then the rate was lost!

Product of the week comes from Virgin Money who have launched some superb four year fixed 2.99% rates (4.4% APR) for a limited time.  For remortgages these also have free valuation and legal costs.  The lender fee is also low at just £999 and customers can overpay up to 10% per annum penalty free.   Max loan to value is 60% and the rate increases to 3.29% at 75% borrowing.

The Nationwide House Price Index suggests that house prices increased in May 2014 by 0.7% and are 11.1% higher than in May 2013.  The report also advises that the average house price now stands at £186,512.

Finally, Natwest has decided to follow the LLoyds Banking Group in capping income multiples for all loans over £500k.  Recently the lenders would have looked at a customer's affordability rather than an income multiple.  However, with immediate effect, the maximum any customer will be able to borrow with these lenders is 4 x their income for all loans over £500k.  Both have highlighted London as their main reason for changing their criteria.  Specifically that wages are not keeping pace with house price growth and forced inflationary pressures have forced these required changes...

Confused by the internet "information"? .....we can help!

Considering it was a ‘holiday month’ August was a flurry of activity and caught many of us out and this was a very pleasant and great surprise!  Of those approaching AToM, many were seeking straight forward simple human assistance having become confused by the huge amount of information currently available on the internet.  The majority were after the superb low rates currently available.  However, and with this in mind, we have seen a few fixed rates increase over the last week as some volatility returned to the financial markets (as I write Nationwide Building Society, Accord Mortgages and a couple of other specialist lenders have all raised medium to long term fixed rates, some by up to 0.4%).  As mentioned in previous columns, lenders are incurring huge delays with processing and underwriting and August’s great business volumes won’t have helped clear the back logs!

Second steppers are being given a helping hand.  Some lenders are offering loans of up to 95% of the property value to get people moving up the ladder and thus freeing up properties affordable to the first time buyer sector.   Lloyds TSB’s recent research also compliments this as they report that equity levels for home movers have helped people living in their first home jump up to the next level.  Improving house prices over the last twelve months have helped.  Despite a reported 2% decrease in homemover mortgages in the first half of 2013, the same time frame that saw a nineteen per cent increase in first time buyer approvals, the average equity share position of a home mover rose from one per cent in the second half of 2012 to thirteen per cent in June 2013!

Finally, due to the increase in business volumes, we’re looking for staff to join our expanding AToM team.  If you know someone in the mortgage sales sector, with the relevant qualifications (or studying towards them) and who likes to be kept very busy, then please ask them to get in touch! 

Don't Dilly Dally, otherwise you'll miss out!

The limited edition mortgage products available for ‘seven day only’ are back!  Santander, or Abbey for Intermediaries as we still know them in the broker world, have launched a number of market leading fixed rates for a limited period.  In order to bolster books and attract a wealth of new customers, these two year fixed rates are sub 2% with minimal fees and free valuation.  Although requiring a hefty deposit at 40%, they’re great products and only available for 7 day slots.  Maybe we’ll see a few others join in these quick fire offerings before the end of the financial year…

But despite the newly attractive rates, it is still tough out there.  Lloyds TSB carried out a survey of over 500 first time sellers and 65% of these suggested that raising a deposit was their biggest obstacle.  Over 22% say it’s now harder to move up the ladder than it was to get on it!

With this in mind, I turn to one of this month’s largest issues - the Bank of Ireland rate hike.   Around 13,500 existing customers will have their rates increased over the coming months.  For those with Buy to Let mortgages, rates will rise from 1.75% above Bank Base Rate (BBR) to 4.49% above BBR in May!  Those with residential Bank of Ireland mortgages will see rates increase to 3.99% plus BBR from October.

The Bank says the changes reflect the significant increase in the cost of funding these mortgages and refers to a “special condition” in its mortgage contract that permits the hike.

This has obviously angered a lot of customers, including many mortgage professionals who had mortgages from this lender.  Even more so that Bank of Ireland also fund the mortgages offered by the Post Office, who, incidentally are currently offering near market leading competitive fixed rates to new customers!  Obviously I have to be careful in what I say here, but the mortgage profession is strictly guided and assessed by a policy called ‘Treating Customers Fairly’.  Enough said I think!

 

Lloyds Banking Group use power....

The Lloyds Banking Group (HBOS and Lloyds TSB) began to wield their new found power on the mortgage market this week and withdrew all adverse and self certification mortgage products from two of their subsidiaries, BM Solutions and Bank of Scotland.
This will have a major impact on the mortgage market, not only because they had great products and were specialists in these areas, but their removal leaves the remaining providers who still offer such products, out on a limb and right now lenders are not keen to be 'last man standing' in any product areas. Thus, the next few weeks are likely to witness more changes as the need for these products increase, from both those in genuine financial difficulties and others who simply cannot easily prove all their income. This, despite the governments instruction to banks to lend more will, no doubt, see the contraction of both sectors of these markets in coming weeks. If either self certification or adverse credit products suit your personal requirements, come in and see us, sooner rather than later!
Good news this week came from a surprising source, the Woolwich who launched a market leading 2.29% one year fixed rate for borrowers with a 40% deposit. Their rate then follows the bank of England base rate + 2.29% for a further two years and has a 2% arrangement fee which can be added to the loan and no extended redemption penalties.
Our wish is that others follow suit and that we will see some really competitive rates on offer soon. This will help get the market moving again…