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. 

Never a dull week in the Mortgage Market!

Never a dull week in the mortgage market!  I was at a presentation from a major lender late last week and who predicted Bank Base Rate won’t move for a good couple of years, but also advised us to ignore their predictions as they have been far from right over the last 3 to 4 years!  Helpful!  We also then saw reports suggesting that the Lloyds Banking Group wanted to reduce their share of the mortgage market from 28% to 25%.  This is a huge reduction.   We also saw RBS publicise a reduction in their share of gross mortgage lending from 14% in Qtr 1 2011 to 11% in Qtr 1 2012.  More signs that although the market is very busy, it is in certain areas, and not necessarily via household names. 

In other news, the Co-Operative Bank decided to withdraw its Interest Only offering entirely from all residential offerings and sadly, after five years of trying, Portillion has decided to call it a day and abandon its lending ambitions.  The latter showing it really is so difficult to launch a new lender in current climates.

Many people ask me “should we fix our mortgage rate now?”  This is a difficult question to answer and one I always answer with a question – are you a gambler?  At some point, Bank Base Rate will increase; I think we are all aware of that and it is just a question of when?  Five year fixed rates are proving popular and competitive in the current climates.  However, if you decided to take an attractively low tracker now with a view to fixing at a later date, be wary that when the BBR does increase, you can almost guarantee that fixed rates will have already been substantially increased! 

Finally, outside AToM we have a box offering ‘Property Today’ papers.  This is a good gauge to the local market and how interested people are in properties each week.  Over the last two weeks, we’ve run out of papers over the weekend (normally they last until Thursday!).  Possible signs of a buoyant local market, or just a lot of people keeping an eye on things?  Who knows…

More restrictions on Interest Only loans

Interest Only remains in the Spotlight this week as Lloyds Banking Group and Leeds Building society impose restrictions on those wishing to obtain an interest only mortgage. This is following Santander's interest only loan reduction last week and Barclays/Woolwich previous to that.

Although Santander reduced the maximum LTV on interest only to 50%, they did not change their criteria. However, Lloyds Banking Group (Lloyds, Halifax, C&G) have restricted acceptable repayment plans so that, despite keeping Interest only at 75% of the property value, many
borrowers may not qualify. These repayment vehicles include providing proof of a pension pot in excess of £1m, cash savings are no longer accepted and sale of any residential property can only be used if current equity is over £50k and only 80% of current equity can be used. It is reported
that the other high street providers are not looking to follow suit. But we will see!

In more positive news, those who know AToM will know that, in addition to arranging mortgages for the general public, we are also a specialist packager/distributor looking after and arranging mortgages for other mortgage brokers, estate agents and independent financial advisers nationally. For some lenders, AToM acts as their administration arm, collating information,
instructing valuation and processing applications right up to mortgage offer status. For other lenders, AToM will often be allocated a tranche of funds to distribute for them and AToM advertises and controls the administration process. Any mortgage broker, independent financial
adviser or similar, who require these certain products, will often have to come via AToM to gain access to such products. The benefit to the lender is that AToM carry out all the work, including taking telephone calls, requesting information from employers/accountants, collating documentation, and more. So it can be cost effective for the lender.

With this in mind, we are delighted to announce our latest lending partner in this arena, called MBS Lending (part of the Melton Mowbray Building Society) and we now package and distribute products for them. This lender specialises in assisting customers who have had financial issues.
This is one area, more so in recent climates, that appears to be on the increase again and there are lenders actively looking to lend. Terms & Conditions apply and APRs will be based upon individual circumstances.