AToM’s chairman Vic Jannels picks up ‘Service to the Industry’ award!

I start this week with some fantastic news in the AToM’s chairman Vic Jannels was awarded his second accolade of the year as he picked up ‘Service to the Industry’ at last week’s Specialist Finance Introducer Awards 2018.   The event, held at Madison in St Pauls, London, was attended by over two hundred of the industry’s finest and hosted by Homes Under the Hammer and I’m a Celebrity’s Martin Roberts.  AToM’s system, OMS (One Mortgage System), also picked up ‘Best use of Technology’ and ‘Product Innovation’.  Awesome news and well done team!

The market is pretty quiet currently, apart from the odd ‘cabinet reshuffle’ here and there and at the time of writing, we’re about to get our 17^th housing minister in 20 years!  Mind blowing.

What we are seeing, despite heavy rumours of a bank of England base rate increase possibly as soon as August, is lenders reducing their current rates.  The holiday period is inevitably quieter, although add this to an already quiet market, and lenders need to attract customers to keep on track to hit their annual targets.

Just in the last week, we’ve seen Halifax, NatWest, Platform and TSB all reduce selected rates and our friends at Secure Trust launch a 90% LTV product that caters for those who have had a credit blip in the past.  There are some great rates and options around currently.

Finally, valuations on properties to be mortgaged come in various guises. Every mortgage lender will require a valuation on the property although, in some cases, they will not actually visit. This is because they can often access detailed information electronically.  Remember that this fairly basic valuation is for the lender, at your cost, and should not be relied upon as a guarantee that the property is sound and fit for purpose.  Seek a more detailed survey if you have any doubts.  Recently, and with a lack of stock readily available, we are seeing valuers ‘down value’ a property.  Just because it’s been sold at £330k, does it mean it’s worth that price or has it been sold to the highest bidder.  Always do your home work before the valuer goes out, as if he says its only worth £300k, then you’ll have to find the difference from your own pocket as the lender will only lend against the lower of the purchase price or valuation. 

Stick with your current lender?

So, your mortgage product is coming to the end of it's term.  You may have fixed for an amount of time, maybe two, three or five years.  And now your rate is due to change to the lenders variable rate, which in the main, is higher than the rate you are currently on, and your monthly payments are about to increase.  But hold on, your current lender has seen the light and decided to offer you some 'fantastic' products to keep you.  Even though you are four months out of your product change, they've given you just fourteen days to decide whether to choose a new product to stay with them.  What do you do?

One recent example a customer showed us, had some very attractive rates.  However, when we looked, the same lender was offering better rates through the intermediary sector, with the same fees, etc.  I always say do your homework, and lucky this customer did as it saved them 0.1% on the rate over a three year period.

Even though some lenders put a deadline on any new offerings, remember most are contacting you three or four months before your product changes, so there is plenty of time to review your options and choose the best one for you. 

This is the biggest debt you will ever take on, take your time and ensure you will not regret it further down the line.  Always seek advice! 

With this in mind, we've seen a lot of rate changes and reductions over the last few days.  TSB, Santander, Halifax, Harpenden Building Society, Accord, Platform, Saffron, Kensington, Virgin Money and Precise Mortgages have all made changes, to name but a few.  Key highlights include 5 year fixed rates from 1.75% up to 65% LTV, Buy to Let fixed rates from 2.99%, ExPats in Australia can now be First Time Buyers in the UK, more options for lending in to retirement and many many more positive enhancements.    Lenders want to lend!

Mortgage approvals on the increase

Following a dip in July and August, mortgage approvals bounced back in September.  According to the Bank of England's Money and Credit statistics, mortgage approvals totalled 118,470 in September with a value of £19.1bn, compared to 113,524 and £17.6bn in August.

The number of approvals for house purchase reached 62,932 with the value at £11.1bn, up from August, but still lower than the six month average of 64,481. Remortgage approvals totalled 42,440, also down on the six month average of 41,882 but also higher than August.

AToM saw a busy October and we don't expect much to change with the run up to the end of 2016.  And of course, with Help to Buy 2 finishing at the end of the year, we do expect to see a slight rush as people with small deposits seek to gain approval on the product before it's withdrawal. 

Nationwide has increased the maximum loan to value (LTV) for customers remortgaging from other lenders on a like for like basis from 85% LTV to 90% LTV.  Rates for the two year remortgage product start from 2.39%.  As always, terms apply….! 

TSB has removed its mortgage application fee, which previously cost £265, from all of its residential and buy to let mortgages.  This lender has also launched new products including a three year fixed rate starting at 1.84% for a 60% LTV.  They also have products right up to 95% LTV.

No doubt we'll see similar from other lenders as they seek to increase volumes pre Christmas.

And finally....New figures from HMRC report that one in four properties bought in the UK in the third quarter of 2016 was a buy to let or a second home.  The introduction of the 3% Stamp Duty surcharge in April has seen figures published for the first time indicating how many properties are bought to rent out.  The data published by HMRC shows that it has collected some £670m in Stamp Duty since the additional 3% charge was introduced.   With First Time Buyers still struggling to get on the ladder, I can't see this changing anytime soon!

Rates are creeping up...

Panic Panic Panic.........ok, so that's a little dramatic!  However, we have seen a number of lenders increase rates over the last few days.  TSB, Halifax, Nationwide, Virgin Money, NatWest and Coventry Building Society are just a few who increased their rates on various product offerings.  We have seen SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) start to creep upwards and as such lenders are re-pricing accordingly.  Despite my headline, I don't believe it is really time to panic just yet.  Many pundits are suggesting middle of 2016 before we see a true rate rise.  Just keep an eye on things if you are looking for a long term bargain.

What we have seen recently are lot of enquiries to remortgage for home improvements.   Increasing the value in your property can involve large renovation, adding a room or two and a general investment in time and builders.  That said, with house prices booming in the local areas, many have decided to look at cosmetic changes.  So up-grading kitchens, bathrooms, redecorations and so on.  Whether small or large, the investment in property can bring rewards to the value and if you are staying put, reward in the satisfaction of home comfort.  Plus a potential large saving in stamp duty too versus moving home!

We have also seen an increase in customers looking to consolidate debt or even look at debt management plans.  Both can sometimes cause issues. If you consolidate unsecured credit in to your mortgage, although your monthly payments may be lower, you may be paying more interest for your debt over a longer term.  With debt management plans, or Individual Voluntary Arrangements (IVA), etc, again, the lower monthly payments may help in the short term, but you may well find it hard to gain an approval from a lender to refinance at a later date.  Lenders tend to shy away from debt management plans and may not consider anyone who has been in an IVA unless it has been discharged for more than three to four years. Advice should always be sought before entering in to these types of arrangements or agreements.

More offering Help to Buy as others change rates and criteria

Santander is the latest lender to launch products to assist those with a small deposit via the government backed Help to Buy Mortgage Guarantee scheme.  All products are arrangement fee free, have a free valuation and £250 cashback to help towards solicitors costs.  NatWest is also due to launch a suite of products via brokers in the coming days.  A positive start to the new year for those with small deposits!

Even lenders who are not part of the Help to Buy schemes are trying to compete.   As such, competition in the 5% deposit arena is the best it has been for some time, so do review all the options available to you.   

Other products have also seen rate movements in the last few days:   In the Buy to Let sector, Mortgage Trust (part of the Paragon group) has launched products with no early redemption penalties at all. Their rates have reduced to around the 4% mark and fees are also reasonably low at around £995.

GE Money Home Lending have launched a large loans proposition (£250k and above) for those who have had a historic financial issue in the past, including defaults, CCJs, etc.  With rates sub 3%, these are a good alternative for when the high street lender says no.  GE and some other specialist lenders are only accessible via certain mortgage brokers or distributors.   

This years Budget will be closely anticipated to see if the Chancellor will offer anything to incentivise and stimulate the market further.  Stamp duty is a key factor and would benefit from payment commencing at a higher level than current, say £250k and smaller increases as the price bands increase.  Is this too much to hope for?   

Finally, a recent report from TSB suggests that nearly 38% of house hunters are concerned they will be rejected for a mortgage.  Levels of income required topped the charts with poor credit rating being the second most common anxiety.  Always keep any eye on your credit reports.  These are your financial history to any prospective transaction and any decisions will take these in to account.  Most are free and relatively simple to understand, but most importantly will highlight any issues that may need rectifying.