Big month for Divorces and many rates have dropped..

Happy New Year!  I hope it is a successful and enjoyable one for you all.

Over the Christmas period, we have seen a number of rates drop as lenders seek to attract new business. One example is from the nice people at Virgin Money who have reduced rates on their first time buyer products to under 4.30% for a two year fixed rate.  This is aimed at those with just a 5% deposit and includes a £1,500 cash back to help pay the stamp duty costs on a property up to a value of £200k.  Positive thinking. Let's hope others follow suit.

I do think we will see some fierce lender competition in the opening quarter of the year.  Lenders are preparing for new regulations that will hit the market in late March, and with only a small amount of stock currently available to purchase, the remortgage market especially will be singled out as a quick source of business. 

Sadly, with January often proving the biggest month of the year for divorces, re-mortgaging can be a key part of the separation process.  It is a difficult time for all parties, especially when children are involved, but the need to pay the joint mortgage is imperative.  If the payments are not made, you may find it difficult, if not impossible, to obtain a mortgage in sole names.  For the newly single, many lenders will take in to account child maintenance, working tax credits and so on.   Affordability is key and any lender will base their decision to lend around this.

The bank of Mum and Dad, or even Grandma and Grandad, can also be bought in to consideration.  There are various ways in which the older generation are helping their children.  Some are gifting deposits, to help them get onto the property ladder.  With most products, the larger the deposit, the lower the interest rate. Others have agreed to the placement of a collateral charge on the parents or grandparents property.  This gives a lender more security and maybe a better credit risk rational to the deal, than originally might have been the case.

Whichever way, always explore the options and have a conversation with a professional as there may just be an alternative way to do the deal.

That's it for 2015! Roll on 2016. Thanks for reading.....!

Amazingly, this is my last column of the year!  I enjoy writing each week and updating you on the mortgage world's good and bad, but I am looking forward to a couple of weeks without tight production deadlines to meet!

The door may be nearly shut on 2015 and, in many ways, I'm ready to kick it shut.  It's been a frustrating year as lenders have been neither here or there with their lending volumes and every one of them has had one eye looking over their shoulder for the regulator and the other looking forward in preparation for the new European Mortgage Credit Directives that are due to be implemented in March 2016.  Wouldn't it be nice if we could just have a couple of years without regulatory changes?

At the same time, it has been a year for building foundations for what I hope will be a fantastic 2016.  Once the new regulations have been implemented and with rates set to stay static for some while yet, mortgage lenders will be competing for business. A rate price war may happen and this can only be a good thing for the end consumer.  We will also be welcoming a number of new lenders to the market (and some returning) and this will help keep competition rife.  Good times ahead!

Finally, a heartfelt thank you for reading my columns.  I've tried to provide an unbiased weekly insight to what happens in the mortgage world (and tried to keep it upbeat!). 

Thank you to everyone who has instructed AToM to source and arrange their mortgage during the past twelve months. It has been a fantastic year and we have enjoyed substantial growth in volume, November bringing more than £30m in new applications. Also, an increase in  headcount with almost 30 in the AToM team located between our two Horsham offices! They are a truly fantastic team. 

On behalf of all the staff and directors at AToM, we wish you and your families a very Happy Christmas and a Relaxing and Prosperous New Year! 

Increased Stamp Duty for Second Properties and Buy to Lets.

So, quite an easy start to this weeks column as the Chancellors 'Autumn Statement' has written most of my column for me!  If you haven't seen the news, for Second Properties, or Buy to Let purchases, stamp duty rates will be 3% higher.  This means that we have the following:

• Value of property £40,000 to £125,000 – additional stamp duty surcharge of 3%
• Up to £250,000 – SDLT increased to 5%
• Up to £925,000 – SDLT increased to 8%
• Up to £1.5m – SDLT increased to 13%
• Over £1.5m – SDLT increased to 15%

Therefore, for a property valued at £175k, stamp duty is currently £1,000 and this will now increase to £6,250.  Quite a hike!  For a property valued at £300k, the additional increase amounts to an eye watering £9k!

The Chancellor says this is in order to help first time buyers.  Some would say that landlords will still buy properties whilst first time buyers struggle to get on to the ladder, but rentals charges may be increased to cover the additional cost.  And whilst this does not come in to force until April 16, some estate agents are predicting a short-term surge in property purchases.

With the recent stamp duty changes and increases in taxation on profits being introduced over the next few years, the Buy to Let sector has taken quite a beating over the last couple of budgets.  Yet with interest rates so low and demand for rented properties increasing, and no clearly defined solution to help first time buyers, I can't see these changes killing off the buy to let sector just yet!

What it does do is ‘stutter’ interest from those who might have been looking to invest in property compared to plunging savings rates and volatile stocks.  If the Chancellor's long term vision is to kill offer the buy to let sector entirely, then those who may have been looking at income from Properties as a viable alternative to a pension arrangement may well be slightly more wary given these latest developments.

Two million sitting on a Lenders Standard Variable Rate!

New lenders will be a key part of the mortgage market in 2016.  A number of lenders have applied for authorisation from the regulator and a number of others have contacted AToM with regards to re-launching in to the market place.  It's a buoyant market and lenders can see growth in 2016, especially whilst rates remain low. 

With this in mind, it still amazes me how many people do not change their mortgage.  HSBC have recently suggested that over two million borrowers in the UK market are sitting on a lenders standard variable rate (SVR) in excess of 3%.  In fact, the average lenders SVR is sitting around 4.82%, whilst the market continues to enjoy record low rates.  Short term fixeds are commonly around the 1.25% mark with five year deals circa 2%.  This makes it worthwhile to review your options and see if you can save money.

Remortgaging away from your current lender should not be looked upon negatively!  Many lenders will cover the cost of surveying your property, as well as covering the legal fees in transferring your mortgage from one lender to another.  But most of all, you should think of number one as this could save you money on your monthly budgets and, subject to terms and conditions, this can only be a good thing. 

In other news, Halifax is changing its income multiple to a flat 4.75 times sole or joint incomes.  For loans over £500k, this remains at 4 times income.  I suspect we will see some other lenders follow suit in to the new year and the lender will still require a full affordability assessment to be carried out.  However, this is pretty generous and many customers still believe they can only get 3-4 times income, so 4.75 times income, especially joint incomes, might be an eye opener for some!

Finally, outside AToM we have a box offering free ‘Property Today’ papers.  This is a good gauge to the local market and how interested people are in properties each week.  Last week, we ran out in a couple of days.  Possible signs of a buoyant local market (despite low stock levels), or just a lot of people keeping an eye on things?  Who knows…

Don't miss Horsham's Landlord show on 28th November

If you are currently in the process of changing your mortgage, has your current provider, adviser, arranger advised you of the regulatory changes that are due to be implemented shortly?  This is especially important if you are looking at buying a new build property that may not be completed until after March 2016.   One of the key areas of the new Mortgage Credit Directive is that lenders must issue a 'binding offer'.  This means that unless a material change occurs, post mortgage offer, or the customer has provided inaccurate information, the lender cannot re-underwrite the case.  This sounds pretty straight forward.  However, if you are arranging your mortgage today and on current lender structures, come March 22nd, your offer will be null and void.  Thus between now and 21st March, the lender should send you another mortgage offer which will be compliant with the new regulations.   This new offer also introduces an obligation on lenders to give customers the right to seven days of reflection (a cooling off period).  These are just two examples of a number of new regulations that are coming into effect and that you should be aware of.  More news will follow on this. Of course, as with the last regulatory changes (Mortgage Market review – April 2014) you can be certain that the national press will publicise all you need to know, just a week before the regulations hit the market!

Finally, we're just over a week away from Horsham's FREE and dedicated LANDLORD event.  On Saturday 28th November, at the Drill Hall, Denne Road Horsham, a number of local businesses will be exhibiting and offering key information and regulatory updates that come in to effect in 2016.  Whether a first time Landlord or an experienced portfolio investor, the event will offer information and assistance for all.  Organised by AToM and Spofforths Accountants, exhibitors include the National Landlords Association, Courtney Green, Guy Leonard, Leaders, Rix & Kay Solicitors, David Everett Plumbing, Lady Decorators, Community Fire Services, Durrants Removals, Sharon Davis Inventories and much much more!  Hope to see you there!

They say no base rate move in 2016. Now, use a broker!

As mentioned in one of my earlier columns, I could not envisage a rate rise for some time and, at the earliest the end of 2016, start of 2017.  This has now also been stated by the Bank of England who suggest that there will be no movement in base rate for the whole of 2016.  If it's correct, then good news indeed!  What this means is that lenders effectively have cheap money to lend.  In the current climate, with minimal property stock for sale, reduced activity across the market and increased targets, we will see a lot of competition and possibly rate decreases as Lenders become more focussed on attracting new business. 

This will also apply to the non high street lenders.  They will have an uphill struggle to compete with the bigger lenders in rate reductions.  Where this breed will succeed is through helping those who are rejected by the high street, for whatever reason.  As the household names usually work on a computer automated credit scoring system, not everyone will fit the mould required.  The smaller lenders have an ability to manually review an application, assess it on its merits and carry out a credit search, rather than a credit score.  Rates are not far different from those on the high street and in most cases, the process will be the same.  But having a human underwrite your application can be a big plus when other avenues may have been closed to you.

What is for sure is that obtaining professional advice from a company who is willing to stand behind their recommendations and build a relationship with you, rather than just treating you as a number, should be a key priority.  Yes it may cost a small fee, but finding the right mortgage for your needs has to be more important in the longer term.  As more and more regulations hit the mortgage industry, dealing with someone who is experienced and who has access to the whole market, rather than just a small panel of lenders, should mean that you get the appropriate advice and less stress to concern you later on.  Remember, this is the biggest debt you're ever likely to have.  It should therefore be treated with the up-most respect.

Buy to Let now with free valuation and free legals (including purchases*)

With the year end closing in fast, and new regulations only just around the corner, we are starting to see some lenders advising their plans for next year.  Many lenders have increased targets and AToM has been in contact with a number who are looking to launch or re-launch (having been dormant) during the coming months.  The majority of industry pundits, including myself, don't believe rates will now change until late 2016, or early 2017.  So with a slightly quieter market, competition, especially rates, should be fierce for the remainder of this year and moving into next year.  This can only be good news for the end consumer.

For those with Buy to Let / Investment property interests, we have seen new lender, Foundation Home Loans, stir up the market as they have launched products with free valuations, free legal costs and will accept customers who have no minimum trading period on employed or a self employed basis and no minimum income requirements.  This is in addition to looking at customers who may have had a blip or two on their credit history.  Although a recent new entrant to the market, Foundation have an appetite to lend and are innovative.  I think we will see a lot more from them in 2016.

Another lender has launched a five year fixed rate for Buy to Lets with a rate sub 4%.  This whole sector will remain buoyant while the rental market continues to grow at a substantial pace.

Nationwide House Price Index confirm UK house prices increased by 0.6% in October, with the annual price growth edging up to 3.9% from 3.8% in September.  The average house price now stands at £196,807!

And finally...due to an 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!