19/6/09 - The Council of Mortgage Lenders has reported that 69% of borrowers took out a fixed rate mortgage in April, with an average rate of 4.83%. The percentage of borrowers fixing is the highest since June 2008.
While the number and value of house purchase loans increased by 16% from March to 35,600 loans worth £4.5bn in April, this was still well down on the year before.
SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) rose steeply last week. As a result, Accord, C&G, Nottingham, Northern Rock, Yorkshire, West Bromwich, Chelsea building society, Birmingham Midshires, Bank of Scotland and the Nationwide have all increased rates on longer term fixed rate deals.
Although the above emits some large high street names, such as Abbey, A&L, Woolwich, etc, those who have not increased their rates (at the time of writing) will receive a deluge of new business and thus, in order to stem the flow of business and maintain service standards (so they will say!), will no doubt increase rates anyway. What's there today may not be tomorrow.
The Confederation of British Industry expects quantitative easing to continue for “some months”, with the Bank of England maintaining interest rates at 0.5% until perhaps the spring of next year. But although the base rate looks to stay static for some time, both banks and building societies are showing signs of raising tracker rates also.
With house prices so low and experts predicting the harshest period of the recession is behind us, it’s now down to the consumers and house buyers to lead the way. As I stated at the beginning, purchasers are showing signs they think the worst is over.
To take advantage of the current relatively low long term fixed rates, DON'T DELAY and visit your local mortgage broker (AToM!)asap..
17 June 2009
The music's stopped....all change at Lloyds!
12/06/09 - You may have seen the news this week regarding the Lloyds Banking Group reshuffle. When Lloyds took over HBOS, the newly created group had many differing brands, so it was only be a matter of time until a review of their market offerings was undertaken. At the time of writing this column, we have heard that the Cheltenham & Gloucester branch network is to be closed in November 2009 and that they will concentrate purely on business via mortgage intermediaries. With circa 160 branches nationwide, some in close proximity to Lloyds TSB, Halifax and Bank of Scotland branches, this is no real surprise. Birmingham Midshires, Cheltenham & Gloucester (intermediaries) and Scottish Widows will continue to have a strong presence in the mortgage intermediary market, with Halifax offering both intermediary and general public products, we believe. What this means for you, the consumer, is a wider variety of options when looking for your new mortgage with each brand understood to be targeting different areas of the mortgage spectrum. This is also great news for the mortgage intermediary market and product options available via mortgage specialists, such as AToM, should be sought when reviewing your requirements.
Having recently seen that Abbey, Alliance & Leicester and Bradford & Bingley are to be renamed under their parent brand, Santander, these are clear signs that condensing brands and fine tuning offerings are the way forward. Cost cutting is apparent and any recently seen green shoots, now appear to have no roots.
However, profit is key and we may well see some very competitive and attractive mortgage products to kick start the ‘all new’ brand looks. What is for sure is that these moves show the Lenders faith in mortgage brokers and intermediaries and for that, at least, we are eternally grateful! Now it’s your turn to do the same!
Having recently seen that Abbey, Alliance & Leicester and Bradford & Bingley are to be renamed under their parent brand, Santander, these are clear signs that condensing brands and fine tuning offerings are the way forward. Cost cutting is apparent and any recently seen green shoots, now appear to have no roots.
However, profit is key and we may well see some very competitive and attractive mortgage products to kick start the ‘all new’ brand looks. What is for sure is that these moves show the Lenders faith in mortgage brokers and intermediaries and for that, at least, we are eternally grateful! Now it’s your turn to do the same!
What credit crunch? £20m in bonuses paid....
05/06/09 -
News emerged this week that the FSA paid its staff near £20m in bonuses last month, a 40 per cent increase on last year’s payouts, according to figures obtained by the Liberal Democrats. The average bonus paid to regulator executives was £19,100, while the average for other staff was £4,107. A LD spokesperson commented that the size of some of these pay-outs would be hard to justify at the best of times, but it looks especially bad in the current economic climate.
Creditaction has reported that 33,600 applications for credit have been turned down every day during the past six months and that the Citizen Advice Bureaus have been dealing with 7,241 new debt problems every day.
The number of house purchase approvals in April hit 43,201, an increase on the March figure and the previous six-month average, according to the Bank of England. Although purchase approvals increased, the number of remortgage applications continued to decrease. This is somewhat surprising in current climates. With predictions of rates set to soar and current fixed rate mortgages so low, I’d have expected re-mortgaging to a long term fixed rate to be very attractive.
The Nationwide House Price Index suggests that house prices rose by 1.2% in May with the annual fall in house prices slowing significantly. Their latest figures show average house prices at £154,016, some 11.3% lower than this time last year but an improvement to the annual decline of 15% recorded in April.
However, let’s not jump up and down just yet! Every month, the variance in house prices is reported by numerous sources. So despite Nationwide suggesting house prices are on the up, there’s the probability that the Halifax and Land Registry reports may disagree. They all follow differing sampling measurements and more recently have rarely agreed. Some say that until these three align and consistently report that house prices are on the increase, for at least a quarter, the champagne needs to stay on ice.
News emerged this week that the FSA paid its staff near £20m in bonuses last month, a 40 per cent increase on last year’s payouts, according to figures obtained by the Liberal Democrats. The average bonus paid to regulator executives was £19,100, while the average for other staff was £4,107. A LD spokesperson commented that the size of some of these pay-outs would be hard to justify at the best of times, but it looks especially bad in the current economic climate.
Creditaction has reported that 33,600 applications for credit have been turned down every day during the past six months and that the Citizen Advice Bureaus have been dealing with 7,241 new debt problems every day.
The number of house purchase approvals in April hit 43,201, an increase on the March figure and the previous six-month average, according to the Bank of England. Although purchase approvals increased, the number of remortgage applications continued to decrease. This is somewhat surprising in current climates. With predictions of rates set to soar and current fixed rate mortgages so low, I’d have expected re-mortgaging to a long term fixed rate to be very attractive.
The Nationwide House Price Index suggests that house prices rose by 1.2% in May with the annual fall in house prices slowing significantly. Their latest figures show average house prices at £154,016, some 11.3% lower than this time last year but an improvement to the annual decline of 15% recorded in April.
However, let’s not jump up and down just yet! Every month, the variance in house prices is reported by numerous sources. So despite Nationwide suggesting house prices are on the up, there’s the probability that the Halifax and Land Registry reports may disagree. They all follow differing sampling measurements and more recently have rarely agreed. Some say that until these three align and consistently report that house prices are on the increase, for at least a quarter, the champagne needs to stay on ice.
02 June 2009
Sale and Rent back...back?
Council of Mortgage data reports that gross mortgage lending fell to an estimated £10.4bn in April, 60% down on this time last year. April’s figure is down 9% from £11.4bn in March and 60% from £26.1bn in April 2008. These figures confirm that the market is still weak and, despite industry reports, lending is not increasing just yet.
Innovation is though! Lloyds TSB launched a new product this week. The ‘Lend a Hand’ deal offering first time buyers an ‘in’ to the property ladder with a 95% mortgage on an attractive rate of interest. Parents have to place an investment with the bank against which a legal charge is taken. The investment receives a fixed rate of 3.5% for 42 months. The combined savings and deposit from the purchasers must equate to 25% at the outset. Although this will not suit all first time buyers, it is a positive step forward.
The Sale and Rent Back sector (investors buy your property and rent it back to you) has received many derogatory press comments in recent times. However, with regulation of the sector due in July, the future should be ethical.
Sale and rent back will not be right for everyone, but it does provide a valid solution for homeowners facing repossession and who have exhausted every other option. A new company has recently launched in this sector and the founders have enjoyed many years experience in the mortgage market, most recently as lenders. Their model is based around the customer remaining in the home with the ability to buy-back the property at any time during the tenancy agreement (up to 5 years) and share in any increase in market value. Customers must take independent advice and there are no application or administration fees to pay. Customers can withdraw at any time before the sale of their property, at no cost. Valuations of the property are based on two independent assessments. This is a specialised market and we support its forthcoming regulation. Please call for more details.
Innovation is though! Lloyds TSB launched a new product this week. The ‘Lend a Hand’ deal offering first time buyers an ‘in’ to the property ladder with a 95% mortgage on an attractive rate of interest. Parents have to place an investment with the bank against which a legal charge is taken. The investment receives a fixed rate of 3.5% for 42 months. The combined savings and deposit from the purchasers must equate to 25% at the outset. Although this will not suit all first time buyers, it is a positive step forward.
The Sale and Rent Back sector (investors buy your property and rent it back to you) has received many derogatory press comments in recent times. However, with regulation of the sector due in July, the future should be ethical.
Sale and rent back will not be right for everyone, but it does provide a valid solution for homeowners facing repossession and who have exhausted every other option. A new company has recently launched in this sector and the founders have enjoyed many years experience in the mortgage market, most recently as lenders. Their model is based around the customer remaining in the home with the ability to buy-back the property at any time during the tenancy agreement (up to 5 years) and share in any increase in market value. Customers must take independent advice and there are no application or administration fees to pay. Customers can withdraw at any time before the sale of their property, at no cost. Valuations of the property are based on two independent assessments. This is a specialised market and we support its forthcoming regulation. Please call for more details.
22 May 2009
Could it be a sign??
The latest Bank of England quarterly inflation report suggests that the economy will not now recover until the middle of 2010 (somewhat contradictory to Alistair Darlings recent budgetary prediction!). Analyst’s inflation review indicates that the Bank's base rate is likely to remain at 0.5% well into 2010. Therefore, a short term tracker rate with options to change to a fixed rate with no early redemption charges looks good. Generally known as an ‘all-weather’ product, a few lenders have previously offered this option, although Nationwide is currently the only lender with such an offering….at least for now!
This week, Rightmove.co.uk reported that sellers have increased asking prices by up to 2.4% during May in a bid to maintain their own position when buying. The average asking price is now £227,441 (against £222,077 in April). The Rightmove House Price Index for May shows that the jump in asking prices is the largest the property website has measured, for a single month, since 2003!
More positive news indicates that UK residential property sales have hit an 18-month high. Figures from the National Association of Estate Agents (NAEA) show that the average agency branch sold ten properties in April – compared with eight in March.
RBS (Royal Bank of Scotland) has changed its definition of New Build properties. Any property refurbished, modernised or altered since 1st January 2006 will now be classed as New Build. As a result, the maximum advance on these properties is now limited to 80% for residential and 65% for investment mortgages! This, from a lender who is seeking to lend a further £25bn over the next two years!
On the favourable side, the Abbey have increased their lending values from 60% to 70% on their competitively priced re-mortgages on 2, 3 and 5 year fixed rate products!
Congratulations to Lifestyle Ford of Horsham, who succeeded AToM in winning this years coveted West Sussex County Times Business of the Year Award. Well done!
Finally, you buy a car from a car specialist, flowers from a florist, so for all your mortgage requirements, why buy anywhere other than from your local mortgage specialist?
This week, Rightmove.co.uk reported that sellers have increased asking prices by up to 2.4% during May in a bid to maintain their own position when buying. The average asking price is now £227,441 (against £222,077 in April). The Rightmove House Price Index for May shows that the jump in asking prices is the largest the property website has measured, for a single month, since 2003!
More positive news indicates that UK residential property sales have hit an 18-month high. Figures from the National Association of Estate Agents (NAEA) show that the average agency branch sold ten properties in April – compared with eight in March.
RBS (Royal Bank of Scotland) has changed its definition of New Build properties. Any property refurbished, modernised or altered since 1st January 2006 will now be classed as New Build. As a result, the maximum advance on these properties is now limited to 80% for residential and 65% for investment mortgages! This, from a lender who is seeking to lend a further £25bn over the next two years!
On the favourable side, the Abbey have increased their lending values from 60% to 70% on their competitively priced re-mortgages on 2, 3 and 5 year fixed rate products!
Congratulations to Lifestyle Ford of Horsham, who succeeded AToM in winning this years coveted West Sussex County Times Business of the Year Award. Well done!
Finally, you buy a car from a car specialist, flowers from a florist, so for all your mortgage requirements, why buy anywhere other than from your local mortgage specialist?
15 May 2009
Easing the Financial Strain...
I did have a small chuckle last week as reports emerged from the government that the ‘mortgage rescue scheme’ initiative (which was due to ‘save the world’), has assisted just one family. This is despite suggestions that it would be available to circa 6,000 in the country. In an hour of need, it surprises me that with so many analysts, experts and others in the industry, they cannot come up with a more practical scheme that would actually help rather than just be an apparent PR stunt. Perhaps less concentration on expenses might be a start!
Following the unexpected drop last week, the cost of fixed rate monies increased this week, as have the number of mortgage products in the market. The latter is great news as competition and attractive product options begin to return. Despite being some 70% down on this time last year, the number of available products has increased by 22% over the last two months to circa 3,300.
Much is made these days of the fact that, pre-credit crunch, customers took on secondary borrowings simply because they were available! These are often very expensive and can ultimately lead to financial difficulties which might easily blight their credit file if it is left to fester. In many cases, re-mortgaging may be the right option for customers and the following is a live example of one case where we were able to make a real difference:
The clients owned a property worth £395000 with a standard mortgage of only £47000. However, they had accumulated more than £90000 in secondary borrowings, including car and credit card loans and other similar commitments. These had led to monthly outgoings in excess of £2700! Whilst it is not always wise to convert short term loans to long term borrowings, these clients were gradually heading towards a point where defaults on payments were going to happen soon. A view needed to be taken, and quickly.
Income was fine and a re-mortgage to £140000 was undertaken culminating in a new monthly payment of approximately £785 representing a monthly saving of £1915. This massively eased the financial strain the clients were starting to feel. This would not be the right response for everyone of course and every applicant has different needs demanding individual consideration. Even for those of similar age and financial circumstances! As always, for more information, please visit our website or contact us on the number above.
Following the unexpected drop last week, the cost of fixed rate monies increased this week, as have the number of mortgage products in the market. The latter is great news as competition and attractive product options begin to return. Despite being some 70% down on this time last year, the number of available products has increased by 22% over the last two months to circa 3,300.
Much is made these days of the fact that, pre-credit crunch, customers took on secondary borrowings simply because they were available! These are often very expensive and can ultimately lead to financial difficulties which might easily blight their credit file if it is left to fester. In many cases, re-mortgaging may be the right option for customers and the following is a live example of one case where we were able to make a real difference:
The clients owned a property worth £395000 with a standard mortgage of only £47000. However, they had accumulated more than £90000 in secondary borrowings, including car and credit card loans and other similar commitments. These had led to monthly outgoings in excess of £2700! Whilst it is not always wise to convert short term loans to long term borrowings, these clients were gradually heading towards a point where defaults on payments were going to happen soon. A view needed to be taken, and quickly.
Income was fine and a re-mortgage to £140000 was undertaken culminating in a new monthly payment of approximately £785 representing a monthly saving of £1915. This massively eased the financial strain the clients were starting to feel. This would not be the right response for everyone of course and every applicant has different needs demanding individual consideration. Even for those of similar age and financial circumstances! As always, for more information, please visit our website or contact us on the number above.
08 May 2009
The right time to invest?
House prices are low, mortgage interest rates are competitive, traditional investment returns are poor. Therefore, purchasing a property as an investment might be viewed as an opportunity to make decent returns on savings. Let’s look at this in more detail.
A ‘Buy to Let’ mortgage is specifically targeted at borrowers who wish to invest in property to let out. The rental income landlords receive should generally exceed monthly mortgage payments and will help to offset maintenance/management costs as well as making some profit!
As a result, more and more people are looking at Buy to Let as a viable option for:
Planning for retirement.
It is a sad fact that many people in UK do not plan sufficiently for retirement. Additionally, large numbers of pensions and endowments may fail to perform to target or pay out as expected. As a result, purchasing an investment property might be considered as a flexible, controllable means of planning for retirement and also a medium to long-term investment.
A second income from property.
Investing in property can deliver a modest monthly return over and above the mortgage payments and be drawn as additional income or (with a flexible loan) used to “overpay” the mortgage. This might lead to early redemption and a nice profit once the mortgage debt has been re-paid. There are, of course, no absolute guarantees!
Letting as a long term investment.
Repayment terms range from 5 to 30 years so some might consider Buy to Let as a viable medium to long term alternative to more traditional investments vehicles.
These options do give rise to potential taxable implications (no surprise there then!) and these should be investigated with your financial adviser/accountant.
Finally, other news - The cost of fixed rate money nose-dived last week, prompting lenders to, against some expert predictions, lower fixed rates! Some have already launched reduced rate deals giving new customers some great fixed options. If you want to fix your monthly mortgage costs for the next 2 to 15 years, there’s no better time to be speaking to your local and independent mortgage brokerage!
A ‘Buy to Let’ mortgage is specifically targeted at borrowers who wish to invest in property to let out. The rental income landlords receive should generally exceed monthly mortgage payments and will help to offset maintenance/management costs as well as making some profit!
As a result, more and more people are looking at Buy to Let as a viable option for:
Planning for retirement.
It is a sad fact that many people in UK do not plan sufficiently for retirement. Additionally, large numbers of pensions and endowments may fail to perform to target or pay out as expected. As a result, purchasing an investment property might be considered as a flexible, controllable means of planning for retirement and also a medium to long-term investment.
A second income from property.
Investing in property can deliver a modest monthly return over and above the mortgage payments and be drawn as additional income or (with a flexible loan) used to “overpay” the mortgage. This might lead to early redemption and a nice profit once the mortgage debt has been re-paid. There are, of course, no absolute guarantees!
Letting as a long term investment.
Repayment terms range from 5 to 30 years so some might consider Buy to Let as a viable medium to long term alternative to more traditional investments vehicles.
These options do give rise to potential taxable implications (no surprise there then!) and these should be investigated with your financial adviser/accountant.
Finally, other news - The cost of fixed rate money nose-dived last week, prompting lenders to, against some expert predictions, lower fixed rates! Some have already launched reduced rate deals giving new customers some great fixed options. If you want to fix your monthly mortgage costs for the next 2 to 15 years, there’s no better time to be speaking to your local and independent mortgage brokerage!
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