Rates down and Lenders are attractive!

Two weeks into the working year and the mortgage market is looking incredibly positive! Many lenders, including Abbey, Chelsea, Coventry, Halifax and Nationwide have reduced their fixed rates recently. Others have increased the amount you can borrow against the value of the property and another lender has launched an 80% tracker rate with no redemption penalties, meaning you can leave when you like at no extra cost. It appears the active lenders are becoming somewhat nervous at the ‘alleged’ number of applications received by the FSA from prospective new lenders as well as the competitiveness appearing between those already there! As a result, increasing market share has become priority and lower rates and competitive products can only be good for all!

We have also noticed a number of lenders becoming somewhat more relaxed in arranging mortgages that don’t fit the normal credit score mould. Some while ago, I mentioned that AToM had re-launched its ‘Complex Prime’ proposition. Complex Prime looks at applications which, ‘for whatever reason’ do not fit the normal high street mentality or need something of a more complex underwriting nature. A short list of examples include applicants with no credit, too much credit, a desire to pay up front or add additional security in the form of another property increasing their ability to borrow more. We have five lenders on our panel already looking exclusively at this scenario for AToM. One has awarded AToM a £10m tranche of funds, so there is no better time to visit our offices in the Carfax, Horsham, to see how we can assist you.

Finally, why not visit our website at www.atomltd.co.uk and review all of our financial offerings. These range from the ability to apply online for mortgages from the whole of market, secured loans, credit cards, right up to switching your mobile phone, gas and electricity bills or simply to review your current insurances. Give it a try, you’ve got nothing to lose, but a possibly a lot to save!

2010 - time to be positive!

Firstly, a very Happy New Year to one and all! What a way to start……..VAT is back to 17.5%, the Stamp Duty threshold has returned to £175,000, and the fluffy white stuff is causing havoc (and great fun!). As 2010 emerges from the grey of 2009, what portends for the mortgage market as we head towards the Spring? A General Election, more regulation and greater confusion for those looking to step onto the property ladder, or change their mortgage?

The challenge we face in 2010, as a mortgage intermediary, is being able to compete on a level playing field against those organisations that conduct non-advised sales (especially the banks) or who are not independent and do not remotely offer even a representative ‘whole of market’ offering. Whatever your scenario, you need and deserve to be given advice for all products available in the market, not just a chosen few!

The other challenge facing us all is the national debt! The myriad of press and TV coverage will have ensured that we are all fully aware that, whoever wins power in the forthcoming elections, there will be financial pain meted out to the community to engender recovery of this issue which has spiralled massively out of control.

Good news this week in that one of the larger property websites has allegedly reported that, on Monday alone, they received more hits than in the whole of January 2009. Positive news and greatly received so early in the year!

We too, had a positive end to 2009 with more new applicants than for many months. If this is a sign of returning confidence then that is good news all round in the home mortgage sector. Confidence is contagious and is a good thing. Let's start the year that way and, who knows where it might lead us?

Something to ponder..

I start this week’s column with a brief look back at 2009!
January saw UK plc officially reach recession with house prices in steep decline. BBR dropped in February and has remained at 0.5% ever since. In March, many banks announced dramatic losses. Stamp Duty relief was extended in April for properties under £175k until the end of 09. May confirmed hundreds of mortgage brokers had left the market! In June AToM opened new premises in the Carfax (Hooray)! July’s mortgage business hinted small signs of recovery. August saw a renewed call for Estate Agent regulation and in September Lloyds completed the first mortgage asset backed securitisation in Europe for over a year! In October the FSA circulated their Mortgage Market Review proposals including the removal of self certification mortgages. November saw news of a number of lenders ready to join or re-enter the UK mortgage market and December bought the pre budget report - Oh joy! Overall, not a great business year for mortgages! It can’t get any worse, can it?

So, something to ponder - BBR will increase at some point soon. Some pundits suggest late 2010. We think it will be sooner. Tracker rates remain attractive but if you are waiting on a tracker and planning to move to a fixed rate when BBR moves, then beware….we can almost guarantee that the cost of fixed rates will quickly rise too. So, if you are sitting on a good tracker, is it worth taking a gamble on where fixed rates will be when the uplift in BBR comes? If you are keen on stability, have you thought about the possible advantage of taking a small hit at the front end knowing you are well placed with rate protection when BBR rises? A conundrum to consider during the festivities?

Thank you for reading my column throughout 2009. Please let me know any burning issues you would like me to cover in 2010. You can email me at dale.jannels@atomltd.co.uk or give me a call on the above number.

The directors and staff at AToM wish you, family and friends a very Happy Christmas and relaxing New Year. We look forward to being of assistance to you during 2010. Let’s hope it will be a good year for everyone…

AToM launch 'Complex Prime'

Despite the decade drawing to a close, there is still time to look at a new mortgage! Many lenders offer ‘product transfers’ or ‘retention products’ to existing customers. These are not generally advertised to the general public or offered unless you ask for them. If your current incentive rate has come to an end and you have been transferred to the lenders standard variable rate, you will often have the option to choose a new product from an internal range available to existing clients. Some lenders have a good range of retention products. Others, particularly in the current climate, may not and expect that you will simply pay the new rate or move lenders. When moving lender, you release the original funds back to the current lender to advance to someone else, probably on a higher rate of interest and with an attractive new arrangement fee. Basically, some will make more money if you switch lenders, than if you remain on their books! Most retention products can be arranged within a matter of days. Speak to an independent mortgage brokerage to see what’s available and see whether this is the right option for you.

I rarely promote AToM product offerings in my column. However, this week is an exception! With most lenders, a mortgage is initially agreed using a tick box computer system. If you tick all the boxes, you normally get offered a mortgage. However, if you are not on the voters roll: have too much credit: have too little credit: require something a little more complex…. you may find it difficult to get past the first hurdle. Don’t give up! AToM have launched ‘complex prime’ to cater for such examples. We have an arrangement with three lenders who will ‘manually’ underwrite your application and, if the deal fits, they will look ‘outside the box’ and lend. This is a superb alternative to the current “computer says no” mentality and is a positive step forward by the lenders we are working with. It is refreshing and harks back to the days of real underwriting! Call AToM now to find out more.

Trackers remain the product of choice.

4/12/09 - We are suddenly well into the Christmas season and as such, I should really look to be upbeat and not announce anything other than glad tidings. So, I won’t be able to let you know that the Citizens Advice Bureaux have reported an increase in debt problem queries and are now handling an estimated 9,300 new enquiries every day. I certainly won’t mention that 1,000 people are seeking some sort of formal debt rescheduling every working day. And, lastly, I will definitely refuse to write about the 386 people who will be declared insolvent or bankrupt today or that it is equivalent to one person every 3.72 minutes. Stark facts indeed as released by ‘creditaction’. What these disturbing numbers signify is that, even though it is the season to be jolly, reality determines that this Christmas may prove to be a financial burden too far for many and the price people will be prepared to spend on it may well receive much more thought than in previous times. It could go two ways - firstly, people will put their cares to one side, forget the 2009 trials and tribulations and the credit cards will be flexed with any spends being forgotten until later. Or secondly, the purse strings will be drawn and funds will be tightly managed. Whichever applies to you, just make sure you’re happy and don’t regret it later!
Other news - House prices have increased for the seventh month in a row according to the Nationwide. Rising by 0.5%, the average house price is now at a similar level to that of 2006 and 2.7% higher than in November 2008. Mortgage product availability is also increasing. As lenders fight for market share, great new products and innovations are being sought. One lender has launched a very attractive 10% deposit product that tracks the Bank of England base rate plus 4.29% (so 4.79% - APR 4.4%). Trackers still remain the product of choice as experts predict that base rate will remain static for some time. So, if you are in the market for a 90% mortgage, and your income can stand scrutiny, this is a product well worth further investigation.

"bedside manner" counts, even from Brokers!

Mixed messages from lenders this week! One major high street lender is apparently 10% below its projected business target. This is great news as, shortly, we should see some highly competitive rates launched to attract new business, as we move towards the year end. Another lender who suspended lending last year is back, albeit with a limited product offering. But again, this is great news.
Conversely, some lenders are experiencing severe service issues and, despite being low on intake, have tightened criteria which curtails new business whilst offering a better service to customers. What you can get today, may not be available tomorrow.

As I reported recently, the last remaining self cert (no proof of income) lender withdrew from the mortgage market. They also took with them some great adverse product offerings. This has resulted in just a handful of lenders offering products to those who have incurred CCJ’s, defaults, bankruptcies/IVAs or who have poor payment profiles. The volume of business submitted to the remaining lenders has increased their exposure in this sector and one lender has already suspended certain products in order to stem the intake of new applications.

It really is becoming tougher to get a mortgage in the current climate and now, more than ever, you should do your homework and speak to a ‘whole of market’ mortgage adviser and compare all mortgages available. Even Martin Lewis, of moneysavingexpert.com, writes on his website “Ask ‘em – Are you Whole of Market”. If the person you are speaking to is not offering “whole of market” advice, i.e. they just review a panel of selected lenders, you may not be getting the best product for your needs and/or requirements. And remember, you can place your mortgage with whoever you like. You are under no obligation to anyone, despite what some may say! Everyone covets your business and there appears to be some underhand (and not necessarily compliant) tactics going on. Again, to quote Martin Lewis – their “bedside manner” counts! If you don’t like their stance, or they’re ‘forcing’ you to use them, walk away….!

Another year yet..

Every year, the mortgage industry holds an exhibition for all providers in London. The event lasts two days and it’s a good chance to meet lenders, discuss business with competitors, and review new product providers, etc. However, this year, it was somewhat of a small affair held at Olympia and only five or six out of the 60 exhibitors (normally 200+) were lenders happy to invest in promoting themselves and their product offerings! I still decided to visit and met with those who were participating and the general consensus was buoyant and one of optimism. This was until day two, when the last remaining Self Certification (no proof of income) lender withdrew from the market. If there’s one thing the market needs right now, it’s more lenders, not less! Although only lending a small amount compared to the high street names, a couple of billion is still a lot of lending in the specialist markets! Less than a week later, we’re already seeing a gap in the market which Self Cert used to fill.
The other message, repeated by various sources, was that the expectancy for new lenders to arrive and for lending to increase dramatically is still another year away. What does this mean? In short, the lenders currently lending can control the market between them. They have limited competition and, as long as they hit their own internal targets and profitability, need not reduce rates and/or fees to attract more customers. They can also keep criteria controlled and have a limited appetite to review applications that don’t quite fit their standard mould.
I’ve said it before, but it needs re-iterating again and again - if you have plans to apply for a mortgage in the not too distant future, keep your head above water. Don’t miss or make late payments to any provider. All financial institutions will base their decision initially on your credit history. If you have missed or late payments, or even a lot of recent searches (from multiple finance/mobile/car/home insurance applications), this could be detrimental to your ability to obtain finance, at a competitive rate. If you have not reviewed your credit search before, get it for free (for 30days) from the AToM website. It’s well worth a review and a good insight on how attractive you look to a lender!