AToM = GE Top Volume Producer for 2013!

The mortgage market is a flurry of activity currently and competition in the sector is rife.  Lenders are looking at a variety of ways to sneak ahead of their competitors.  One such example relates to the Help to Buy New Build schemes.  When the scheme was launched, the customer would take a percentage of the property, normally up to 75 per cent.  Customers would put in a 5 per cent deposit and the government would cover the remaining 20 percent as an equity loan, repayable after ten years or on sale of property.  One lender has launched a product that will now allow a remortgage up to the full 95 per cent of the property value to remove their shared equity loan.  This is new to the market and shows an ambition to think outside the box and cater for customers who may otherwise have minimal options at the end of the equity loan period.

Some rates have started to creep up….. over the last week we’ve seen Metro Bank and Accord Mortgages increase selected rates by 0.2% and both Halifax and Santander increased some rates by 0.1%.  Not time to hit the panic buttons just yet, but good to note the movements in the market.   In fact some lenders have actually reduced a selection of rates, so always review the options available across the whole of the market.

Finally, AToM has been recognised as a major contributor to two specialist lenders.  GE Money Home Lending has awarded AToM as their top volume producer for the whole of 2013! Part of the GE Group, they specialise in lending to those who require large loans, over £250k, and to those who may have had a credit issue in the past.  Precise Mortgages, who also lend in the specialist sector, as well as Buy to Lets has confirmed AToM as their top volume producer across all products for the last six months!  Both lenders have a fantastic suite of products and we look forward to continuing to grow with them both.  Have a great weekend!

Weeks to get an appointment with your Bank?

We have had many mortgage customers approach us who have become frustrated in recent times.  Mainly with two things:  firstly, that some of the local banks or building societies cannot see mortgage customers for a matter of weeks (we heard one was booking four weeks ahead!) and secondly, each appointment often takes well in excess of an hour.  Sadly, for whatever reason, that lender could not offer the customer what they wanted and so they went to another and sat through another hour or so only to find they could also not then offer what was required, and so on.  This is a large consumer commitment to time but without a satisfactory solution.  This is where independent and whole of market brokerages come into their own.  They will be able to offer you access to a number of lenders, including the high street names, if appropriate, and you only need to have one conversation with the same person.  In addition, they should have access to lenders who will manually assess your needs rather than a ‘computer says no’ type scenario, if required.  If I can also ‘plug’ a little, we also have access to a number of limited access lenders and exclusive products not readily available to the wider mortgage market!

With this in mind, we have seen lenders reviewing criteria options over the last few weeks.  For those looking at investing in property to rent out, Buy to Let mortgages are now available with just a 15% deposit.  For those looking to get on the ladder with a small deposit, or even remortgage with little equity in the property, this is now possible right up to 95% of the value of the property.   Some lenders have reviewed options for those wishing to by their council property and Right to Buys seem to be back in fashion.  Shared ownership options (buy part of the property, rent the rest) are also on the increase in both demand and supply, especially on newly built properties.  Finally, the lenders in the specialist sector are catering for many options.  Terms and conditions apply, but whatever the scenario, make sure you review all the options available to you!   

New regulations from 26th April - MMR

On April 26^th 2014, a new regulation will govern the mortgage market entitled the Mortgage Market Review (MMR).  Those who have recently arranged a mortgage will have seen that there is already a vast amount of regulatory paperwork involved in all aspects of the mortgage process.  This will not change.  But the amount of detail involved will increase somewhat.

Affordability has always been a key element when arranging a mortgage.  The MMR takes this a step further in also requiring a lender to predict affordability into the future.  Will any material changes occur in the next five years, how much will you spend on seasonal commitments this year, are you intending to expand your family?  These are just some of the more intrusive questions that are to be explored when budgeting for a mortgage.

Lenders have always stress tested affordability when arranging mortgage loans.  Now it is projecting to ensure the customer will be able to meet all future commitments over the next five years.  Difficult task!

But this also means that from April onwards, what was once an affordable mortgage may suddenly become unaffordable due to the perception the lender has on consumer spending habits, historically and projected for the future.   

The lender has always endeavoured to protect their investment to ensure they can get their money back should a customer not pay the mortgage.  The new rules mean they also now need to report on this to the regulator and confirm all projections and detailed calculations.

Even if a customer has life cover, income protection cover and any other insurances, these monthly payments are deducted from actual income as a monthly expense!  This could have an adverse affect on affordability and despite a lower risk and having been protected for a number of outcomes the customer may not achieve the mortgage despite their commitment to the cause!

Today, it’s about affordability.  From April, the lender is predicting the next five years affordability, risk assessment, future spending behaviours and more.   Whilst you might think you are superb candidate to raise a mortgage to purchase your dream home, the lender is being forced to think and project your assumed ongoing risk and affordability, amongst other considerations, before making their decision on whether to lend to you, or not.

                                                                                                                                                                                    

Great time to be a First Time Buyer...

First Time Buyers are in the limelight again this week as lenders adjust criteria in order to assist.  The Saffron Building Society offers a 95% loan to value product which used to require the customer to have a twelve months rental history with a professional letting agent.  The lender has now removed this requirement entirely and the product is now available to those living with parents!  Even better news in that this product has no redemption penalties at any time, should the customer wish to change providers.

The ‘Bank of Mum & Dad’ continues to be a major player in a large number of enquiries received at AToM HQ.   Many options are available to first time buyers and parents, including guarantors, cross collateral charges (using parent’s property as additional security and grandparents in some cases!), gifted deposits or equity and more.  It is important to note that, in most cases, a guarantor must be a blood relative.

One such example causing quite a stir is provided by the Coventry Building Society.  Called the ‘step up’ mortgage, this allows parents/guardian or close relative to also add in their income when calculating the loan amount available to the applicants.  The lender then deducts the parent’s annual mortgage commitment and any other credit to reach a total loan available (this cannot exceed 7 x the First Time Buyers income).  The product requires a ten per cent deposit and all parties are named on the mortgage deed.  Other terms and conditions apply, but these show the innovative levels lenders are considering to assist people purchasing properties and, for this, they should be applauded. 

Let’s also not forget that the number of lenders now offering the Governments Help to Buy Mortgage Guarantee schemes has expanded.  Over the last few weeks, we have seen Aldermore, Woolwich (Barclays), Virgin Money and Santander all launch products to assist those with a 5% deposit.   In addition some lenders who are not on the Government Help to Buy register have also been offering good alternative product ranges, including remortgage options.

All in all, the number of options available to those with a small deposit or who are a first time buyer is on the increase and that can only be a good thing for the wider market!

Is now the right time to Fix?

Activity remains high in the financial sector.   Halifax has reduced some two year deals by up to 0.2%.  Santander have launched two year tracker rates in the region of 1.79% (40% deposit) and Woolwich (Barclays) has launched products on the Governments Help to Buy Mortgage Guarantee scheme, available up to 95% loan to value.  We’ve also heard Richard Sharp, an external member of the Bank of England’s Financial Policy Committee, suggest that now is a good time to fix in to a long term deal.  Is he right?  Who knows!   There’s no denying that five year fixed rates are incredibly attractive and we have seen some rates start to creep up on these longer term deals.  However, it is personal preference.  If you wanted the certainty of knowing your mortgage payments won’t change for the next sixty months, then they are certainly worth a review!

The New Year has seen a large increase in requests for secured loans. A secured loan is a 2nd, or subsequent charge, designed for homeowners and which allows the equity in their property to be used as security.  Loans are usually between £3.5k and now up to £2.5m!  There are also no 'up-front' fees to find although costs are added to the advance.

We tend to find that many customers looking to remortgage to raise additional funds are already on an attractive rate with their lender. To move away could be costly and they could end up on a much higher interest rate.  Depending on the amount already lent as a mortgage, compared to the value of the property, most lenders will allow a secured loan to be added as additional borrowing, right up to 95% of the property value.

The secured loan is usually repaid over a shorter term than a mortgage, circa 3-7 years, but the term can be longer, although this will increase the amount of interest repaid. Rates vary depending on the customer’s circumstances and current level of borrowings.  Always seek advice.

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.       

House Prices up 1.4%. Next Steppers have good options

A Happy New Year to you all!  I hope you are holding up in the blustery and rather wet conditions!

UK House prices increased 1.4% in December according to the Nationwide House Price index.  This was some 8.4% higher than in December 2012.  The index also suggests that house prices are just 5% below the peak of 2007.  However I would think the impact of the horrendous weather recently will alter the figures somewhat in January/February.  Supply and demand is still playing a major factor with housing transactions being around 25% below 2007/8 levels, but new homes being built are around 45% lower (as at Q3, 2013).

The hope for 2014 rests a lot on the opportunities and offerings that are available to First Time Buyers.  We’re seeing a number of lenders offer mortgages to those with a 5 or 10% deposit.  I expect we will see more as the year unfolds.  Competition is good and should bring rates down at this borrowing level.

However, the ‘next step’ home movers also need attractive propositions in order to move.  There are only a handful of lenders who may consider 5% deposits to those already on the property ladder.  I would hope this offering will increase in order to help the supply chain with properties being available.  If rates remain high in this sector, there will be limited properties available to First Timers, and this will have a knock on effect.

All the while First Timers have limited options, the Buy to Let rental market will continue to flourish and this is one of the most competitive parts of the mortgage market currently.  Many options are available including innovative capital raising options to assist with the purchase of further properties.  Do be advised that market pundits are predicting that whilst house prices will rise, rental values may not, depending on the area.

Finally, the Funding for Lending scheme is coming to an end and this may possibly push up rates throughout the year.  Options are still incredibly attractive at the present time.  Long term fixed rates are sub 3% depending upon loan to value levels and for remortgages many lenders will pay the standard legal and valuation fees.   This, along with news that one in 11 people in Britain fear they won't be able to afford their mortgage or rent at the end of this month, according to research by homeless charity Shelter and YouGov, should mean that the one firm New Years Resolution is to keep on top of ALL finances.   It’s good to talk and most intermediaries will offer free mortgage advice, so don’t hang around and review your options today…