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Monday, 2 December 2013

Brokers vent anger at FCA over opaque UK lending criteria


Brokers vent anger at FCA over opaque UK lending criteria

Mortgage Solutions | 02 Dec 2013 | 11:22
Julia Rampen
A Financial Conduct Authority mortgage boss has expressed concern after listening to brokers' struggles to meet unpublished and non-transparent lender criteria.
Mortgage policy manager Lynda Blackwell heard brokers' tales of frustration with often-unpublished lender affordability criteria at The Mortgage and Protection Event 2013. Having apparently strong cases rejected with no explanation is a particular problem.
Brokers vented their anger at the conference after Blackwell addressed the issue of the difference between published headline rates and lenders' "black box" of internal affordability criteria raised by Legal & General housing boss Stephen Smith in a blog for Mortgage Solutions. Other concerns included the cost to clients if apparently strong applications fail and the impact on broker reputations.
Having forecast the Mortgage Market Review will increase opportunities for brokers earlier in her talk, she commented: "It seems the MMR is putting a spotlight on the way the relationship [between lenders and brokers] is not working very well at all."
The FCA is listening to broker representatives such as the Association of Mortgage Intermediaries and proposals such as date stamping cases in order to monitor criteria changes over time and more consistent published lender criteria. Blackwell said she is willing to hear from other broker groups as well.

Wednesday, 13 November 2013

Help to Buy will trigger 2014 rate war - broker

Borrowers will benefit from a Help to Buy-fuelled rate war in the first few months of 2014, a broker has predicted.
green house
Springtide Capital expects competition will intensify among lenders as more first-time buyers enter the market.
However, the broker anticipates rates will increase later in the year in reaction to a general improvement in economic conditions.
Springtide Capital managing director Henry Knight said: “I do not believe we are seeing the emergence of a housing bubble though we are clearly at the start of an improving market. Next year is set to be the year of the first time buyer.
“The Help to Buy schemes are going to present a great opportunity for people who have historically struggled with deposits. Our advice is to try to make the most of the first half of the year while rates remain low.”

Monday, 14 October 2013

RBS swamped by Help to Buy 2 calls

Mortgage Solutions | 14 Oct 2013 | 09:41
Mortgage calls to the Royal Bank of Scotland doubled after the bank launched products linked to the second phase of the scheme last Tuesday.

The bank received 10,0000 phone calls in four days from interested parties, and booked 5,000 appointments within three hours of the scheme going live.
RBS said that the average applicant for its 95% mortgages, which will be backed by the government scheme, was 32 years old and seeking a joint mortgage with a partner.
The youngest applicant was 19 years old and the oldest 42.
Lloyd Cochrane, head of mortgages at RBS and its NatWest subsidiary said:
"From the moment we launched our Help to Buy mortgage products, the response we've had from customers has been fantastic. "We knew there was pent up demand, from speaking to customers we knew there was a frustration and a desire for these products."
He added: "We expect demand for our 95% mortgage to continue, and with appointments for next week already filling up fast, from Tuesday over 740 of our branches will be open longer to make sure we continue to help as many customers as we can."
RBS is offering a two-year fixed rate charged at 4.99% and a five-year fixed rate charged at 5.49%. Both are fee-free and available throughout the UK. Other lenders already offer 95% mortgages not linked to the government scheme, some priced more cheaply, but they are few and far between and sometimes come with regional restrictions.
Halifax is so far the only other mainstream bank to have started offering Help to Buy 2 mortgages but Santander, HSBC and Barclays have all confirmed they will be taking part.
Smaller banks Aldermore, OneSavings Bank and Virgin Money are among lenders planning to launch Help to Buy-backed mortgages in 2014.
RBS has said that it plans to provide a total of 25,500 Help to Buy-linked mortgages via RBS and NatWest.
Speaking at last week's launch, Cochrane said it may only take "two to three weeks" for the first person to move in with a Government-backed mortgage

Wednesday, 9 October 2013

Help to Buy: what you need to know

The government’s Help to Buy scheme has been officially launched by George Osborne, Mortgage Solutions rounds up the key facts you need to know.
Which lenders are offering Help to Buy mortgage guarantee products?
Royal Bank of Scotland and NatWest are the only lenders offering products at launch although Lloyds Banking Group brands Halifax and Bank of Scotland will offer mortgages using the scheme from Friday 11 October.
HSBC plans to offer products by the end of the year while Virgin Money and Aldermore will launch at the start of 2014, although the latter hopes to bring forward its involvement.
What products are available under the Help to Buy scheme?
RBS/NatWest was first to announce product details, the brands will offer a two-year fix at 4.99% and five-year fix at 5.49%, up to 95% LTV. Both products will be fee-free.
So far Halifax has announced a two-year fix at 5.19% with a £995 fee, more product details are expected to be announced shortly.
Which lenders will offer products through mortgage brokers?
RBS/NatWest made the controversial decision to restrict its products to direct channels only at launch but plans to offer Help to Buy through NatWest Intermediary Solutions by the end of the year.
This means brokers are only able to place cases through Halifax for Intermediaries at present. HSBC will continue its direct-only lending policy when it joins the scheme although Virgin Money and Aldermore are likely to offer products through brokers.
What fees are lenders being charged?
Lenders will be charged a one-off fee of 0.9% on all loans between 90-95%, 0.46% on all loans between 85-90% and 0.28% on all loans between 80-85% by the Treasury.
The percentage charged will be reviewed each year and could be changed depending on macro-economic conditions and data gathered from mortgages already using the scheme.
What do lenders get in return?
Lenders will be allowed capital relief on mortgages made using Help to Buy, this will depend on the size of the lending institution with major banks each given a different level of relief. Smaller lenders will also receive some capital relief.
What are the scheme's key rules?
All types of properties are eligible as long as the purchase price is £600,000 or less. The property must be located in the UK and lenders are only able to offer residential repayment mortgages, no interest-only or buy-to-let deals are allowed.
Borrowers must sign a declaration stating they have no interest in any other property to proceed with a Help to Buy mortgage. The scheme is not limited to first-time buyers and includes a remortgage element, intended to help mortgage prisoners.
What does the industry think?
Trade bodies including the Council of Mortgage Lenders and the Building Societies Association welcomed the scheme and the publication of its final rules, although CML's Paul Smee said further support for new housing was necessary.
"As the mortgage market continues to unfreeze, assisted by Help to Buy and Funding for Lending, an increase in the supply of new housing will be a crucial factor in success," he said. "The homes need to be there for people to buy, as well as the finance to buy them."
Others were more sceptical. Genworth, which already provides insurance on high LTV loans to smaller lending institutions, said: "The pricing structure is designed as a ‘one size fits all', not taking into account individual lenders' risk profiles, as commercial guarantors would.
"The problem with this is more prudent lenders will end up subsidising the rate for more aggressive lenders. And if those more prudent lenders do not participate in Help to Buy, the 'one size fits all' rate would be clearly insufficient."
Treasury Select Committee chair Andrew Tyrie said the government must monitor the progress of the scheme closely.
"Given the chequered history of government interventions in residential property, great care will need to be taken in both the construction and running of this scheme. Mistakes could distort the housing market or carry threats to financial stability," he stated.

Monday, 7 October 2013

Help to Buy: full details expected on Tuesday

Chancellor George Osborne is expected to announce the full workings of the government’s Help to Buy scheme tomorrow, Tuesday 8 October.
George Osborne
Following the government's shock decision last week to bring forward the start date of the scheme by three months, further details will be announced by Osborne with participating lenders expected to launch products soon afterwards.
Newspaper speculation indicates rates could be as high as 6% but the majority of sources expect initial rates of between 4.5% and 5.5%.
Mortgage Solutions reported last week lenders will be charged around 0.9% of the loan to offer 95% mortgages under Help to Buy. This would equate to a fee of £1,800 on a £200,000 loan.
Help to Buy mortgage guarantee products will be available through Halifax, NatWest and Royal Bank of Scotland from launch, although mortgage brokers will initially only be able to place cases with Halifax as RBS Group plans to restrict products to direct channels until later in the year.
Aldermore confirmed last week it plans to launch products using the scheme by January.
The launch of the scheme is expected to generate huge interest from would-be homeowners with RBS planning to keep branches open later to meet increased demand.
Researched conducted by Santander this weekend claimed as many as one-in-ten Britons believed they would buy a property in the next year, with around a third of these stating they plan to utilise the Help to Buy scheme.

Wednesday, 2 October 2013

Lack of mortgage broker protection sales ‘disgraceful' - Stockton

Countrywide's Nigel Stockton has branded the slump in protection sales through mortgage advisers ‘disgraceful' and warned that sales will continue to fall as the mortgage market grows

Stockton, speaking during a broker panel session at the Financial Services Expo in London's Old Billingsgate, said that around two-thirds of mortgages were completed without the appropriate level of insurance.
"I sold my first mortgages in 1987 and before I could get the completion I had to get the direct debit receipt to show that I had sorted life cover for that loan," he said.


Tuesday, 1 October 2013

Govt brings forward Help to Buy launch date

Govt brings forward Help to Buy launch date

Mortgage Solutions | 30 Sep 2013 | 10:03
Joanna Faith
The second part of the Help to Buy scheme will be available imminently after the Government brought forward the launch date by three months.

David Cameron
The mortgage guarantee scheme, which allows prospective homeowners in England to take out 95% mortgages, was due to start in January 2014 but people will be able to start applying for the new mortgage guarantee shortly.
The mortgages - backed by the Government - will help people buy new or existing homes worth up to £600,000 with a 5% deposit.
The scheme will initially be available for three years up to January 2017.
The Prime Minister has been forced to defend the scheme after critics, including business secretary Vince Cable, warned it could spark a fresh housing bubble.
On Friday, a statement, released after a meeting of the Financial Policy Committee, set out central bank plans to ‘closely monitor' the housing market and intervene if it feels property prices are overheating.
Speaking on the BBC's Andrew Marr Show, David Cameron said: "The Bank of England said expressly, there isn’t a bubble. The housing market is recovering, but from a low base.

"As Prime Minister, I’m not going to stand back while people’s aspirations to get on the housing ladder, to own their own flat, to own their own home, are being trashed."

Last week, the Bank of England moved to calm fears  by saying it would step in if a bubble emerged in the housing market.
The first phase of the Help to Buy scheme launched in Scotland this morning.
The equity loan scheme has generated more than 12,500 sales in England since its launch in April and the Scottish government was keen to launch an equivalent.


Wednesday, 11 September 2013

Three-fifths of lenders predict broker decline post-MMR

Intermediaries’ market share fell by nearly 14% last year with lenders expecting a further decline post-Mortgage Market Review, Avelo research has found.

The survey of major mortgage lenders found 30% of mortgages were sold through branches, compared to 22% in 2012.


Wednesday, 14 August 2013