The Retrofit Explorer tool offers an accurate, transparent view of the upfront cost and returns of retrofitting a home. It also recommends cost-effective methods for energy upgrades.
This will be integrated into the Octopus Real Estate website to encourage retrofitting and bolster green residential lending.
It will work in conjunction with Octopus Real Estate’s green product offering, which comprises refurbishment loans to fund up to £200,000 of works. Where a property’s EPC rating has been improved following works, borrowers will benefit from a 1.8% per year discount on the interest rate.
Octopus Real Estate said that, when it came to making homes more efficient, borrowers were faced with the challenges of not understanding the costs, the return on investment and being unaware of what works to undertake.
The lender said this partnership was a “no brainer” as it would help to decarbonise housing in the UK.
Joe Webb, chief growth officer of Kamma, said: “Retrofitting offers benefits on many levels, reducing emissions, saving on energy bills and even adding to asset value. It further reduces transition risk, supports transition planning and limits financed emissions for lenders.
“In this context, the lack of actual activity in the market has been surprising. We aim, for the first time, to make these benefits clear to consumers and lenders alike, driving up retrofit activity and driving down emissions and energy bills.”
Steve Matthews (pictured), head of residential lending at Octopus Real Estate, said: “We want to offer genuine incentives to customers seeking to borrow to improve their property investments. We’re delighted to partner with Kamma, who clearly illustrate the benefits from making positive changes.
“Together, we’re aiming to drive genuine change and improve the availability of quality, sustainable homes.”
Last month, Octopus Real Estate revealed it had completed over £35m in green homes lending through the Greener Homes Alliance initiative. The scheme is in partnership with Homes England and offers discounted rates to developers to encourage energy-efficient projects.
The latest Primary Mortgage Market Survey from the Federal Home Loan Mortgage Corporation (Freddie Mac) shows that an average 30-year fixed rate was 7.17%.
This was higher than the previous week’s average of 7.1%, and compared to a year ago, higher than the average of 6.43% in 2023.
The 15-year fixed rate average rose from 6.39% to 6.44% week-to-week, and was up on the previous year’s average of 5.71%.
Sam Khater, Freddie Mac’s chief economist, said: “Mortgage rates continued rising this week.
“Despite rates increasing more than half a percent since the first week of the year, purchase demand remains steady. With rates staying higher for longer, many homebuyers are adjusting, as evidenced by this week’s report that sales of newly built homes saw the biggest increase since December 2022.”
US mortgage applications decline
Mortgage applications decreased by 2.7%, according to the Mortgage Bankers Association’s (MBA’s) Weekly Mortgage Applications Survey.
Joel Kan, MBA’s vice president and deputy chief economist, said: “Mortgage rates continued to move higher last week, reaching their highest levels since late 2023 and putting a damper on applications activity. The 30-year fixed rate increased for the third consecutive week – the highest since November 2023.
“Purchase applications declined, as homebuyers delayed their purchase decisions due to strained affordability and low supply. The adjustable-rate mortgage (ARM) share of applications increased to 7.6%, consistent with the upward trend in rates, as buyers look to reduce their potential monthly payments.”
The share of mortgage refinance activity fell to 30.8% of total applications, down from 32.1% during the previous week.
The GfK Consumer Confidence Index increased two points to -19 in April. Four measures were up and one stayed the same in comparison to last month’s announcement.
The index measuring changes in personal finances during the past year is up two points at -11; this is 10 points better than April 2023. The forecast for personal finances over the next 12 months is unchanged at +2, which is 15 points higher than this time last year.
The measure for the general economic situation of the country during the past 12 months is up four points at -41; this is 14 points higher than in April 2023. Expectations for the general economic situation over the next 12 months have increased by two points to -21; this is 13 points better than April 2023.
The Major Purchase Index is up two points to -25; this is three points higher than this month last year.
The Savings Index has increased one point to +26 in April; this is seven points higher than this time last year.
‘Significantly better’ than last April
Joe Staton, GfK client strategy director, said: “Headline confidence edged forward in April to -19. There was a welcome repeat of the March +2 score for how consumers feel about their personal finances in the next 12 months. While the Overall Index Score remains negative, all of the underlying five measures this April are significantly better than they were last April.
“These improvements reflect the impact on household budgets of lower inflation and the anticipation of further tax cuts. However, we are a long way from the much firmer sentiment last seen in the period before Brexit, Covid and the conflict in Ukraine.
“There is a lot of ground to make up, and caution is needed in the face of continuing economic and fiscal challenges, and revised views on when the Bank of England might cut borrowing costs. But spring has arrived and maybe consumer confidence is, at last, slowly becoming brighter and heading in the right direction.”
She will report to Charlotte Grimshaw, Suffolk Building Society’s head of intermediary relations and mortgage sales.
Hillman will be tasked with fostering new and existing relationships with intermediaries to ensure their and their clients’ needs are met.
Suffolk Building Society said it created the new role to demonstrate its commitment to helping its intermediary partners.
Key intermediaries in the central London region will continue to be managed by Andrew Sadler, key account manager. He will primarily engage with mortgage clubs and networks.
Hillman has experience in the financial services sector and spent seven years in the mortgage sector. She was a mortgage and protection adviser for four years.
Hillman (pictured) said: “I am looking forward to expanding the society’s reach in central London. By providing pre-decision in principle [DIP] approvals, manual underwriting and direct access to underwriters, brokers can rely on the Suffolk team to help them shape cases and proactively advance applications.”
Grimshaw added: “Beth will be a huge asset to Suffolk Building Society, bringing with her key learnings from her time as an adviser – something we’re sure she’ll use to her advantage to further strengthen our service proposition.”
In its 2023 results, Suffolk Building Society posted £180m in gross mortgage advances, up from £165m the year before.
Lending was similar to the previous quarter, however, when Natwest completed £5.6bn in gross mortgage lending.
Within its retail banking division, Natwest said loans to customers fell quarter-on-quarter, due to a decrease in mortgage balances caused by higher redemptions. This was partially offset by new mortgage lending.
Its total income excluding notable items came to £3.4bn, which was 0.8% or £28m lower than the previous quarter. Natwest attributed this to “mortgage margin dilution”.
Its net interest margin (NIM) improved by six basis points over Q4 to Q1 to reach 2.05%. Compared to 2023, this was down on the NIM of 2.25% in Q1.
Natwest reported an operating profit before tax of £1.3bn, down from £1.8bn a year earlier. Compared to the previous quarter, it was higher than the profit of £1.2bn in Q4.
Natwest: A strong set of results
Paul Thwaite, chief executive of Natwest, said: “Natwest Group has delivered a strong set of results for the first quarter – with an operating profit of £1.3bn – as we remain focused on the priorities we set out in February, which will help us shape the future of this bank.
“Our performance is grounded in the vital role we play in the economy and in the lives of our 19 million customers. Though macro uncertainty continues, customer confidence and activity is improving, with both lending and deposits up in the quarter and impairments remaining low, reflecting our well-diversified business.
“We are ambitious for this bank, and by succeeding for our customers, we will succeed for our shareholders. Our first priority is delivering disciplined growth across our three businesses by serving our customers well. At the same time, we are becoming simpler, more productive and easier to deal with. As a result, we aim to generate returns that allow us to support our customers, invest in our business and deliver attractive distributions to shareholders.”
He added: “We are also pleased with the recent momentum in the reduction of HM Treasury’s stake in the bank. Returning Natwest Group to private ownership is a shared ambition, and we believe it is in the best interests of both the bank and all our shareholders.”
Last month, the government reduced its stake in Natwest to 29.8%, meaning it no longer has a controlling share in the bank.
The products have been launched to serve borrowers who sit between the usual 5% incremental LTV brackets.
Kensington Mortgages has now introduced 82.5%, 87.5% and 92.5% LTV tiers to its range alongside the existing 80%, 85%, 90% and 95% high-LTV deals.
The products will be available to borrowers who fit the lender’s ‘Select’ criteria.
The 82.5% LTV product is a two-year fix with a rate of 6.27% with a £999 fee or 6.52% with no fee. This offers a free valuation for purchase borrowers, and the options a free valuation and free legals or £250 cashback for remortgage borrowers.
For a five-year fix at the same tier, the rate is 6.07% with a £999 fee or 6.17% with no fee. These have the same borrower incentives of free valuations for purchases and the choice of £250 cashback for remortgage.
The two-year fix at 92.5% LTV is for purchase only and has a 7.24% rate with a £999 fee or 7.24% with no fee. This offers a free valuation.
The corresponding five-year fixes at this tier have respective rates of 6.79% and 6.99%.
Vicki Harris (pictured), chief commercial officer at Kensington Mortgages, said: “The launch of our mid-LTV range speaks to Kensington’s commitment to continuing to innovate, making brokers’ lives easier, and helping more people to own their home.
“The new offering aims to ensure that customers can access the right product for their specific needs and that they are not forced into a higher LTV when making their purchase, so they effectively only pay for what they need.”
Speaking on a Mortgage Brain Criteria Masterclass, Graham Laverty said: “A big message here, as an ex-broker, would be don’t disregard any cases and don’t say no to clients before you’ve tried us because we can, and we will, lend more.”
He pointed to an example of a broker who was helping clients with a £1m+ property purchase at 90% loan to value (LTV) with a joint income of £190,234.
Laverty said that the case had been closed as lenders could not give the loan needed, as the maximum loan was £853,000 due to the high LTV requirement and over four-and-a-half times income being needed.
Following the launch of Perenna, the broker tried the calculator, and the maximum loan available was £1,141,404, or around six times income.
The broker was able to recontact the client, and the application to offer time was 12 days.
In an illustration, Laverty showed that, due to stress testing, the maximum loan size could be limited with other lenders.
For a joint application with a gross income of £60,000, monthly credit commitment of £200 and one dependent, Perenna could offer a maximum loan size of £307,489.
This compares to a lender with a standard variable rate (SVR) of 7% plus 1% stress test who could offer £258,293, a lender with an SVR of 8% plus 1% stress test who could offer £235,546, and a lender with a 9% SVR plus 1% stress test who can go up to £215,966.
Perenna can offer ‘different’ and ‘fresh’ later life solutions
Laverty said that the “sad reality” for later life borrowers was they are “often frozen out and have to go to very specialist products, which are very expensive”.
He added: “We believe that these borrowers should have solutions.”
Laverty outlined an example with a 66-year-old borrower who has recently retired with an interest-only mortgage and had a lender SVR of around 9%.
The borrower had tried to remortgage previously, but did not meet the affordability or interest-only criteria, and her lender couldn’t offer a lower rate.
Monthly payments were around £890 per month, and while it was a struggle, they never missed a payment.
Their pension income came to £20,000 per year, including state and a small private pension. The mortgage balance was £120,000 with a property value of £250,000.
Perenna could offer interest-only and repayment mortgages as it did not have to stress test, and it calculated affordability “based on what it is today, not what it might be in the future”, Laverty said, and there is not a loan to income cap on like-for-like remortgage.
The lender also does not have a maximum age on its standard range, having offered loans to borrowers up to 78 years old.
“What this means for borrowers like this is they can get a lower rate than on a RIO, so we bring the interest rate down, but they also pay the capital back as well. So, for this borrower, it means she can save £350 per month, start paying the capital back and get in a much better situation,” he said.
Laverty continued: “We are proud to help clients like this. It is a massively under-served market and we can offer some very different, very fresh solutions.”
If you are interested in attending future Mortgage Brain masterclasses, follow this link for more information and to sign up: https://mortgagebrain.com/insights/events/
Speaking about the rebounding activity in the market and the changing borrower profile, Louisa Ritchie, key account manager at Fleet Mortgages, said: “Going forward, the type of landlord is evolving and will evolve even more.”
She said there were more first-time landlords joining the sector and existing landlords were taking opportunities to build their portfolios.
James Forth agreed, adding: “We’re seeing more people get involved with houses in multiple occupation (HMOs), multi-unit blocks (MUBs).”
He said this used to be associated with students and low-quality housing, but with the challenges around homeownership, there was now more professionalisation in this part of the market.
A similar point was made by Ian Hall, regional account manager for the North at Landbay, during a separate presentation.
He said HMOs typically generated higher yields than single dwellings, making them attractive to investors.
Also referring to Ritchie’s point on first-time landlords returning to the market, Hall said: “Actually, lots of first-time landlords are joining the HMO market straightaway.”
Understanding HMO and MUB rules
Hall said there was a misunderstanding that HMOs had five beds or more with shared facilities, but he said a property became an HMO once it had three beds with shared facilities.
However, government licensing only applies to properties with five or more beds. Hall predicted that licensing rules could change if the demand for HMOs and MUBs carried on its trajectory, noting that local authorities had different rules.
Brokers should also consider that local authorities can bring in Article 4 directions at any time, which restricts planning for certain properties and areas and could limit HMO developments, Hall added.
Hall said brokers should make sure they were “aware of [their] landlords’ strategy”.
If you are interested in learning more about the BTL sector, the Buy to Let Event is still taking place next week in Cardiff on 1 May and Reading on 2 May; register here to attend.
During a panel session, Louisa Ritchie, key account manager at Fleet Mortgages, and James Forth, head of sales at Kent Reliance and Precise Mortgages, said the buy-to-let (BTL) market was performing better than last year as lower rates, product choice and improved yields spurred landlords on.
However, one delegate said as a broker, they were still seeing landlords struggle to refinance onto a higher rate as it reduced their cash flow.
Forth agreed and said some landlords would be faced with “serious cash flow restrictions” and possible “negative equity”.
He said professional landlords could seek tax advice and consider borrowing through a limited company, as some were “slow to switch on with what was happening” and were seeing the downsides to borrowing in their personal name.
Ritchie said another challenge was that because many lenders in the BTL sector were non-bank-funded, “they’ve not been able to offer a product transfer proposition”. She said this was changing and there was more innovation, but it was “quite difficult”.
“There’s restrictions on it. It’s not because lenders don’t want to, we do to help you and your landlord clients. But we are getting there, we are trying as lenders to help landlord clients going forward, so I think we’ll see more and more innovation around that,” Ritchie added.
She also said there were a number of high-fee products in the market last year but, now that rates were starting to settle, “you’ll probably see that type of thing go”.
Ritchie added: “Fewer are the days where you’ll see lenders with fees of 7% or 8%.
“Going forward, you’re going to see a lot of lenders pulling out of the high-fee market now that rates are settling a bit.”
Considering the impact of rates on yield returns
During a later presentation, Ian Hall, regional account manager for the North at Landbay, made a similar suggestion regarding landlords seeking tax advice.
Speaking about yields and how higher mortgage rates could reduce this, he said: “You’ve got to remind the landlord that they can cope with it now, but what about when they’re doing their tax return for this year? They need to look at their portfolio to make sure they can afford to pay their tax return.”
Hall also said brokers should make themselves aware of average yields and look at the data to get familiar with the locations their landlord clients operated in.
If you are interested in learning more about the BTL sector, the Buy to Let Event is still taking place next week in Cardiff on 1 May and Reading on 2 May; register here to attend.
