Sale of stake in Mojo Mortgages to return £2.08m to investor Maven
The investment firm agreed in July to sell its holding in the broker to RVU, subject to regulator approval.
Maven’s H1 2021 trading update outlined how it received an offer from RVU for Mojo during the first half of the year and that the sale, which completed after period-end, “will generate a total return of up to 1.8 times cost over the life of the investment.”
The report recorded the value of Maven’s interest in Life’s Great Group, which trades as Mojo Mortgages, as £1.76m, and cost as £1.16m.
Maven’s stake was 13.6 per cent, with a further 31.8 per cent owned by another of the investment firm’s clients.
Maven originally invested £3.25m into Mojo Mortgages in February 2019.
The H1 report described how the timing of exits from investments can be “difficult to predict, particularly for young companies, where those that gain early commercial traction may attract interest from a strategic acquirer.”
It continued: “Maven maintains an active relationship with each investee management team and is closely involved during an exit process or when an unsolicited approach is received.”
RVU agreed to acquire Mojo in July, with the aim to “supercharge digitisation in the mortgage sector”.
At the time, the firm, which forms part of Zoopla Property Group, and also owns Uswitch, Confused.com and Money.co.uk, said: “The agreement to acquire Mojo will enable RVU to go deeper into mortgage intermediation and own the full journey across all touch points, from the moment they seek information and advice, to applying for and securing a mortgage.”
The Newcastle’s lending grows 35 per cent in H1 helped by lockdown savings
The society lent £483m in H1, up from £357m of loans made during the lockdown-hit six months in the first half last year.
The Newcastle enjoyed “a stable source of funding for mortgage lending,” this year, it said, with the savings market continuing to grow, on top of last year’s uplift, owing to lower spending during lockdowns.
The “strong mortgage market” had been “fuelled by a combination of government intervention and a shift in the needs of homeowners,” it added.
Growth in mortgage lending included adding 2,300 new customers, while “maintaining a sensible lending approach,” the lender said.
It specifically highlighted initiatives for first-time buyers, including its roles in Deposit Unlock and First Homes, as well as its 95 per cent, Help to Buy and Joint Mortgage Sole Proprietor offers.
Operating profit before impairments and provisions was £13m, up from £7.3m in H1 2020.
Advice subsidiary Newcastle Financial Advisers “delivered a strong performance,” exceeding planned targets on growth of its customer base, level of funds invested, funds under management, and customer service, the Newcastle said.
The society moved out of its Newcastle city centre head office in early 2021, and is investing in “a substantial programme of transformation”, to provide a future-friendly hybrid working environment at its Cobalt Park, North Tyneside, site.
Andrew Haigh, chief executive at Newcastle Building Society (pictured), said: “We’ve continued our focus on helping communities recover from the impacts of the pandemic, and driven innovations in home ownership to help borrowers onto the property ladder, particularly those with lower deposits.”
The lender also made two new board appointments in H1, following departure of chairman Phil Moorhouse after almost a decade.
James Ramsbotham, CBE DL, was appointed as chairman. Ramsbotham was formerly chief executive at the North East of England Chamber of Commerce, and before that served for 14 years with Barclays, and was chair of Darlington Building Society.
Michelle Faull was appointed as a non-executive director and to the audit and group risk committees. Faull is a former chief financial officer at Coventry Building Society and risk director at Nationwide.
First Homes adds 12 more properties with councils to set ‘local connection tests’
The homes in Newton Aycliffe will be offered to first-time buyers at 30 per cent off full market value under the scheme.
The local authority will set a local connection test to determine which potential buyers are prioritised for the scheme, based on the needs of the community.
The government has already outlined various eligibility criteria, including a cap on the income of buyers and the 30 per cent discount as a minimum. The discount is passed forward to the next first-time buyer.
The aim of First Homes is to let families and key workers such as NHS staff and forces veterans afford to purchase homes in the communities where they live and work.
The First Homes pilot scheme saw a funding pot of £150m open earlier this month to bids from developers offering homes under the banner.
The pilot is targeting delivery of 1,500 homes by 2023, of which today’s count for a piece.
The latest 12 homes form part of Elder Gardens development by Keepmoat Homes (pictured).
Tim Beale, chief executive at the developer, said: “Working in partnership with government, Homes England and Durham County Council, we are delighted to launch the First Homes scheme at our Elder Gardens development.”
The launch marked what was described by government as an “early delivery project” within First Homes, following on from those in Bolsover, Derbyshire, and Cannock, Staffs, since June.
The wider aim for First Homes is to deliver 60,000 homes by 2029-30.
The scheme itself forms part of the government’s overall commitment on housing, which is to increase delivery of homes to a level of 300,000 a year.
Robert Jenrick, housing minister, who was in Newton Aycliffe for today’s launch, said: “It’s fantastic to see First Homes become available to local people in the North East. The chance to buy a home at 30 per cent discount is giving local people, families and key workers a route into home ownership where they already live.”
Lenders offering 95 per cent mortgages on First Home properties include Lloyds, Nationwide, Halifax, Chorley Building Society, Darlington BS, Leeds BS, Mansfield BS and the Newcastle.
Mortgage fraud drops sharply in Q2 as account and loan scams soar
The rate of mortgage fraud fell by 17 per cent in April to June, compared to the previous three months, the credit checking agency told Mortgage Solutions.
Mortgage fraud was down 19 per cent compared to Q2 2020, with the quarterly figure the joint-lowest in three years.
The picture for mortgage fraud contrasted sharply to the situation for bank account and loan fraud.
For accounts and loans, fraud ballooned by 40 per cent in Q2 against Q1. These frauds hit their highest quarterly rate for three years and reached 66 per cent above the same period last year.
Experian said the low level of mortgage fraud was difficult to explain, but could relate to improved checks at application stage.
“It could be that fraudsters are looking at other products, like accounts and loans, as opposed to mortgages,” a spokesman said.
“Similarly, lenders can now better and more accurately assess people’s information and affordability at the point of applications, helping them to identify questionable applications at the beginning of the process,” he added.
The rise in account and loan frauds was ascribed to fraudsters using accounts to facilitate other criminal activity and by improvements to technology that has let banks identify fraud more easily.
The loan fraud rate particularly is expected to stay high over the coming 18 months as cases come through of criminals targeting the Bounce Bank Loans Scheme.
On the mortgages side, banks’ experience of pandemic schemes has been more positive, with many now releasing funds set aside against possible defaults, as borrowers have started up repayments again after the expiry of pandemic payment holidays.
Masthaven cuts rates and scraps bank statements for self-employed and BTL
A rate cut of 20 basis points (bps) was applied to the lender’s two-year fixed first charge residential mortgage, giving a starting rate of 3.04 per cent.
The two-year fixed fee-free version was reduced also by 20 bps to start from 3.54 per cent.
The five-year fixed equivalents were lowered by 25 bps, to go from 3.34 per cent, and for the fee-free 3.64 per cent.
The criteria relaxations saw additional earnings like bonus and overtime allowed in affordability calculations.
Changes for self-employed cases saw projections now considered, as well as not having to provide bank statements in all circumstances.
BTL cases also do not now require bank statements in all situations.
Further, the lender extended its policy on automated valuations so that they are now possible for purchase and BTL cases, and up to £350,000 on first and second charge.
Rob Barnard, director of intermediaries at Masthaven (pictured), said that “a return to many of our pre-Covid underwriting approaches”, would let the lender “continue supporting borrowers, brokers and the wider market, even as some may begin seeing affordability issues owing to high prices, the end of stamp duty relief and the furlough scheme closing.”
Demand for scarce stock of family homes drives up prices by six per cent this year – Zoopla
The market also saw a step change in speed of sales, with the average time from listing to sale-subject-to-contract at 26 days, down from 49 days in 2019.
Zoopla expected average price growth to settle at four to five per cent by end of the year.
The overall price increase of six per cent was driven in large part by lack of stock, including particularly a dearth of family homes on the market, as a “reassessment of home” owing to the pandemic saw borrowers want more space.
Total stock for sale was 26 per cent lower this year compared to end of July 2020, and levels were expected to remain depressed well into next year. On the demand-side, the picture was one of growth running at 21 per cent this year.
Supply constraints were most evident for houses, and properties priced up to £350,000.
Zoopla ascribed the lack of supply to three factors: sheer level of activity in the first-half, increased demand from first-time buyers (FTBs) and investors, and softening in new-build completions.
Improved mortgage availability for FTBs was a factor in adding to net demand because people in this group do not have properties to sell.
And, demand from BTL investors grew by 21 per cent in the year to end of July, compared to the same period last year.
Price rise variations
Price growth was highest in Wales at 9.4 per cent, Northern Ireland at nine per cent and the North West at 7.9 per cent.
City-wise, seeing strong growth were Liverpool at 9.4 per cent, Manchester with 7.7 per cent and gaining 7.5 per cent, Belfast.
London continued to lag, with a rise of 2.5 per cent, although this was up on 1.9 per cent in March.
Across the UK, houses have tended to see high-single-figure rises, while price growth for flats was generally in the low-single-figure range.
Slow stock rebuild
Zoopla’s analysis of sales this year showed mortgaged home-movers as the largest customer group at 37 per cent, mortgaged FTBs at 30 per cent, cash owners or investors 24 per cent and at nine per cent of the market, buy-to-let mortgagees.
The house price growth figure of six per cent was greatly inflated compared to 2.3 per cent seen in the same seven months last year.
However, price rises had slowed compared to the figure of 6.3 per cent recorded for the six months to June this year.
The average value of a home in the UK is now £234,000.
Gráinne Gilmore, head of research at Zoopla, said: “The lower of supply of homes listed for sale may lead to a natural slowing in buyer interest, albeit from high levels. A return to more normal levels of market activity will result in a slow rebuilding of stock through H1 2022.”
Homeowners require 25 per cent bigger loans for ambitious renovations conceived in lockdown – Mojo
The broking firm said low mortgage rates, high building costs and borrowers’ big ambitions had combined with the result that borrowing requirements boomed on remortgages for renovation.
The average size of a completed remortgage loan, for a homeowners’ renovation, was £65,267 in the period January to July 2021, up by £13,000 or 25 per cent, compared to the average for January to December 2019.
The number of homeowners remortgaging for renovations had spiked this year particularly, rising by 174 per cent when comparing January to July 2021 with the same period in 2019.
Cassie Stephenson, director of mortgages at Mojo Mortgages (pictured), said: “After an uncertain 18 months, you might’ve thought purse strings would have tightened, however in many cases it’s been the opposite.
“With people spending more time at home, they’ve had time to imagine the dream property, and the steps required to make it a reality.”
“Couple this with record low rates for remortgages, and you can see why homeowners are looking to strike while costs are low,” Stephenson added.
Coventry for Intermediaries’ bot-free chat gains rapid acceptance from brokers
The lender saw the communication channel grow in popularity from handling 20 per cent of incoming new business questions when it first launched, to 50 per cent today.
“We introduced this service based on broker feedback. Our focus was on personal contact, conversation and getting straight to an adviser. There are no bots involved and no automated or scripted responses,” said Keith Williams, intermediary operations manager at Coventry for Intermediaries.
“The younger generation of brokers, particularly, have adopted it, and the experience of brokers, and of our policy experts internally, has been positive,” Williams said.
The lender introduced the cloud-based technology alongside telephone support, with the same team of advisers crossing between channels.
The chat function was dedicated solely to new business lending policy enquiries, while the telephony service additionally offers support also across areas like products transfers, systems support and case processing.
The web-chat conversations have typically lasted for up to 30 minutes and the average wait-time for queries to be picked up is 33 seconds, the lender said.
There are currently no plans to expand the service, however, Williams said: “You can imagine in the future how it would be possible to add additional functionality, like video.”
Atom Bank targets non-advised sales as report reveals upbeat return to lending
The lender, which launched in 2016 offering fixed rate residential mortgage products through brokers, outlined its aims to grow the non-advised channel in its annual report for the year to end of April 2021.
The report showed Atom generated new originations of £336m in the period from late 2020 to April 2021, after a return to lending following a halt from March to October 2020 owing to the Covid-19 crisis.
The mortgage portfolio reduced by £700m to £1bn during the year, a result of selling a tranche of mortgage loans in a securitisation transaction with its subsidiary Elvet Mortgages.
The transaction de-recognised £764m of mortgage loans from the bank’s balance sheet, thereby reducing the capital requirement on them and “allowing these resources to be redeployed to support assets with higher yield characteristics,” the report said. Atom booked a loss of £10m on the sale during the year.
Mark Mullen, chief executive officer, said: “We returned strongly to residential mortgage lending where spreads have made a dramatic and, for now, sustained recovery, from the lows of 2019.”
“Later this year, we will implement. . . our near-prime mortgage offer and our execution-only mortgage beta,” he said.
The bank further outlined a vision “to expand product range and to enhance automated origination and servicing.
“We are developing tools to support a non-advised mortgage sales journey,” it said.
Atom made an underlying loss of £36m during the year, down from £46m in the year to end of April 2020. Net interest margin (NIM) was 54 basis points (bps), an improvement on eight bps in 2020. The lender noted NIM of 114 bps during March 2021.
“While we continue to be loss-making, the dynamics of the business have been transformed and we have developed strong momentum toward reaching breakeven on a monthly run rate during 2022,” Mullen added.
Atom has previously reported new lending of £100m for the first quarter of its current financial year, in April to June 2021.
Manchester BS strategy ‘under review’ after Supreme Court win
The mutual won damages of £13.4m in the Supreme Court, in the case it brought against former auditors Grant Thornton.
Its half-year report said profits included £21m in relation to the award, and associated costs and interest.
The mutual made no new advances during H1 and mortgage assets reduced by seven per cent to £166m.
Manchester BS has not been active in the mortgage market since 2013 and said it had no current plan to return to lending, with the strategy for long-term run-off.
However, the report said: “No change in strategy has been agreed as a result of the improvement of the capital position following the Supreme Court’s judgement in the society’s legal case with Grant Thornton, though the board keep this under review and is working with advisers and the regulators to establish what the Supreme Court judgement will mean for Manchester’s ongoing strategy.”
The lender sued the auditor over advice given in the period from 2006 to 2012.
Analysis of the case by law firm Brodies explained that the mutual had used interest rate swaps to offset its fixed-rate lifetime mortgages. This had resulted in balance sheet volatility and having to hold increased reserves.
Grant Thornton advised that it could use hedge accounting, but this turned out to be wrong. The society suffered a loss of £32m.