Mortgage prisoners talking directly with lenders to find solutions
The group has begun talking directly to the mortgage industry, with Co-operative Bank and RBS reaching out to the campaigners in attempts to find solutions. And they are due to meet with UK Finance at the end of October with the intention of helping improve understanding between parties.
The group has already called on economic secretary to the Treasury John Glen MP to meet for talks about changing the law and picketed his office in Salisbury after repeated attempts at contact were ignored.
They say the buck stops with Glen and home secretary Sajid Javid who have authority to legislate to help existing mortgage prisoners and to ensure no more borrowers get trapped with inactive lenders.
In June, Glen told the Treasury Select Committee he expected the Financial Conduct Authority (FCA) to implement changes rapidly, but the results of its consultation are not expected until the end of the year.
The increased pressure from the group has come ahead of the one-year anniversary of the BBC Panorama film ‘Trapped by My Mortgage,’ which aired on 27 October 2018.
Campaign organiser Rachel Neale told Mortgage Solutions: “We want them to look back at what happened to us and to stop that right [for a mortgage book] to be sold to any company, unless it is regulated and a bank. And to look at redress for the situation they’ve allowed people to be left in.”
“We met Andrew Bailey [chief executive of the Financial Conduct Authority] in May and were told the consultation on responsible lending would be a quick way of helping mortgage prisoners. They are now saying that the results will published towards the end of the year.
“I call it graveyard justice. They are just using it as an excuse,” Neale said.
However, the campaigners are calling on government to get their act together.
“It’s a huge mess and people’s problems are getting worse. Every week I get six or seven emails from people in arrears or about family breakdown. A year on from Panorama, we’ve had the inquiry by the All-Party Parliamentary group, the debate in parliament and the FCA consultation. Now we want the government to act.”
BFS completes £1.65m development loan for luxury Surrey pad
The developer had already acquired the eight-acre site including a bungalow with planning permission to build a large detached house.
The desirable, semi-rural location has helped to set the estimated sale value of the new property when complete at £2.75m.
The loan comprised £1.2m for the build and £450,000 for costs and retained interest and will be repaid over 18 months.
“This was a straightforward development finance loan in terms of how the deal was structured. We secured funds against the value of the pre-owned land which, due to the location of the site, was of particularly high value,” said John Harman, head of sales at Bridging Finance Solutions.
“We moved in rapid time agreeing terms and conditions and providing funds in line with the client’s pressing timescales,” Harman said.
“We look forward to working with the client as the project progresses and to releasing funds at key stages to support this exciting scheme,” he added.
Mortgage prisoners picket offices of John Glen MP in attempt to force action
The group travelled to Salisbury to confront Glen in person because he refused to meet with them despite numerous attempts to speak to him, according to a report in Salisbury Journal.
Glen is Conservative MP for Salisbury and South Wiltshire along with his role in the Treasury.
Mortgage prisoners are borrowers whose loans were sold to non-active lenders and who are unable to switch, owing to changes in affordability criteria or their circumstances — even though their monthly repayments would be made cheaper by doing so.
Many mortgage prisoners are trapped on relatively high standard variable rates while interest rates in the active mortgage market have been drifting lower.
Estimates peg the number of mortgage prisoners in the UK at between 150,000 and 200,000.
They include former Northern Rock and Bradford & Bingley customers whose loans were sold by the Treasury to inactive lenders when the two firms crashed during the financial crisis.
Speaking at the CityUK annual conference in June, Glen said: “When I came into post in January 2018, I was struck by the extent to which the financial crash still casts a shadow over the city.
“I’ve placed a significant portion of my time seeking to rebuild trust between consumers and the financial services sector . . . working with regulators to help free mortgage prisoners.”
FCA consulting on changes
The Financial Conduct Authority began consulting in March on proposed changes to responsible lending rules and guidance.
The proposals on modified affordability assessments were broadly welcomed by professional bodies across the mortgage market, but were anticipated to help only 2,000 to 14,000 mortgage prisoners and have been criticised for the approach.
The Intermediary Mortgage Lenders Association (IMLA) urged the regulator and government to reconsider legislation that would help more mortgage prisoners but was abandoned in 2013.
UK Finance and the Building Societies Association called for more data on mortgage prisoners to help focus policy and speed up implementation by lenders.
The final rules have yet to be enacted.
Hear our voice
Glen was contacted by Mortgage Solutions for comment.
He told Salisbury Journal:“It is complex because it requires bringing a lot of different stakeholders along but I am optimistic that a solution is close.”
More than a decade on from the crisis, the affected mortgage customers appeared to be running out of patience.
They told Salisbury Journal: “We are UK taxpayers who have been struggling for 12 years on extortionate standard variable rates while the rest of the country has gone through austerity on low interest rates.
“We need action. We’re not going away and we’re here today to make sure John Glen hears our voice.”
London broker Mortgage Find acquired by consolidator Fairstone
The deal was one of a pair of acquisitions that also included wealth manager Lofthouse Gate and will bring gross fee income of £23m and funds under management of £120m to Fairstone.
The acquisitions together added 8,800 clients, 20 advisers and 14 support staff to the group.
The firm said: “These two purchases, which mark a total of six acquisitions for us this year, highlight the strength of our proprietary downstream buyout model, which reverses the traditional buy-and-build approach in integrating ambitious independent financial adviser firms into the group.”
Mortgage Find, which is based in London, arranges residential and buy-to-let mortgages, and Lofthouse Gate specialises in pension planning and investment management out of Wakefield.
Mark Alexander, principal at Mortgage Find, said: “We have joined forces with Fairstone to enable us to use its excellent compliance systems and structures, so that, in turn, we can spend more time focusing on clients.”
Lee Hartley, chief executive of Fairstone, said: “We’re delighted to complete the acquisitions of Lofthouse Gate and Mortgage Find through our proprietary downstream buyout programme.
“Our model delivers strong organic growth that leads to a transfer of client ownership and focuses on firms with an appetite to grow,” Hartley added.
Queen’s Speech proposes new building safety regulator and Ombudsman for developers
Housing secretary Robert Jenrick tweeted that the regulator would have “powers to enforce criminal sanctions”.
The New Homes Ombudsman, he continued, would “protect the rights of home buyers and hold developers to account.”
The reforms amounted to “the biggest shake up of the sector in 40 years,” ministers reportedly told the Guardian.
The wide-ranging proposals take forward all 53 recommendations made by Dame Judith Hackitt in her review of building safety following the Grenfell Tower fire.
The proposed safety framework for high-rise residential buildings will include:
- Clearer accountability for, and stronger duties on, those responsible for the safety of high-rise building through design, construction and occupation, with clear competence requirements to ensure high standards are upheld;
- Giving residents a stronger voice in the system, ensuring their concerns are never ignored and they fully understand how they can contribute to maintaining safety in their buildings;
- Strengthening enforcement and sanctions to deter non-compliance with the regime in order to hold the right people to account when mistakes are made and ensure they are not repeated;
- Developing a new stronger and clearer framework to provide national oversight of construction products, to ensure all products met high performance standards;
- Developing a new system to oversee the whole built environment, with local enforcement agencies and national regulators working together to ensure that the safety of all buildings is improved; and
- Legislating to require that developers of new build homes must belong to a New Homes Ombudsman.
The government estimated the new regime applied to more than 11,000 high rise buildings today and will affect up to 15,000 blocks over 10 years. These numbers “will be refined as details are finalised”, it said.
The rules will apply in England, but with “UK oversight of construction projects reserved”.
The main benefits will be to “learn lessons” from the Grenfell Tower fire and to change the regulatory framework for high-rise residential buildings and the industry culture “to ensure accountability and responsibility and to ensure that residents are safe in their homes”.
LMS predicts ‘ramp-up in remortgages’ during Q4
Nick Chadbourne, chief executive of LMS said: “Volumes are up month-on-month and this trend should continue in Q4 as remortgaging continues to outperform other areas of the market.”
LMS analysed its own conveyancing data and UK Finance remortgage lending figures to find that five-year fixes remained the most popular product in August. They accounted for 48 per cent of all remortgages, down from 50 per cent in July.
Two-year fixes made up 35 per cent of the remortgage market, up from 34 per cent in July, and 10-year products held firm at five per cent.
Only three per cent of remortgage borrowers took out a variable or tracker rate.
“Product purchasing levels remain consistent, but we do expect 10-year fixes to become increasingly popular in line with current industry activity we are seeing. Borrowers are looking for certainty,” Chadbourne said.
“A significant peak in early redemption charge expiries is on the horizon for October and therefore we expect a ramp-up in remortgage activity over the next few months,” he added.
The number of remortgages rose by 0.5 per cent to 53,141 in August, up from 52,869 in July.
The average loan amount on a three-month rolling basis increased by two per cent to £178,107, against £174,386 in July.
And the average rise in monthly payments for people who remortgaged in August was £214.31.
Record number of remortgage customers sign deeds digitally
The service was designed to reduce paperwork and delays when applying for a remortgage and may be extended in the future to include purchases.
Almost 40 per cent of Coventry Building Society’s digital mortgage borrowers used the service and for HSBC it was 25 per cent.
Conveyancer Enact arranged about half of these.
Some customers completed their remortgage in three days with help from the service.
The lender creates a digital mortgage deed template with the Land Registry. The conveyancer uses this template to create deeds and the borrower signs the deed through a secure code after verifying their identity with Gov.uk Verify.
Peter Frost, chief operating officer at Coventry Building Society, said: “Because of the way the service has been designed, the only information needed is an email address, mobile phone number and the borrower’s date of birth. The whole process is online and can be completed at any time of day, speeding up the remortgage process and making it more convenient for home owners.”
The service was developed by the Land Registry with extensive support from Coventry Building Society and Enact Conveyancing.
The lenders enabled to use the digital service are Atom Bank, Barclays, Clydesdale Yorkshire Banking Group, Coventry Building Society, HSBC, Metro Bank, Molo Finance, Nationwide and The Mortgage Works, Platform/Co-operative Bank, Principality Building Society, RBS and Natwest, Santander, Skipton Building Society, TSB, West Bromwich Building Society.
The conveyancers involved are Enact, Hugh James, LMS, O’Neill Patient and Optima.
The Land Registry said the new service was part of its digital transformation and it would look to develop further innovations making it easier to buy, rent, sell, finance, build and manage property.
Already, data from seven local authorities has been transferred to the digital Local Land Charges Register, a central database for all authorities in England that buyers can search.
They are Warwick District Council, City of London Corporation, Blackpool Council, Liverpool City Council, the Council of the Isles of Scilly, Norwich City Council and Lambeth Council.
Banned landlord fined after threatening tenant
In February 2018 Harpal ‘Harry’ Singh demanded money from a man who was staying in a property he owned in Glasgow, even though he was subject to a city council order preventing him from requesting such a payment.
Singh was subsequently banned from letting properties following a council meeting in April 2018.
And this week Glasgow Sherrif Court ordered him to pay a £270 fine which was reduced from £300 after Singh plead guilty to the charge, according to reports.
The property was in the same street in Glasgow as the basement flat where a fire had killed two tenants in 1999.
Singh was found to have been operating unlicensed flats lacking basic fire and safety features.
The students’ flat was not fitted with a smoke alarm and metal bars on the windows had prevented their escape.
He was jailed for perjury for saying that the flat was fitted with working smoke detectors in the hallway.
Yorkshire Building Society lengthens mortgage terms to 40 years
The new terms are designed to help reduce monthly payments for customers by lengthening the period over which repayments are due.
The society has seen first-time buyer (FTB) demand for mortgages with terms of 25 to 35 years rise over the course of 12 years since the financial crisis in 2007.
The proportion of FTBs taking out mortgages over 25 to 35 years reached 62 per cent in 2019, up from 38 per cent in 2007.
Meanwhile the proportion of FTBs opting for a conventional 25-year term dropped to 22 per cent this year, down from 48 per cent in 2007.
Leapfrogging starter homes
YBS suggested that the changing profile of FTBs had influenced choices on mortgage terms, with average ages rising and a trend for leapfrogging starter homes in favour of larger detached properties.
In the first half of this year, 36 per cent of FTB mortgages were taken out over 30 to 35 years; 26 per cent were for 20 to 30 years; 22 per cent for 20 to 25 years; and for a terms of less than 20 years it was 10 per cent, the lender said.
“Attitudes of first-time buyers are altering, with an increased demand for large homes compared to the traditional starter home that was once standard to get on the property ladder,” said Charles Mungroo, senior mortgage manager at Yorkshire Building Society.
“Along with more purchases being made later in life and families having to juggle multiple financial commitments, there’s real demand from borrowers wanting to stretch their terms to make monthly payments more affordable, along with borrowing into later life.”
“We need to ensure that mortgages are affordable to customers across the entire term of the loan. By extending our maximum term to 40 years, this enables customers to find an affordable home to meet their needs,” Mungroo added.
HSBC could cut 10,000 jobs globally – reports
The Financial Times reported that the banking group was preparing a “substantial reduction in headcount,” from the current 238,000, according to two sources who were briefed on the plan.
HSBC declined to comment when approached by Mortgage Solutions.
The job cull strategy was reportedly approved by interim chief executive Noel Quinn, who was appointed on 5 August to succeed John Flint who stepped down.
On the same day, HSBC’s interim results indicated that a changed outlook – including soft US interest rates and Brexit uncertainty – would impact returns.
“We are managing operating expenses and investment spending in line with the increased risks to revenue,” the interim statement said.
The FT reported “very hard modelling going on” within the bank to understand costs and revenues globally.
The job losses, which are believed to target high-paid roles, would come in addition to 4,700 redundancies announced in April.
They reflected “an increasingly complex and challenging global environment,” characterised by low interest rates, trade conflicts and Brexit uncertainty, the Financial Times said.
The newly-appointed Quinn was reportedly collaborating on the plan with chief financial officer Ewen Stevenson. Stevenson was known for reducing costs as CFO at RBS.
Quinn has been chief executive of HSBC global commercial banking since 2015 and has clocked up 32 years with the bank.
The job losses are believed to affect all four banking divisions comprising multi-national corporations, smaller businesses, retail customers and wealthy individuals. HSBC is one of the top six big lenders in the UK mortgage market.
More details of the plan are thought likely to be revealed by HSBC along with its Q3 earnings release on 28 October.