House price growth below one per cent for tenth consecutive month
Nationwide’s latest house price index painted a subdued picture of property price growth last month.
Annual growth fell from 0.6 per cent in August.
September marked the tenth consecutive month in which the average annual price increase has been below one per cent. Month-on-month, average house prices declined by 0.2 per cent from £216,096 to £215,352.
Nationwide’s chief economist Robert Gardner said: “Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty.
The slowdown, said Gardner, was focused on business investment. Household spending has been more resilient, bolstered by a steady increase in the rate of employment and earnings.
He added: “The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.”
London was the weakest performing region in quarter three followed by the “outlying” regions that make up London’s commuter belt with average price falls of 1.7 per cent and 1.5 per cent respectively. Despite nine consecutive quarterly price drops in the capital, the value of London homes remains only five per cent the all-time highs recorded in the first three months of 2017 and 50 per cent above the lows seen in 2007.
The North West was the top performing region last month with a 2.5 per cent annual rise in quarter three, compared to a 1.2 per cent change last quarter. The average house price rise in region is now £166,597.
On 30 September 2019, the Bank of England reported the number of mortgage approvals for house purchases fell to 65,500 in August, down from the 18-month high of 67,000 in July. But it remained within the narrow range seen in recent years.
Octopus Property strengthens development team
Paul Watson, Martyn Pollock and Matt Foley have been appointed to the roles of development origination manager, refurbishment origination manager and credit underwriter, respectively.
Watson started his career at Jones Lang La Salle, then joined Royal Bank of Scotland’s asset management team and most recently managed a number of family office real estate portfolios. Pollock is a former corporate lawyer, who previously ran a boutique residential development business, focused on schemes with a £2-£5m gross development value. Foley joins from Lloyds Banking Group, where he spent five years in restructuring before working as the bank’s hotel and retail analyst.
Grow loan book
These hires are intended to strengthen its team as it continues to grow the loan book and expand its footprint across the UK. Since May 2017, Octopus has lent £94m to professional developers looking for bespoke financing solutions, funding 21 schemes.
Emma Burke, head of development origination at Octopus Property, (pictured) said: “The breadth of our lending in 2017, combined with demand for our new product suite illustrates that we are getting it right in terms of delivering flexible products for our developers. Our loan book continues to build at record pace, through lending on liquid sensibly priced schemes in strong locations and partnering with experienced developers.”
Burke added: “The appointments of Paul, Martyn and Matt will further complement the skills of our existing experienced team, as we continue to differentiate ourselves from the peer group by swiftly assessing and completing loans for a range of borrowers in the mainstream development finance market, while retaining our first-class customer service.”
The wider Octopus Property business has doubled its origination volumes over the past 24 months. It expects to grow its new lending to £1bn a year in the next 12 months and double the size of its loan book to £1.5bn over the next two years.
Consumers do not understand role of mortgage brokers – Duncombe
As part of this campaign it carried out research based on a survey that indicated more than five in ten UK consumers, (55%) were unaware that a mortgage broker could offer more product choice than a bank or building society.
Speaking at Mortgage Solutions’ Mortgage and Protection Event to launch the research, Duncombe explained that brokers needed to adapt to the current market as threats to their business came from multiple directions.
The Value of a Broker research, supported by analysts from Censuswide, draws on a survey of 500 individuals who have bought a home in the last 12 months with a mortgage, and 500 first time buyers who plan to buy in the next six months.
The research revealed that nearly half (48%) of homeowners and those looking to buy who did not use a broker chose not to because they felt that their bank or building society offered them a good deal, 15% thought that they would get a cheaper mortgage going direct, and almost one in five (19%) consumers “did not see the value” a broker would add. Almost a fifth (19%) of all respondents surveyed thought that brokers and banks had access to the same mortgage products and deals. This was despite there being 3,721 products available to consumers who went direct, compared with 29,886 for those who used a broker.
When asked whether they agreed with a series of statements about mortgage advice, one in seven (14%) thought their bank or building society would be able to give them access to the same impartial advice as a mortgage broker.
The Legal & General Mortgage Club Mortgage Myths campaign aims to put the spotlight on misunderstandings like these, highlight the valuable role of independent advice from a mortgage broker and encourage consumers to speak to an adviser about their mortgage options.
The survey also showed that the majority of borrowers were unsure about the role of a broker and how an adviser could help them with finding a mortgage. Less than half of respondents (44%) correctly identified that a mortgage broker works primarily for the borrower, while over a quarter (29%) thought brokers worked on behalf of the lender.
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “These findings show there are a number of misconceptions consumers hold around the role of a mortgage broker, particularly when it comes to understanding who the broker is there to support. As an industry, there clearly is a significant amount of work to be done to change these attitudes, educate consumers and promote the advantages of using a mortgage broker.
“Although some consumers appear to believe they have secured the best deal possible by going directly to their lender, without speaking to a broker they could be missing out on thousands of mortgage products that might be even better suited to their needs. Brokers can offer consumers exclusive rates to their benefit and provide them with access to specialist lenders if they haven’t been successful on the high street.
“Ultimately, we hope our campaign will encourage brokers and the wider industry to dispel the myths surrounding mortgages and encourage consumers to speak to a professional mortgage adviser, who can guide borrowers and provide best advice when making the biggest financial decision of their lives.”
Scottish Widows Bank introduces limited edition rates on five-year remortgages
For a limited period, the specialist lender is offering the following five-year fixed remortgage rates (up to and including a value of £1m): 0-50% loan-to-value (LTV) at 1.74% with a £749 fee, and 50-60% LTV at 1.84% with a £749 fee.
Eligible mortgage applications must be fully packaged and at offer stage by 30 November and completed no later than 22 December 2017. All existing five-year, fixed rate products still remain available
Martin Fleming, managing director, Scottish Widows Bank, said: “We have seen a strong trend of our customers opting for longer term fixes in recent months and this has also been reflected across the market.
“Following the Bank of England Base Rate rise, there is an opportunity for advisers to provide certainty around mortgage payments for their clients in a period of change,” he added.
Accord points clients to brokers in product transfer revamp
Accord, part of Yorkshire Building Society, said it has taken on board feedback from intermediaries and it is now possible for brokers to retrieve customer details, review and compare mortgage options, produce key facts illustrations (KFIs), and instruct product transfers all through the lender’s online portal. The lender is also working to deliver end-to-end online offers.
The lender has also extended its maturity notice period for customers from 60 days to 90 days and said it signposted customers to their broker to review their options.
In addition, Accord does not require affordability assessments, valuations or credit checks for straightforward mortgage switches.
David Robinson, national intermediary sales manager at Accord, said: “We know that existing customers are essential to both intermediaries and our own business, and we want to work in partnership with brokers to cultivate these relationships.
“We actively encourage our customers to speak to their broker before their current deal matures. While we know that a broker will review the best options for their client, we want to give them the assurance that if they return to Accord securing their client’s next home loan will be easy. In addition, we pay a procuration fee of 0.30% for transfers in recognition of the effort a broker makes securing the best deal for their client.”
Aldermore board recommends £1.1bn FirstRand bid
The cash offer is for 313p a share, as first disclosed last month. It represents a premium of 22 per cent to Aldermore’s share price of 256 pence at the close of play on 12 October, 2017 – the day before the initial offer.
The offer price is also 1.8 times Aldermore’s reported Net Tangible Book Value of £607.1m as at 30 September 2017.
Johan Burger, chief executive officer of FirstRand, said: “We are very pleased that the Board of Aldermore, one of the UK’s leading specialist lenders, will be recommending our Offer. The transaction is the latest step in our strategy of protecting and building shareholder value by achieving a more diversified revenue profile and we believe it will provide the platform to fulfil our growth objectives in the UK. It will allow the FirstRand Group to allocate more financial resources to our operations in Africa, whilst diversifying earnings in the UK.
Phillip Monks, chief executive officer of Aldermore, said: “We set out to provide a real alternative that would challenge the status quo in banking and it’s been a remarkable journey. There are now 1,000 colleagues serving over 230,000 customers and together we have built one of the UK’s leading specialist banks, with lending to small businesses and individuals totalling £8.4bn at the end of the third quarter.
“The offer reflects our strong track record of delivery and FirstRand’s confidence in Aldermore to continue delivering on its sustainable growth strategy. Through its own portfolio of leading financial services franchises, the FirstRand Group has demonstrated its ability to successfully integrate entrepreneurial businesses and we believe there is a strong strategic and cultural fit for customers, colleagues and wider stakeholders.”
He continued: “With the backing of FirstRand Group’s considerable resources and wider capabilities, we will be able to accelerate the delivery of our strategy and further expand the products and services we offer customers. Our vision has always been to bring more competition to UK banking, and the support of the FirstRand Group will enable us to continue to do just that.”
One third of equity release customers use property wealth to clear debts
The data shows that among Retirement Advantage’s own customers, 35% used equity release in the third quarter of 2016 to clear an existing mortgage, and/or to consolidate unsecured debts. The findings follow research earlier this year that found a quarter of those planning to retire this year expect to do so in debt.
Alice Watson, head of marketing at Retirement Advantage Equity Release, said: “Carrying residual mortgage debt into retirement is on the rise. House prices are at historic highs, household debt is growing again and interest-only mortgages are maturing. This is reflected in the reasons our customers give for tapping into their property wealth.
“What’s encouraging though is that our customers are taking a holistic view of all their assets, and using property alongside pensions and other savings. What’s more, we know that our customers use equity release for multiple reasons. Clearing mortgages or other debts are popular ones, but so are going on holiday, covering daily living expenses and making home improvements.”
Retirement Advantage’s data shows that in the third quarter, home and garden improvements was another popular reason for using equity release – cited by one in four (25%) of their customers. Among other reasons given, 5% also used equity release to by a new property.
Alice Watson added: “Current demographic trends suggest the retirement debt pattern will continue. People are buying their first property later than previous generations. At the same time, a new generation of house buyers are carrying student loan debts their parents did not.
Knowledge Bank launches packager filter on search engine
Lenders with criteria on Knowledge Bank can now select the packagers to accept business from and whether it is optional or mandatory for the broker to go through a packager to place business with them. Packagers can do this for each different lending type, so this information will be specific to the search the broker has conducted. For example, if a lender accepts packaged business for buy-to-let, but direct business for first charge residential, then the packager symbol will only appear when the broker conducts a search for buy-to-let.
So, a broker will conduct a criteria search to see which lenders will take their client’s case. If any or all of the lenders revealed in the search require the broker to go through a packager or master broker to submit business this will become immediately apparent.
Nicola Firth, chief executive officer of Knowledge Bank and its parent company Compass Systems, said: “After a broker has searched the criteria on Knowledge Bank to find out which lenders can take their client’s case, it then makes it simple for them to contact the packager or master broker with the case details straight away if the lender prefers this route of case submission.
“Like the whole of Knowledge Bank, the packager section has been designed to make brokers’ lives easier and shorten the amount of time it takes to find the information they need and place a case. In this case it will also make life easier for lenders to showcase both packagers and master brokers.”
Networks will also be able to tailor the system to display only the packagers or master brokers that their Appointed Representatives (ARs) are permitted to use. Networks can also do this with regards to lenders, so ARs of a particular lender only ever see the criteria for the lenders on that network’s panel.
Knowledge Bank now contains over 26,000 criteria across over 70 lenders. This is up from just 18,000 criteria and 48 lenders at launch three months ago with over 17,000 broker searches.
Coutts launches offset mortgage with £750k minimum loan
Although aimed primarily at private individuals and non-charitable trusts, a spokesperson nevertheless confirmed: “It is available to any broker that refers an eligible client”.
Unlike most offset mortgages on the market, it can serve both residential and personal buy-to-let purposes, and allows clients to use their deposits to either reduce their monthly mortgage payments or the mortgage balance that is charged interest. Additionally, it triggers no ERC (Early Repayment Charge) for those wishing to repay their mortgage early.
Borrowers can elect to use up to 10 multi-currency deposits held by a Coutts-banked family member, or connection, to offset their mortgage balance. These deposits will be held in a segregated account and are accessible at all times by the third party who will not be liable for the mortgage. Clients are able to fully offset 50% of their mortgage balance, after which every £1 deposit counts as 50p towards offsetting.
James Clarry, chief operating officer and head of lending & capital management at Coutts commented: “Offset mortgages are not commonplace across the private banking industry, however the launch of our Offset Select Mortgage is in response to a demand from our clients who wish to make use of excess cash balances, including foreign currency deposits, to reduce the cost of their mortgage.
“It also provides a flexible solution to help support the next generation to get on to the property ladder. With a number of differentiating features which makes it unique on the marketplace, the Offset Select Mortgage gives the choice back to the client.”
Castle Trust expands development finance offering
Castle Trust has doubled its maximum loan size and is now able to lend up to £20m on loans up to 65% Gross Development Value (GDV).
Maximum GDV has been increased from 70% to 75% for loans up to £15m and, for those developers who do not need this extra leverage, Castle Trust has introduced more competitive pricing at 65%.
In addition, Castle Trust is rolling out its Mezzanine Finance offering, which launched as a pilot earlier this year. Mezzanine loans are available up to £5m on schemes of up to £50m.
Nick Oakley, director of structured finance at Castle Trust Capital, said: “We are delighted with the way our portfolio has been developing since our launch last year, and this means that we are able to expand our offering on the back of an established book. We now have a full suite of senior and mezzanine finance options for experienced developers who want to maximise their returns through the efficient use of capital.
“At Castle Trust, we place great emphasis on the principle of ‘yes means yes’ and we recognise that developers need a finance partner that knows what it is doing, is strong, consistent and committed to the relationship,” he added.