NatWest cuts maximum LTI for self-employed borrowers
The lender did not formally announce the cut but appears to have made the change when introducing its new calculator for self-employed cases earlier this week.
Broker illustrations shown to Mortgage Solutions from the calculator which have since been replicated, indicate the lender will now only offer a maximum of 4.25 times income to self-employed borrowers.
This is a reduction from the five times income that was previously available.
It does not appear that the LTI cap for employed borrowers has been changed.
The lender did not dispute the changes when contacted by Mortgage Solutions.
A NatWest spokesperson said: “We continually review our proposition to ensure it is in line with current market conditions.”
NatWest also increased rates across its product suite this week, with those at higher loan to values (LTVs) rising by up to 0.3 per cent.
The lender joins Barclays in reducing its LTI cap this week, although Barclays made the changes for all residential mortgages not yet at offer.
HSBC increases high LTV rates in product update
Earlier in the week the lender stopped taking new business at 90 per cent LTV, noting that it had seen “very significant increased demand for higher LTV mortgages”.
Rates have now been increased by up to 0.25 per cent as it is understood the lender took several factors into account, including managing demand following its announcement this week.
At 85 per cent, LTV two-year fixes have been increased by 0.15 and 0.2 per cent with a £999 fee and without a fee to 1.99 and 2.44 per cent respectively.
Likewise, five-year deals have increased by 0.15 and 0.25 per cent to 2.49 and 2.79 per cent respectively, while the two-year tracker has been increased by 0.25 per cent to 2.29 per cent plus the Bank of England base rate.
Rates on products in the 60, 70, 75 and 80 per cent LTV ranges have all been increased by between 0.1 per cent and 0.25 per cent.
The 90 per cent LTV range is still available for internal customer switches and these rates have also been increased by up to 0.25 per cent.
Barclays cuts LTI for all cases not at offer
For borrowers with a loan to value (LTV) above 90 per cent and joint income of £50,000 or less, the new LTI will be tighter at four times income.
This limit will also apply to applications where there is a debt to income ratio of 20 per cent or more.
In a message sent to brokers, the lender said the LTI cut would also affect those offered cases where a material change has occurred that was reported after 28 August.
Barclays listed seven examples which it considered to be a material change in circumstances:
- An increase to the mortgage term;
- An increased loan amount;
- A change that results in increased outgoings/expenditure, for example adding a commitment or financial dependant;
- A reduction to the stated income;
- An increase to LTV;
- A change of repayment type;
- A change of borrower.
A Barclays spokesperson said: “We regularly review our lending policies and today have made some changes to loan-to-income multiples.”
In the note to advisers the lender said: “These changes also apply to any application that has been created and not submitted and to those that have been submitted but are yet to receive an offer.
“Please be advised if you do have a case that has not yet gone to offer, we will assess under the new policy and you will be notified of the outcome in the usual way.”
Prior to the change Barclays’ maximum LTI was 5.5 times income. The lender has also used the opportunity to simplify the number of LTI categories across its proposition.
Earlier this week the lender removed its daily cap on the volume of cases which it could accept, but added that there would be further changes coming.
Emma Hollingworth joins M:Qube as distribution director ahead of Q4 launch
Hollingworth (pictured) has taken up the role of distribution director with responsibility for building the lender’s team and distribution strategy as it launches.
The firm announced its arrival at the end of last year, promising to automate the whole mortgage application process focusing on using data.
Hollingworth told Mortgage Solutions: “I’m absolutely delighted to be joining M:Qube and we have a plan to bring real tangible change to the mortgage market in the months ahead.
“I’m really looking forward to launching our lending proposition and getting out and about meeting some old and hopefully some new colleagues in the weeks ahead, to let them know what we are all about.
“We’ll be building a team so we will be hiring salespeople as soon as possible and we have a plan for going to market which will involve the help of distributors, clubs, networks and packagers.
“We’re not planning to limit distribution, but we have to be mindful of capacity so will have a roll out at launch with handpicked distribution with a view to onboarding others as quickly as possible,” she added.
To start with the lender will be operating in the buy-to-let market but will move into the residential space.
It will be based on its own platform but will initially be lending funds from other sources using rules and criteria from those funders.
The firm is aiming to maximise the use of technology to speed up the mortgage process. It is effectively removing the decision in principal stage, with the intention of issuing binding offers where required – whether based on an automated valuation or subject to an in-person valuation.
“The systems and processes have all been tested and we’re now working on the products that will be on the platform,” Hollingworth continued.
“There will be quite a lot fewer questions on our applications because of all the data we have got access to.”
Rapid market change
Hollingworth is joining M:Qube from Bluestone where she was sales and marketing director and part of the executive team for nine months.
She noted that the impact of the coronavirus pandemic on the market meant she was not able to carry out what she had originally planned to do there.
“I went to Bluestone as they are seen as a real innovator and I wanted to lead the associated scale up of distribution.
“During the Covid lockdown it became clear to me that the mortgage market would change more rapidly and extensively than I originally thought.
“Therefore I decided to move to a firm which is reimagining the mortgage market, as I believe that this is the direction the industry will accelerate toward,” she said.
Hollingworth was previously proposition director at Mortgage Advice Bureau, and prior to that sales director at Intrinsic.
M:Qube chief operating officer Richard Fitch, said: “We are incredibly pleased to have someone of Emma’s calibre join.
“Being able to recruit someone with Emma’s talent speaks volumes for the strength of our proposition and holds us in great stead for developing really strong relationships with our distribution partners”
Barclays removes daily case limits
In a message sent to brokers today, the lender noted that it had also returned to assessing applications within four working days.
“As a direct result, we have been able to increase the case booking limit within our systems,” said Barclays Intermediaries director Craig Calder (pictured).
“We seldom reached the daily case limits before 4pm during the summer but you can now have confidence that you will be able to secure a booking for your clients at any part of the day.”
However, Calder noted that there were likely to be further changes to Barclays proposition as the busy market continued into the autumn.
“We expect September to be just as busy, if not busier, so please be advised we are currently reviewing our offering to ensure we remain best placed to serve the needs of you and your clients with both products and service,” he added.
Calder thanked brokers for their support and patience during the summer, explaining that in late July there was a “mini-boom within the market” with the loosening of lockdown restrictions.
“While it was great to see demand return so quickly, this did present a challenge as we needed to ensure we continued to effectively manage capacity so you and your clients receive a consistent level of service.
“As in March, when lockdown came into effect, we took the decision to introduce a temporary case booking limit as a short-term measure of controlling volumes.
“Then, throughout August, we made several tweaks to our products as and when we felt we needed to re-address the balance.”
Coventry BS relaunches interest-only for high value properties
The products are capped at 50 per cent loan to value (LTV) and borrowers require a minimum £300,000 equity left in the property after the mortgage amount required has been accounted for.
There is no minimum income requirement, but borrowers must demonstrate they have sufficient income to support an equivalent repayment mortgage and meet all the repayment affordability checks.
Deals are available on two- and five-year fixes with early repayment charges applying.
For interest-only there is a two-year fix with £999 fee at 1.47 per cent and a fee-free five-year deal at 1.95 per cent.
Meanwhile interest-only offset versions are available at 2.29 per cent for a two-year fix with zero fee, with a five-year fix and £999 fee at 2.15 per cent.
Speaking at the Mortgage Vision event, Coventry Building Society head of intermediary relationships Jonathan Stinton confirmed the lender would allow a maximum age of 75 on the products.
“A wide range of repayment plans are available and borrowers can use a mixture of repayment vehicles,” he added.
In a statement Stinton continued: “Now, more than ever before, borrowers are looking for control over their finances so we’re pleased to be re-entering the interest-only market.
“Interest-only products are ideal for borrowers who would like to reduce their monthly mortgage payments or free up cash that they can use in other ways.
“With our products, there’s also the option of using the sale of the property to repay the loan which makes downsizing a realistic option for repayment.”
HSBC withdraws 90 per cent LTV mortgages for new customers
The lender said it was making the move, which came into place today, as a result of “very significantly increased demand for higher LTV mortgages”.
It will continue to offer products above 85 per cent LTV for existing customers switching rates.
Customers with appointments in place for mortgages over 85 per cent LTV and pipeline applications from brokers and customers that have already been received will be progressed subject to the usual checks, it added.
The lender had been one of the few to continue offering 90 per cent LTV mortgages for new customers since the coronavirus pandemic hit, but has finally had to take a step back.
Significant service level consequences
HSBC UK head of buying a home Michelle Andrews said: “While the worst effects from Covid-19 appear to have thankfully passed, the country and the housing market have yet to return to normality.
“Mortgage market participation has been volatile at higher LTVs which has led to significant consequences on service levels and our colleagues for those who, like HSBC UK, have remained open for business at those higher LTVs.
“This is a temporary change for us. We look forward to other lenders joining us back in the market as well.”
Andrews noted that easing lockdown and the stamp duty cuts had “injected fresh impetus” to first and second-time buyers who may have a smaller deposit.
However, she added the increase in demand meant the lender was not able to satisfy service levels and did not want to face putting property purchases at risk.
“Offering a competitive product and being able to provide a great and timely service is extremely important to us and the recent significant uptick in applications has meant that we have not been able to consistently meet the high standards we set ourselves, which is not always a positive experience for our customers and can delay and put a property purchase at risk,” Andrews continued.
“As such we continually review our proposition and service levels and adjust how we are working and try to manage the inflow of new cases.
“Temporarily reserving our mortgages at over 85 per cent LTV for those switching rates only is not a decision we have taken lightly, but one we will be reviewing regularly.
“We remain open for business and continue to support our customers and the wider housing market.”
Coronavirus increases need for family support to buy a home – L&G
Family and other financial support will be involved in around 23 per cent of transactions this year, up from 19 per cent last year, illustrating the level of strain in the current market.
Of those who’ve bought recently and received support from family and friends, 65 per cent said it would have been ‘unlikely’ without help.
One in five said they would have had to delay their purchase by more than five years. A further 14 per cent said they never would have been able to buy without the help of family or friends.
Stamp duty cut not helping
The stamp duty holiday in England appears to have had little success for stretched buyers, with just eight per cent of would-be purchasers saying they would rely less on family or friends as a result of government intervention.
And only 12 per cent have brought forward their plans to buy since the start of the pandemic.
Indeed, a third of those likely to buy a house in the next five years said that this will be done using money from family and friends.
The research also highlighted that prospective buyers were being penalised as choice in high loan-to-value (LTV) mortgages becomes more restricted.
Inheritance reliance growing
Intergenerational support in the form of inheritance is becoming more common with 27 per cent of gifters using inherited funds to help their children or grandchildren to buy a property.
However, cash remains the most common way of offering help with 39 per cent of gifts coming from using cash savings to provide financial assistance.
As a result of the pandemic and closure of the housing market earlier this year just £3.5bn is expected to be given by family and friends in 2020, almost half the £6.3bn in 2019, and it will also fund 85,000 fewer home purchases.
Nigel Wilson, chief executive at Legal & General noted that for years buyers have been faced with a limited supply of affordable homes, a challenge which is now being compounded by Covid-19.
“Not only are buyers facing an uncertain economic future, but changes by lenders in the wake of the pandemic have restricted the low-deposit mortgage options on which many young people rely to make their first step,” he said.
“While the Bank of Mum and Dad is leaning in to help those lucky enough to have its backing, a generation of hopeful buyers without the support of families could find themselves locked out of the housing market.”
Masthaven increases minimum bridging loan to maintain service
The lender will be temporarily increasing its minimum loan across all bridging products from £200,000 to £300,000.
Decisions in principle (DIPs) for loans between £200,000 and £299,999 will need to be approved by 5.30pm today and converted with fees paid by 5.30pm on 8 September.
Mortgage Solutions understands that the lender has made the move to protect service levels as it is incredibly busy.
In a further message posted on its website, Masthaven said: “We have seen demand for our products increase significantly and, at the moment, no doubt like you, we’re very busy – this means that we’re taking a little longer to deal with things than usual.
“To help us help you it would be of great assistance if you could fully package your cases when you submit them to us.
“This will help with a much more efficient underwrite of the application when it lands on an underwriter’s desk.”
Mortgage Solutions has contacted Masthaven for comment.
Foundation withdrawing 60 and 70 per cent LTV resi deals
On 2 September it will be withdrawing its 60 per cent loan to value (LTV) and 70 per cent LTV residential products.
The 60 per cent deals will be replaced on 3 September with an increased LTV of 65 per cent.
However, the 70 per cent LTV products will not be replaced.
In a message to brokers, Foundation said any decisions in principal (DIPs) on existing products will need to be received by 7pm on 2 September.
Brokers will then have 30 days from the DIP accept date to progress to the case to a full application.
Further details of the incoming products will be published later this week.