Kensington plans long-term fix launch for first-time buyers to boost affordability
Speaking during an online panel debate hosted by the lender, Kensington Mortgages’ new business director Craig McKinlay (pictured), said the long-term fixed rates would mean first-time buyers would not have to be stress-tested on much higher interest rates than the actual deal they were taking out.
The fixed rate terms will range from 11 years to 40 years and will go up to 95 per cent loan to value for first-time buyers.
Kensington re-entered the 95 per cent LTV market in July.
The deals are expected to give first-time buyers a significant affordability boost compared to the lender’s two and five-year deals.
The launch is planned for the end of November.
Gender pensions gap: impact of divorce or bereavement on financial resilience – Wilson
But recent more2life research has highlighted a group that is at greater risk of turbulent economics and rising bills in later life; widows and divorcees.
Socio-economic changes are the only long-term solution to addressing this disparity, but advisers can play a vital role in raising awareness of the importance of holistic financial planning by adjusting conversations with clients in light of these findings.
The numbers are clear. Our research showed that not only do just a third of UK women (35 per cent) report they have independent pension wealth (whilst 40 per cent do not have any pension wealth whatsoever), 59 per cent of widows surveyed felt that they had lost out on retirement income following the death of their partner. This equals 1.5 million widows across the UK and stands in stark contrast to just 16 per cent of widowers who said the same.
For divorcees, a similar picture emerges: 39 per cent of women felt that they had lost out on the retirement income they receive or expect to receive as a result of splitting from their partner, compared to only 21 per cent of men. In a period of rising inflation and uncertainty around energy bills, if consumers are unprepared for the loss of income following a divorce or bereavement, they may struggle to manage household finances or afford monthly mortgage repayments.
What can advisers do to help bridge this gap?
As professionals on the front line of financial services, advisers are uniquely placed to help women, and men, plan for later life and understand the solutions available to them. Firstly, simply raising awareness that the gender pensions gap both exists, and is heightened for divorcees and widows, may help these groups better plan mortgage repayments and household bills in later life.
As part of a more holistic financial conversation, advisers should also consider and highlight the role that property wealth can play in helping to bridge any income gap. More women (27 per cent) than men (21 per cent) own property wealth, despite the gender pensions gap, showing how tapping into this property wealth may be key.
Equity release is one option and can even be used to complete mortgage repayments, consolidating the debt but securing a client’s forever home so they are more secure against rising bills.
In the unfortunate event of a bereavement or divorce, the last thing a client needs is to unwittingly fall through the cracks into this gender gap facing a future struggle to pay bills or meet mortgage payments. Advisers may be the first line of defence and need to consider all arrows in their client’s quiver to make up this shortfall.
Who will blink first on mortgage interest rates – Young
There’s no doubting the ultra-competitive nature of our market has provided a compelling opportunity for advisers and their clients.
Low rates have not just been confined to the residential market but within buy-to-let the same trend has persisted. However, what makes it even more interesting is this doesn’t chime at all with what has been happening to swap rates recently.
Take a look at SONIA (the Sterling Overnight Index Average) – a rate based on actual transactions and reflecting what banks are paying to borrow sterling overnight from other financial institutions and institutional investors.
Back at the end of July, five-year SONIA swaps were 0.42 per cent; on 12 October they had more than doubled to 0.88 per cent. It’s an even more graphic rise for two-year swaps over the same timescale, moving from 0.22 per cent to 0.71 per cent. In other words, everyone is paying considerably more for their money.
As you’ll no doubt be aware pricing has actually gone down during that period. When you consider just how many lenders use the credit markets to fund their mortgage lending, it seems somewhat odd.
Why hold or drop rates on your products when it’s costing you more to fund them and when you’ll be making even less margin?
It also justifiably begs the question, how long can what seems like a contradiction in the way our sector works continue and who will blink first when it comes to putting rates up? The traditional trend is that when one moves, others will follow.
As I write, lenders appear to have their eyes fully open in the buy-to-let space but are potentially beginning to blink in the residential market. Again, in mid-October, news was filtering through that NatWest and HSBC were about to inch up rates for higher loan to value borrowers.
The next big question is how will others react? Will the competition feel this presents an opportunity for them to secure volumes, even at less margin, because their competitors have repriced upwards. Or will they believe that they must follow as they fear being left as the last lender standing at a particular price point which means large levels of business that they’ll be unable to service effectively?
It is a quandary and one that I suspect buy-to-let lenders will also face in due course as well. Also, even though Bank Base Rate (BBR) is generally unrelated to mortgage product rates if the mood music begins to change and the Monetary Policy Committee ups BBR as it is expected to do before Christmas, then we could see an acceptance that this period of historically low rates has ended and a mass movement of rates.
For advisers, it presents an interesting conundrum in terms of the advice to be given especially over the next couple of months. The likelihood is that rates will still be relatively low after this but they won’t be as competitive as they currently are.
Mortgage Brain’s intermediary acquisition head Jane Benjamin to leave
Benjamin joined the company in March, and took on the newly-created role with responsibilities including new customer acquisition and tacking the challenge of drawing brokers away from submissions on mortgage lender websites.
Formerly the director of mortgages at Sesame Bankhall Group for five years, Benjamin said her decision to join Mortgage Brain meant she could combine her distribution experience with a “leading industry tech giant” which the role gave her the opportunity to do. She left the Sesame network in February following a group restructure.
Speaking to Mortgage Solutions, Benjamin said: “It’s been great to work with the team at Mortgage Brain and make a positive contribution to a leading industry tech giant on behalf of advisers.
“The market is now ready for an acceleration of intermediary distribution growth and lender innovation to support changing customer expectations and requirements.
“It’s the perfect time for me to get back to my core passion as an adviser and lender champion within a mortgage and protection-focused business. I’m excited to find my next opportunity and really make a difference in the mortgage market.”
Neil Wyatt, sales and marketing director at Mortgage Brain, said: “It has been a pleasure to work with Jane for the last six months. Jane has contributed hugely to a number of our key projects most notably our recent rebrand and Mortgage Vision events.
“We fully understand the desire Jane has to work more closely within the mortgage and protection environment and wish Jane all of the best for the future.”
Octopus Real Estate and Homes England create £175m green lending partnership
As part of the Greener Homes Alliance with Octopus, Homes England will provide £46m of the £175m of loan finance.
The alliance will provide loans of between £1m and £20m to finance new SME development projects.
Loans are capped at 85 per cent Loan to Cost or 70 per cent Loan to Gross Development Value.
Homes funded must achieve a minimum Energy Performance Certificate (EPC) rating of B and will benefit from increasing interest rate margin discounts as the energy efficiency of the homes increases above this, measured using the Standard Assessment Procedure.
Homes achieving an EPC rating of A will benefit from interest rate margin discounts of two per cent.
The alliance will support the construction of up to 750 new homes whilst also equipping SME housebuilders with knowledge and expertise around low carbon construction.
Before starting their developments, SMEs will benefit from free of charge advice from sustainability consultants McBains and Octopus Energy.
McBains will provide design guidance and practical steps to achieve an improved EPC.
Housing Minister Christopher Pincher MP said: “Our Future Homes Standard will ensure that from 2025 new homes produce at least 75 per cent lower CO2 emissions and be future-proofed with low carbon heating.
“This partnership will help reach our targets for cleaner, greener homes for future generations.”
Andy Scott, head of residential development at Octopus Real Estate, said: “Although green credentials may be an aspiration for most developers, sometimes access to funding, costs and education can stand in the way of these aspirations. The alliance will offer tangible discounts which can help fund the costs to support the delivery of green developments, plus access to advice and education, which will enable SME housebuilders to deliver future proof, energy efficient homes to be enjoyed for generations to come.”
House sales rise marking record September as stamp duty holiday ends
Compared to August, the number of homes that changed hands rose by 67.5 per cent in September to 160,950.
This created the third spike in property transactions for the year, after June and March.
Year-on-year HMRC’s property transaction data showed that September’s activity, which netted the government £1.3bn in taxes, was 68 per cent up on the same period last year.
The stamp duty holiday offered buyers the chance to pay no stamp duty on the first £500,000 of their property purchase between July 2020 and 30 June 2021 which meant a saving of up to £15,000.
When the incentive was revealed, Chancellor Rishi Sunak said it would end in March causing the first spike in property transactions. The deadline was extended until the end of June driving transactions up to 198,240, their highest point since records began. A reduced tax incentive was left in place until the end of September offering buyers the opportunity to save up to £2,500 in stamp duty.
Overall, the stamp duty holiday has generated £13.5bn in revenue for the tax man between July 2020 and the end of September 2021, according to analysis by Coventry Building Society.
Karen Noye, mortgage expert at Quilter, said: “Considering the saving available to home buyers was a maximum of £2,500, it is somewhat surprising that so many rushed to buy while house prices remain so inflated.”
The Land Registry’s latest house price data showed that prices rose 9.8 per cent annually in August increasing the average property value to £280,921.
Noye added: “As Covid-19 cases are beginning to rise and the prospect of restrictions being reinstated increases, the number of people willing to move home may well start to drop as we head into winter. With the stamp duty holiday now officially drawn to a close time will tell whether the property market will return to some semblance of normal.”
Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “The fact we saw a surge at all shows the psychological power of the tax break. For those who had been locked in an incredibly frustrating housing market for months and may have initially been aiming for one of the earlier deadlines, this was a final chance to at least get a small saving on the painful and expensive process of buying a house.
“We expect to see sales slow from this point, reflecting the fact that agents reported a drop in buyer interest in August and a levelling off in September. We’ve also seen six successive months of drops in the number of properties coming to the market, so even if there were plenty of keen buyers, the property drought would keep a lid on sales.
“However, we’re not expecting the market to come to a shuddering halt, because people are still reassessing how and where they want to live, and while mortgages are gradually becoming more expensive, they’re still at low enough levels to support activity in the market.”
Conveyancers call for support to halt threats of violence and intimidation tactics
Threats of violence, swearing, name calling and intimidation tactics are some of the experiences property solicitors have endured since lockdown restrictions were lifted and house sales rocketed. Conveyancers say the behaviour highlights the need for change in the homebuying process and are calling for support from the industry.
All professionals in the property buying process have reported unprecedented levels of activity due to a combination of pent up demand, the stamp duty holiday and a desire to move to a larger home after lockdown.
But conveyancers say, as the last link in the property chain, they are forced to bear the brunt of client frustrations and abuse as they attempt to fulfil their legal responsibilities. Not understanding or respecting the role of conveyancing in the homebuying process, say solicitors, leads to unacceptable client behaviour which mortgage brokers and estate agents could help to relieve.
A shocking message posted on the professional networking site Linkedin laid bare the scale of the problem.
It read: “Fat c***, w****r, bunch of sh**s.
“This is language that has been levelled at conveyancers by clients in recent weeks – unacceptable isn’t it? We all know that moving house is stressful and that the SDLT deadlines have made everything worse. But clients must take responsibility for their actions.”
Author of the post, Lorraine Richardson, property solicitor at Adapt Law, said she had been compelled to write the message and host a talk on her YouTube channel, Conveyancing Matters, due to the heightened levels of abuse directed at her profession.
“The stress conveyancers have been under in the last 12 to 18 months is extraordinary,” she told Mortgage Solutions.
“Coal face conveyancers have been subject to a fair sense of rudeness from stressed clients for a long time, but the stamp duty holiday has massively exacerbated the situation.
“There’s not a great deal of respect for what we do. Some conveyancing has become commoditised which doesn’t help. It’s seen as a box ticking exercise. But the client also thinks they own you because they’ve paid a fee.
“Conveyancers are also the ones who have to give bad news, such as sorry you can’t move forward with the purchase because there’s a problem with the title.”
Having to repeat actions such as producing identification and bank statements when they have already submitted these documents to a broker and a lender also incites anger, Richardson added.
Stuart Forsdike, partner at PCS Legal, said his firm has been subject to various threats over the last 18 months which he has put down to the pressure buyers were under to complete purchases ahead of the 30 June stamp duty deadline.
“We had someone leave a voicemail to say they were going to drive to the office and run over the case handler,” said Forsdike. “In the last two months alone we’ve had people threatening to come to the office with a gun and another with a knife.”
Forsdike said while aggressive clients account for a small proportion of instructions, the level of frustration felt by homebuyers which occasionally leads to abuse “demonstrates the radical need for change in the conveyancing process,”.
He would like to see bodies such as the Law Society and Solicitors Regulation Authority produce literature for borrowers explaining how conveyancing works and how long it takes.
Encouraging clients to provide information pre-offer would also help to speed up the transaction, he added.
Estate agents and mortgage brokers could play their part by managing expectations and prepping their clients about the documents they will need to provide again to their solicitor even though they have already shown them to a broker and lender said Richardson. Sharing information with solicitors would also help to speed up the transaction, she added.
“Brokers will know if the borrower is receiving a gifted deposit from their parents but lenders rarely indicate on the offer that the source of the deposit is gifted,” she said. “When we find out, we have a responsibility to do ID checks on the parents and then disclose it to the lender even though they know, because it’s not referenced on the offer. If the broker told us on day one, at least we could do these checks straight away instead of finding out three weeks later.”
The Home Buying and Selling Group has begun work to tackle abuse and speed up the homebuying process.
The Association of Mortgage Intermediaries, part of the group, has been involved in the programme. Chief executive Robert Sinclair said the Department for Levelling Up, Housing and Communities was keen to work with the industry to simplify and speed up homebuying. The development of a cross-industry code of conduct to stamp out abuse is also underway.
“The property buying process causes some people to behave irrationally which can lead to unacceptable behaviour towards conveyancers,” said Sinclair. “The industry is aware of this issue and is proactively trying to find solutions.
“We’re doing a lot of work as part of the Home Buying and Selling Group to combat this behaviour. For example, we hope there will soon be communications coming out talking about how vendors need to be sale-ready.
“Could brokers do more to ease this abuse? Absolutely. Some do this really well, but some could do this better. Brokers should tell borrowers to start the legal process early and spend a little money investing in a solicitor who can start looking into any title issues on the property to reduce delays.
“The abuse often comes because the conveyancer has to tell the buyer there are defects on the title discovered much further down the line.”
FCA chair to step down in spring 2022
He has asked the Chancellor of the Exchequer to begin the process to appoint his successor.
Randell (pictured) said being chair of both watchdogs had been a “great privilege”.
When he took over the job as chair of the FCA in April 2018 he signed up for a five-year term but is planning to leave his post a year early.
Randell said it was the right time to hand over leadership to a new chair as the regulator prepared to complete its transformation.
“As the FCA prepares to implement its new wholesale, retail and data strategies under an established new executive, now is the right time for a new chair to carry on the close and continuous oversight of our transformation.”
Chancellor of the Exchequer Rishi Sunak, said: “Both organisations undertake a vital role in ensuring that the UK financial markets work well, protecting the interests of consumers, promoting effective competition, and enhancing the integrity of the UK financial system. Charles has led both boards during the UK’s transition to our new position outside the EU, through the vital economic response to the Covid-19 pandemic and supporting the important transition following Nikhil Rathi’s arrival as new chief executive of the FCA.”
Green low deposit mortgages will be high on the agenda – Bamford
While specific policy measures were short in supply, there was a general theme certainly from the Labour Party that it intends to give first-time buyers priority access to housing if it is elected, and that new-build developments in particular might be off limits to buy-to-let landlords or corporate investors.
The Conservative Party are unlikely to go that far but it’s clear they also see first-time buyers close to the front of the queue when it comes to securing affordable, new-build housing, and there is a very good reason why stamp duty remains at zero for the vast majority of first-time buyers.
All eyes will now be on the Budget at the end of this month to see if there are any further, specific measures to support first-time buyer activity, given Michael Gove recently highlighted ‘access to finance’ as being an issue within the housing market.
As we know, this is likely to mean access to high loan to value (LTV) finance. It has been positive to see the Deposit Unlock scheme beginning to take off, which will provide access to high LTV loans specifically for those purchasing new-build properties in certain developments.
Nationwide recently joined this scheme and is marrying up its new-build, high LTV mortgage and green-focused lending.
Borrowers who buy a new-build through the scheme will have access to its green reward product which offers a greater level of cashback if the property purchased hits a Standard Assessment Procedure (SAP) rating of 86+, which is equivalent to an EPC rating of a high B.
One can see this green focus being much more heavily pushed by both lenders and housing developers in the months and years to come because of the government’s carbon emissions targets. Clearly, housing stock plays a big part in this. There is encouragement to ensure new-builds meet the highest EPC ratings, for example, and that borrowers are rewarded for that with better priced products and greater levels of cashback.
We’ve already seen a growing number of lenders offering green products in both the residential and the buy-to-let space as the industry seeks to encourage homeowners to either purchase energy efficient homes or invest in upping that efficiency.
Let’s not underestimate how big that task is. It’s one thing to ensure all new-builds reach these standards, but it’s quite another to get that improvement among existing housing stock much of it dating back to Victorian Britain.
However, you have to start somewhere and new-build housing is a much easier win for all concerned. By marrying up high LTV with green rewards, we can ensure that first-timers at least are able to start their home-owning journey off at the top of the EPC charts saving them money on their energy bills in the long run.
Given what is happening in the utilities sector at the moment, who wouldn’t want to achieve that?
Vida cuts rates by up to 0.25 per cent
Rates begin at 2.89 per cent for its two-year fixed rates and 3.14 per cent on its five-year fixed rates.
Special purpose vehicles are accepted across all buy-to-let ranges and the deals are available for both purchases and remortgages. The maximum loan available is £1m.
Richard Tugwell (pictured), director of mortgage distribution at Vida, said: “We have been listening to our intermediaries and despite the challenges the mortgage market has faced over recent years, the UK buy-to-let sector is very much alive, and these changes are aimed at supporting our customers in achieving portfolio growth and reinforces our commitment to offering greater opportunities for intermediaries and their customers locked out of high street lending.”