Trend of buyers and tenants leaving cities is reversing – Castle Trust
Speaking on Specialist Lending Solutions TV in partnership with Castle Trust Bank, Oliver said this was affecting the types of properties and locations investors wanted to buy.
He said: “Diversification in the market has actually driven more people post-pandemic to pull out of the city centres. We’re seeing that trend going the other way now.”
He said because of this, landlords were taking advantage of investment opportunities where they could and focusing on refurbishments or conversions.
Richard Merrett, head of strategic development at Simplybiz Mortgages, agreed, adding: “During lockdown everyone was itching to get out of cities for space.
“But I think as we see a gradual return to normality, in particular people getting back into offices, flexible working will have an impact.”
Anthony Rose, director of LDNfinance, said he was also coming across clients who were staying in hotels one or two nights a week as expectations of how many days they needed to be in the office had adjusted.
He said people changing jobs during the pandemic to companies with different working practices would also push the demand back to city living over the coming year.
Watch the video below [7.46] featuring Shekina Tuahene, commercial editor of Mortgage Solutions and Specialist Lending Solutions, Robert Oliver, director of sales at Castle Trust Bank, Anthony Rose, director of LDNfinance, Kris Corns, operations director at Crystal Specialist Finance and Richard Merrett, head of strategic development at Simplybiz Mortgages.
The better the pre-application discussions, the easier it is to process mortgages – Skipton BS
Featuring on Mortgage Solutions’ podcast in association with Skipton Building Society, Jon Rawley, business development manager at the mutual said it was about going “back to basics”.
He added: “The better the pre-application discussions that the broker has with myself or my BDM colleagues, the better the presentation of the application, the easier it is for us to make a quick decision.
“The broker is always going to have far more knowledge and insight about a client than we may be able to glean from an online application. So, if there are soft facts which would support the loan request, whatever those soft facts might be – assets or savings – then please, brokers, share those with us.”
Julian Raper, underwriter (SME), added: “The more information the broker can provide us, the easier the underwriting decision will be.”
He said the mutual had also invested in technology to work alongside its “human touch” such as its automated income verification function. This eliminates the need to submit payslips and bank statements to enable quicker decision making.
Listen to the podcast below [9.58] featuring Shekina Tuahene, commercial editor of Mortgage Solutions and Specialist Lending Solutions, Jon Rawley, business development manager and Julian Raper, underwriter (SME) at Skipton Building Society.
For intermediary use only.
Demand for capital raising mortgages up by a fifth in September
According to data captured on Legal and General Mortgage Club’s SmartrCriteria platform, this was the second most sought after criteria during the month, rising from sixth place in August.
The most searched for criteria was mortgages for those with a visa.
Searches for borrowers with complex financial situations declined month-on-month in Q3. In August, the platform recorded a nine per cent decrease in demand for mortgages to suit those with debt management plans and an eight per cent drop for those with unsecured arrears.
Searches for borrowers with unsatisfied defaults and those employed via contract work also fell by nine per cent and eight per cent respectively.
In September, demand for products suited to borrowers with satisfied defaults and unsecured arrears fell by a further 10 per cent and seven per cent.
Kevin Roberts, director of Legal and General Mortgage Club, said: “It is reassuring to see a wide range of factors driving demand in the mortgage market, especially in light of the stamp duty holiday ending. However, the crisis has in many cases complicated applicants’ financial circumstances and advisers must keep this front of mind.
“Against this complex backdrop, the value of both mortgage advice and technology remains clear.”
Roberts said the use of technology would help brokers navigate the market and attend to client needs.
He added: “With purchase activity expected to return to its pre-pandemic level in the coming months, in light of the end of the stamp duty holiday, now is the time to invest in mortgage technology and prepare for this new and exciting era of the market.”
AMI launches diversity and inclusion viewpoint event
The online webinar will take place at 10am on Thursday 21 October.
The association launched its survey in July asking professionals in the sector to share their views on people’s perceptions and lived experiences of diversity and inclusion.
Figures from the sector will discuss the findings of the survey to help give an insight into how inclusive the sector is and what more can be done to create a balanced industry.
The survey was supported by Aldermore and Virgin Money.
Register for the event by clicking this link: https://www.workcast.com/register?cpak=6868373356444044
Robert Sinclair (pictured), chief executive of AMI said: “I would like to extend my sincere thanks to everyone who took the time to complete our survey and to both Aldermore and Virgin Money for their support with this work. The survey gives us a real insight into the challenges faced by women and people from under-represented groups within the sector and highlights some of the changes needed to make a real and permanent difference.
“I hope that people will watch the presentation, read the report and take action, both as individuals and firms. We need to work together to ensure that our industry embraces society in its widest sense, ensures that everyone feels safe, included and welcome, and that we are truly representative of our customers, both now and in the future.
“The AMI board would appreciate your support by joining us on this journey.”
Location and mixed use space driving property investment diversification – Castle Trust
Speaking on Specialist Lending Solutions TV in association with Castle Trust Bank, Richard Merrett, head of strategic development at Simplybiz Mortgages said he had noticed an increasing trend for geographical diversity.
Merrett said this was mainly influenced by investors looking for good value assets.
He said because of pent-up purchase demand, some areas were perceived to be overpriced. As a result, investors were “looking at maybe diversifying from a geographical perspective to get access to better yielding properties and places where they might not have to pay over the odds,”.
Kris Corns, operations director at Crystal Specialist Finance, said investors were also de-risking their assets by going for mixed use properties.
He said this was lucrative as properties with retail space underneath residential flats could protect against frequent tenancy changes as retailers were likely to last longer.
However, if a retailer happened to go out of business, Corns also said it was easier to convert the space for a different use.
“If you do have that unit and the tenant has gone out of business on the ground floor, it’s relatively easy to get planning permission on some of these now. You can convert it into something else and really add the value there,” he added.
Watch the video below [8.02] featuring Shekina Tuahene, commercial editor of Mortgage Solutions and Specialist Lending Solutions, Robert Oliver, director of sales at Castle Trust Bank, Anthony Rose, director of LDNfinance, Kris Corns, operations director at Crystal Specialist Finance and Richard Merrett, head of strategic development at Simplybiz Mortgages.
HSBC reduces high LTV rates
Changes apply to mortgages at 80 to 95 per cent loan to value (LTV).
Across purchase products, this includes the two-year fixed at 85 per cent LTV with a £999 fee. This has been reduced by 0.10 per cent to 1.39 per cent.
Receiving the same reduction, the fee-free two-year fixed deals at both 90 and 95 per cent LTV now have rates of 1.99 per cent and 2.79 per cent respectively.
The five-year fixed rate product at 80 per cent LTV with no fee has been cut from 1.99 per cent to 1.89 per cent, while the £999 fee paying alternative has been reduced from 1.74 per cent to 1.69 per cent.
HSBC’s two-year fixed remortgage at 80 per cent LTV with a £999 fee has been cut by 0.15 per cent to 1.39 per cent. The equivalent at 85 per cent LTV has been reduced to 1.99 per cent from 2.09 per cent.
Michelle Andrews, HSBC UK’s head of buying a home, said: “These changes really put a focus on higher LTV customers, with our new lower rates available to those looking to purchase, remortgage or switch rates.
“By cutting the cost of borrowing on over 30 mortgages at 80 per cent LTV and higher, across two and five-year fixed rate deals, we are offering some of the lowest rates currently available, whether coming to us via a broker, or direct.”
Property sales market could ‘cease to exist by spring’ if supply keeps falling
Neil Foster, agent at Foster Maddison Property Consultants, said in the latest Royal Institution of Chartered Surveyors (RICS) UK residential survey: “On the current trajectory, the sales market could cease to exist by the spring.
“Vendors are not coming to market at anything near average levels and the stock of available homes continues to shrink month-by-month.”
The level of new housing supply coming to market remained in negative territory for the sixth month running with a score of -35 per cent in September, flat on -36 per cent in August.
Also pointing to constrained supply, respondents said the number of appraisals carried out by estate agencies in September was below the rate seen last year. On a monthly basis, this also slipped to -26 per cent from -10 per cent.
Scores are based on responses from chartered surveyors and estate agents with positive readings representing a rise in activity while negative readings indicate a decline.
Buyer demand steady
Buyer demand could squeeze supply issues further, as activity returned in September following a brief decline after the phasing out of the stamp duty holiday.
New buyer enquiries posted a net balance reading of zero, up from -13 per cent in August.
Amid the lack of available properties, newly-agreed sales reported a negative reading for the third consecutive month. In September, a net balance of -15 per cent of respondents cited a drop in newly-agreed sales. This was a slight improvement on the -17 per cent of respondents who reported a fall in August.
House price pressure
The lack of stock is expected to continue supporting house price growth with a positive reading of 68 per cent of respondents seeing increases during the month.
Going forward, 21 per cent of respondents forecast prices will rise in the near term while 70 per cent expect increases over the next 12 months.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “A property drought is forcing up house prices, and rents, leaving house-hunters and renters out in the cold. The number of properties up for sale continued to fall in September, and the number of appraisals was down too.
“Sellers can’t see anything on the market to buy, so don’t want to sell, creating a vicious circle that is causing a property drought. This is the sixth successive month of fewer properties coming to the market, so house-hunters have nowhere to go, and sales are falling.”
She added: “One agent said that if we continue on this path, we won’t have a sales market at all by the spring. Popular properties are still creating bidding wars, which is pushing prices up, but not at the rate of the peak this spring, and the agents say some of the panic buying has come out of the market.
“It means buyers have the worst of all worlds, because they can’t find a property they want to live in, and if they settle for second-best, they’ll have to pay through the nose for it.”
Natwest increases new business rates; TSB cuts pricing – round-up
The change has eliminated some of the sub-one per cent deals the bank was offering such as the five-year fixed rates at 60 per cent loan to value (LTV) with a £995 fee.
The purchase and remortgage deals are now priced at 1.03 per cent each, up from 0.98 per cent.
The two-year fixed remortgage product at 60 per cent LTV with a £995 fee and £150 cashback now has a rate of 0.93 per cent. The purchase equivalent is now sat at 0.98 per cent.
Rates now vary between 0.93 per cent and 1.48 per cent. Changes will be effective from tomorrow and brokers have until 10.30pm tonight to produce mortgage illustrations for existing deals.
TSB makes rate cuts
TSB has reduced rates on its residential range by up to one per cent.
The headline reduction has been made to its fee-free five-year fixed remortgage product at 75-80 per cent LTV. This now has a rate of 2.24 per cent.
Other significant cuts include the alternative at 60-75 per cent LTV, which has been reduced by 0.8 per cent to 1.64 per cent.
The bank has also withdrawn and repriced its three and five-year fixed mortgages with respective early repayment charges (ERCs) of two and three years. These have fees of £995 and are available for first-time buyers, house purchase and remortgage.
TSB has introduced 10-year fixes with ERCs for the fixed rate term and equivalents with five year ERCs.
The bank has also launched two and five-year fixed shared ownership products for first-time buyers and home buyers at 85-90 per cent LTV. This includes a two-year fixed deal with a rate of 2.79 per cent and a five-year fixed product at 3.34 per cent.
Nearly a fifth of homeowners using savings to pay mortgage pre-summer
The latest English Housing Survey from the Office for National Statistics (ONS) revealed the proportion of homeowners using their savings for mortgage payments was lower than private renters at 29 per cent and social renters at 23 per cent.
While owner occupiers were less likely to dip into their reserves, the figures suggested mortgage arrears had increased on pre-pandemic levels. Some two per cent of mortgagors were in arrears during April and May, higher than the 0.5 per cent proportion before the health crisis.
It was also a rise on the one per cent who were behind on payments in November and December. However, it was lower than the six per cent recorded during June and July last year at a previous survey.
In addition, a tenth of mortgagors reported that they had been finding it difficult to keep up with payments over the last year.
Of those either in arrears or finding it hard to keep up with payments, two-fifths said they had been struggling more since November and December last year. However, this was lower than the 64 per cent who reported it was more difficult to keep up with payments since June and July of that year, when asked in November and December.
Reasons for falling behind or struggling with mortgage payments included being furloughed on reduced pay, working fewer hours or less overtime, unemployment and an increase in other payments.
Looking forward, three per cent of mortgagors said they expected to fall behind with their bills, similar to the four per cent who cited the same in November and December. The vast majority who were up to date with payments expected to continue paying as normal.
Asking for help
Fewer mortgage holders were seeking help during the period, with just six per cent stating they had sought advice regarding mortgage payments.
This was unchanged from November and December, but lower than the 14 per cent who asked for help in June and July.
Some three per cent of households agreed to a payment referral in April and May, down from a tenth in June and July. A further three per cent had spoken to their lender about a deferral but no agreement was made.
A tenth of households reported being behind with at least one household bill in April and May, lower than the 12 per cent saying the same in November and December.
Owner occupiers were less likely to be behind with bills with three per cent of outright owners saying so, and five per cent of those with a mortgage. Some 17 per cent of private renters admitted they were behind on at least one household bill.
Those renting in the private sector were spending 36 per cent of their income on rent in April and May, up from 32 per cent before the pandemic.
Some seven per cent were behind on the rent, unchanged from the previous survey in November and December.
The proportion of private renters saying they were finding it difficult to keep up with rent remained fairly stable on pre-pandemic levels with a quarter replying this was the case.
Prospective homeownership was affected among renters with just 45 per cent saying they expected to buy their own home. This was down from the 59 per cent who expected to be able to do so in 2019-20 and the 49 per cent who planned to do so in June and July last year.
Daniel Wiltshire, actuary and independent financial adviser at Wiltshire Wealth, said: “These findings are concerning enough, but with inflation forecast to rise above four per cent by the end of the year and the cost of borrowing also expected to increase, household finances are set to be squeezed even further. There are sadly tough times ahead.”
Robert Payne, director at Langley House Mortgages, added: “These are concerning statistics that show an unsustainable pattern of financial behaviour amongst some. If these trends carry on then we are heading towards a large number of defaults, which is bad news for everyone.
“It is unclear why this is happening but if it is linked to the impact of Covid-19 then we are potentially only witnessing the tip of the iceberg, with extremely worrying times ahead of us.”
Ease of use beats cost in the hunt for broker technology – Marketwatch
While cost and reputation count for a lot, so does day-to-day functionality.
So this week, Mortgage Solutions is asking: What are your main deciding factors when shopping around for new technology?
Adam Wells, co-founder and director of Lloyd Wells Mortgages
When we were employed at both Which? Mortgage Advisers and a small brokerage in Bristol who were under the Tenet network, we used the Key by Mortgage Brain and we knew the software inside out.
Although it could be clunky at times, it worked. We knew that the client information was correct, we could do multiple applications at one time, the documents were held securely, the client portal was usable and the mortgage illustration it produced was accurate.
When we set up with a new network, we chose another provider. The software was dreadful and resulted in us having to re-key information across several different forms and software, rather than being fully integrated.
We then went with another network and this time, the software they offered was more important to us than when we first set up.
The network allowed us access to a practice version of the software that allowed us to input cases as if it was a real scenario. They also have fantastic video tutorials that you can run alongside to help with any problems.
When we were looking at different options, we wanted it to be easy to use, compliant with our network, and integrated so we weren’t having to input data repeatedly. Cost would have been a concern, but we’re quite happy to spend money if it made sense. We also like the idea of a client portal, although the quality of these can differ.
We also use Criteria Brain, primarily for the Affordability Brain. We were offered a 30-day free trial and it is so useful that we signed up immediately. We also like the ability to compare criteria. Yesterday I was able to check which lenders accepted professional landlords and HMOs with eight bedrooms. Vida to the rescue.
I’m now actively telling friends in the industry that this is a bit of kit that they need.
Darryl Dhoffer, mortgage and protection consultant at The Mortgage Expert
The key with technology is that it must be easy to use and once in place becomes a time saving tool, otherwise people will avoid using it.
Cost is always going to play a large part in the decision making but ultimately it must be of real benefit to the end user.
The next consideration is whether the new technology integrates with other systems we already use. There is pressure in our industry to be technologically advanced to keep up with the online mortgage services that are available. However, there is simply no point in taking on new systems for the sake of it, especially if it means having to key data more than once to achieve the results.
Over the past 18 months or so we have seen a shift in the way in which documentation is sent to us by clients and in the way we are asked to send them to the lender. There is fast becoming a need for a portal to make it easier for the client to provide these documents and this surely must be a consideration when building new technology.
Another consideration is that of the profile of the company providing the technology. In the past we have had many demonstrations of systems that have been built for brokers, but clearly by IT specialists, culminating in an unadaptable system that just doesn’t work.
We would shop around for as long as it takes to find right solution that works for us and benefits our clients.
Mark Pattanshetti, associate director at Largemortgageloans.com
The main system we use is Twenty7Tec, but because of the nature of the deals we do involving clients who make money on the internet a lot of the time they don’t fit.
So, we rely on our own research, spreadsheets, notes, conversations and an internal database. We also work with ex-pats who want a buy-to-let property in London. Putting that into the sourcing system we use, not all the options come up.
If I was a broker who saw more standard clients, then Twenty7Tec would be the system of choice. We also use the Legal and General Mortgage Club’s service where you can contact them, connect with operators who filter through potential options then they email a list of lenders that can help.
We also use Criteria Brain which is very useful.
Those are what I use the most.
However, because I’m familiar with private banks, I can still suggest potential options to clients outside of those systems because they typically aren’t available. Which is a shame as that would be very helpful so someone should come up with that.
We haven’t tested any other systems because of the way our research and compliance is set up.
Ease of use and the speed at which we can obtain information is a main priority when looking for technology, cost is not a problem as long as it works well.