‘Industry statistics do not reflect the reality of business’ – Marketwatch
So this week, Mortgage Solutions is asking: How important are industry statistics in your understanding of the overall market?
Adam Wells, co-founder of Lloyd Wells Mortgages
We regularly keep an eye on the industry news and between fellow co-founder Pete Lloyd and I, we will discuss anything that stands out. That being said, the importance of them is quite low.
We are always pushing ourselves to be the best we can be and the news at the minute is that purchases have dried up, but there was a busy remortgaging period in April.
We are still completing applications on purchases and remortgages, residential and buy-to-let. Maybe as a relatively young business in a strong Bristol market, we haven’t been impacted in the same way as the large brokerages who might be based in the South East.
We find that the industry statistics don’t always reflect how our business is performing. We see many brokerages who deal with new–build homes, equity release, or buy-to-lets that have been severely impacted.
As we haven’t concentrated on one niche, we have been able to adapt and focus on the clients that are looking for help during this difficult time.
When it comes to data, we trust some more than others and tend to concentrate on the sources we know. Be that from Halifax or L&G for example. If the information is being reported from a reputable source, we are also more likely to read it.
The pause in house price indexes is less of an issue for us as we don’t use it for our own forecasting.
Our outlook will remain the same regardless. We know what our targets are and what we need to do to achieve them.
I’m sure most businesses are being realistic about this year and have already got their plans in place to make it a success.
James McGregor, director of Mesa Financial
I take industry stats with a huge pinch of salt.
It seems every lender has their own stats on property prices and the market which usually supports their own business interests.
A lot of the time they are well away from the reality of the larger economic data that is being released.
I would say the only two pieces of data you can rely on when looking at the property market is the actual sold prices and how many transactions have been completed.
This gives a gauge on valuations as well as how liquid the market is.
Luckily our outlook on business is nothing to do with any data that is released.
We can only work on things that we can control, so I do not believe there will be much impact on our business at all given the lack of data and pauses on house price indexes.
Mesa Financial is all about looking after our clients and we will continue to do this through the good and bad times.
Akhil Mair, managing director of Our Mortgage Broker
To be honest it is not really something I pay much attention to because various sources conflict one another when it comes to the house price index (HPI) index, number of sales, average sale times and so on.
They do not often reflect how business is going for me. In the last 12 weeks I have seen and managed to support more clients than in the previous 12 weeks.
Our business continues to grow because of our strong client relationship and professional introducers.
I don’t really trust or rely on any particular sources as I try to stay clear of data. I find it manipulated or find the source has an agenda.
I tend to work with my introducers, clients and lenders and best support them with real time and live information.
The lack of data has not influenced my outlook on this year. I strongly believe every property has a buyer and every vendor can achieve a sale.
The key is to work with the right partners to understand the motives and create a win–win.
The UK is lacking in new homes being built and borrowing is at the cheapest it has ever been; therefore, I strongly believe there will be a pent-up demand for the remainder of 2020 and in 2021.
PRA tells banks to use valuations from last six months for capital rules
The PRA made this statement in response to questions it said it received from firms relating to requirements in the Capital Requirements Regulation (CRR) for property valuations for residential and commercial real estate exposures.
The Office for National Statistics and Reallymoving are among some of the analysts which have said house price data will be suspended due to a lack of data.
In its house price index for April, Rightmove said the data was “not meaningful” as the housing market was experiencing a pause in activity.
For existing mortgage exposures, the regulator said firms should continue to monitor the value of properties but where this is not possible, a valuation should be deferred until an updated one can be carried out.
The PRA also said banks could continue desktop valuations and drive-by valuations where appropriate.
The guidance applies to all firms which adhere to the CRR and the PRA said it would keep this under review.
Top 10 most read mortgage broker stories this week – 29/05/2020
Lenders continued to make changes to offerings amid the industry working to get back to a sense of normality and elsewhere, brokers were warned of scam emails from fraudsters posing as the Financial Conduct Authority.
Furlough scheme changes expected this week as 8.4m claim
Nationwide cuts rates as Accord increases maximum loan limits – round-up
Brokers unfurlough advisers as mortgage market activity jumps
Mortgage holiday extensions should impact credit rating – Nationwide boss
Bailey reveals negative interest rates being considered to help recovery
Brokers warned over FCA scam emails
Housing market return ‘very quickly’ turned into mortgage applications – Lloyds Banking Group
Leeds BS resumes 85 per cent LTV lending
Mortgage holidays cost borrowers average £665
Nationwide lending and profits fall sharply as coronavirus and competition hit
Majority of brokers confident about mortgage market outlook – IMLA
However, this is significantly lower than the 96 per cent of brokers who said they felt confident about the industry’s future in January and February.
IMLA’s Mortgage Market Tracker questioned 300 brokers in the first quarter of the year, taking into account the boom seen in early 2020 following the General Election result and market changes related to Covid-19.
Despite the drop in wider market confidence, when it comes to their own business 85 per cent of brokers feel positive. However, this is down from the 96 per cent who said the same in February.
For those who felt confident about the future of the industry and their business, they cited the quality of business, preparation and mitigation and a stable long-term outlook as reasons for their positivity.
A slowdown in business, the physical lockdown and staff shortages were reasons given from those who did not feel optimistic.
According to the survey, the amount of pipeline activity converting from offer to completion dropped to 73 per cent in March from 85 per cent in January, likely a result of the restrictions placed on the housing market during that month.
On average, intermediaries completed 22 decisions in principles (DIPs) in the month of March, slightly down from February’s average of 29 but higher than January’s 22.
DIPs that resulted in a full application only fell slightly to an average of 80 per cent in March from 82 per cent in the previous two months. This was only a slight fall from the 84 per cent of DIPs resulting in a full application in March last year.
Some 84 per cent of full applications converted to an offer in March, compared to 89 per cent last year. This was a dip from 90 per cent of applications resulting in offers in January and 86 per cent in February.
Kate Davies (pictured), executive director of IMLA, said: “It’s no real surprise that the coronavirus lockdown and effective closure of the purchase market led to a decline in intermediary confidence in March. And the market’s future remains highly uncertain in the short-term.
“However, 2020 started on an optimistic note and there is every reason to believe the mortgage market will return to strength in the long-term.”
“There are homeowners still looking to move and first-timers hoping to buy. The pent-up demand we saw earlier this year could return and lead to a surge in business when life begins to settle post-lockdown,” Davies added.
Kensington relaunches Help to Buy and BTL purchases; NatWest increases PT rates
Kensington returns to new build
Kensington Mortgages is relaunching its new build and Help to Buy ranges from next week
It will also resume buy-to-let purchase applications.
Mortgage Solutions understands the lender is introducing a raft of changes to its offering on June 3.
Furthermore, the lender will launch 80 per cent LTV mortgages within its select, core, hero and young professional ranges as it continues to reintroduce its range following the coronavirus disruption.
Earlier this month, the lender brought its lending back up to 75 per cent LTV following a temporary restriction on lending above 70 per cent LTV.
NatWest PT changes
NatWest has increased rates on its residential two- and five-year fixed switcher products for existing customers by as much as 46 basis points (bps), effective from today.
Its two-year fixed rate fee-free switcher product at 80 per cent loan to value (LTV) has seen a 0.07 per cent rate increase to 2.89 per cent, while the £955 fee equivalent has risen by 0.18 per cent to 1.70 per cent.
The 85 per cent two-year fixed switcher with a £995 product fee has increased by 28bps to 1.96 per cent and the fee-free option has seen a 0.7 per cent rise to 2.98 per cent.
At 90 per cent LTV, the fee-free two-year fixed switcher has seen its rate increased by 0.13 per cent to 3.08 per cent and the equivalent with a £995 fee has risen by 0.46 per cent to 2.26 per cent.
Among the five-year fixed rate switcher products, the fee-free 80 per cent LTV offering has increased by 0.07 per cent to 3.17 per cent. The version with a £995 fee has risen by 23bps to 2.11 per cent.
At 85 per cent LTV, the rate for the deal with a £995 fee has gone up by 40bps to 2.47 per cent and the 90 per cent LTV equivalent has increased by 0.36 per cent to 2.71 per cent.
Principality reintroduces JBSP; Gatehouse ups max FTV – round-up
This follows the bank’s decision to reduce its maximum FTV to 65 per cent on 1 April, due to difficulties around physical valuations during the lockdown.
FTV is the Shariah-compliant equivalent of loan to value (LTV) for conventional mortgages.
The maximum FTV for homes in multiple occupancy and multi-unit freehold blocks is 70 per cent. Maximum property values for buy to let have been increased to £5m and £2.5m for house purchases in England.
Any applications submitted before the lockdown in March for finance between 65 per cent and 75 per cent FTV will be processed, and the bank is accepting new applications to the 75 per cent FTV.
Roger Evans (pictured), director of home finance distribution at Gatehouse Bank, said: “We are pleased to be able to offer 75 per cent FTV products at competitive rates for UK, expat and international customers.
“We have seen considerable demand from these specialist markets since launching our initial home finance proposition in 2018.”
Principality brings back JBSP offering
Principality Building Society has reintroduced its Joint Borrower Sole Proprietor (JBSP) mortgage offering which allows parents, stepparents and grandparents to help their child or grandchild with affordability.
Up to four applicants can be accepted on the mortgage and there is no required minimum income for the application. Relatives also do not need to be on the title deeds and jointly owning the property.
The JBSP mortgage is available for purchases through both brokers and direct, and includes a two-year fixed at 2.06 per cent and five–year fixed at 2.08 per cent, both at 80 per cent loan-to-value.
Helen Lewis, national account manager at Principality Building Society, said: “It’s a challenging time for first–time buyers not only with rising house prices but current uncertainty in the housing market due to coronavirus.
“This product offers additional support for new borrowers to overcome affordability issues and ensure they can get on the ladder as soon as possible.”
OMS secures DIP integration with United Trust Bank
OMS users will now gain access to UTB’s products through a two-way integration which allows brokers and networks to generate a decision in principle (DIP), without rekeying data.
The second phase will see access widened to packagers.
This follows the platform’s recent announcement to offer free access to Knowledge Bank with every OMS license, the development of an API integration with the Iress Lender Connect software and its partnership with Uinsure.
Neal Jannels (pictured), managing director of One Mortgage System (OMS), said: “It’s important for us to partner with lenders who have technology at the heart of their offering and this stage one integration will pave the way for more brokers and networks to access UTB’s comprehensive product range and bespoke service standards.”
Buster Tolfree, commercial director of mortgages at United Trust Bank, added: “At UTB we have made real efforts over the last two years to introduce technology to speed up the application and underwriting process for our introducers.
“Integrating with OMS is an important step forward given they too have emerged as one of the premier broker CRM and processing platforms over recent years.
“Through API integration we now make it easier for all those users of OMS to select a UTB product for their customers, and to then process that application,” he added.
Housing Secretary admits unlawfully approving former Tory donor’s development
Richard Desmond, businessman and owner of development firm Northern & Shell, avoided paying up to £50m under revisions made to the council’s Community Infrastructure Levy (CIL) when the project was approved on 14 January.
The site was formerly owned by Westferry Printworks which used to print The Daily Telegraph and the Daily Express, papers once owned by Desmond.
Government planning inspectors also advised Jenrick against approving the project to build 1,524 homes as they said they said the borough needed more affordable housing.
In March, Tower Hamlets council took legal action against the decision, claiming it had been “influenced by a desire to help the developer to avoid a financial liability”.
The council asked the government to produce documents relating to the deal but instead, Jenrick’s legal team released a statement saying the minister accepted the decision was unlawful.
Jenrick also denied any bias was shown to Desmond who donated £10,000 to the Conservatives in 2017.
Tower Hamlets has since had the decision to build the development overturned.
The council’s mayor, John Biggs, said: “We may never know what emails and memos the secretary of state received before making his decision and what influence they had, but his reluctance to disclose them speaks volumes.
“In siding with the developer, he went against not only the planning inspector but also the council’s Strategic Development Committee and the residents whose lives would be directly impacted by this scheme.”
He added: “I am grateful to our legal team for their work on this case and for successfully holding the government to account.
“We will continue to press for a scheme that meets the needs of the community on the Isle of Dogs in terms of height and density, the provision of adequate affordable housing and infrastructure delivery.”
Bailey reveals negative interest rates being considered to help recovery
Writing for the Guardian, Andrew Bailey said: “In view of the risks we face, it is of course right that we consider what further options, such as cutting interest rates into unprecedented territory, might be available in the future.”
However, Bailey added that the bank would likely turn to quantitative easing to support the economy as he warned the risks attached to negative rates would need to be “considered carefully”.
The current Bank Base Rate is 0.1 per cent, after the central bank made two surprise cuts at the start of the coronavirus crisis.
Since then comments have circulated about whether the bank would consider the unprecedented step of cutting its main rate into negative territory to aid any economic recovery.
‘Longer and harder recovery’
Bailey also warned the economy could face a tougher rebound from the pandemic than expected. He wrote: “The risks are undoubtedly on the downside for a longer and harder recovery.”
He said there was reason to believe the economy could bounce back quicker than past recessions, but that would depend on how measures were eased, consumer caution and how much long-term damage there is to the economy.
“We have seen some uptick in road travel since social distancing measures were eased earlier this month. Most other indicators remain at subdued levels – most likely because it is too soon to expect to see any meaningful impact,” Bailey said.
“However, it is also possible that the pace at which activity recovers will be limited by continued caution among households and businesses even as official social distancing measures are relaxed.”
Nationwide cuts rates as Accord increases maximum loan limits – round-up
Nationwide is reducing rates on selected two-, three-, five- and ten-year fixed rate switcher mortgage products, and two-year tracker mortgages, by up to 0.25 per cent from 28 May.
The society will also be reducing rates on products with a £1,499 fee and its later life mortgage products by up to 0.40 per cent.
For remortgages with a £1,499 fee, all products have had rates reduced by 0.05 per cent. The two-year fixed up to 60 per cent loan to value (LTV) now has a rate of 1.14 per cent and the five-year fixed up to 60 per cent LTV has a rate of 1.34 per cent.
The two-year tracker remortgage with a £1,499 fee up to 60 per cent LTV has also had its rate reduced by 0.05 per cent to 1.24 per cent.
Product switches from 60-90 per cent LTV have also seen rate cuts by as much as 0.25 per cent, as have two-year trackers from 60-85 per cent LTV.
Within its later life offering, Nationwide’s two-, three-, and ten-year fixes have all had rates reduced by 0.40 per cent.
Nationwide director of mortgages Henry Jordan (pictured) said: “While the housing market slowly begins to open up again, the mortgage market continues to remain as competitive as ever.
“Although many borrowers continue to like the security of fixing their mortgage repayments, we know there are some who want to take advantage of these historic low interest rates by going for a tracker mortgage.
“These reductions demonstrate our commitment to offering competitive rates on both fixed and trackers across a range of LTVs, ensuring we support borrowers no matter how much deposit they have.”
Accord lifts property value limits
Accord Mortgages has removed all property value restrictions and returned its maximum loan size to £5m for residential and £1m for buy-to-let applications.
A lending limit was put in place at the end of March, in response to limitations around physical valuations due to the Covid-19 pandemic.
With changes effective from 29 May, the lender is also increasing the maximum loan size for 90 per cent LTV products to £600,000.
Accord has also cut rates on products at 75-85 per cent LTV.
These include a two-year fixed purchase product at 1.64 per cent, down from 1.71 per cent, at 75 per cent LTV. The product comes with a £995 fee, £500 cashback and free valuation.
Jeremy Duncombe, director of intermediary distribution at Accord Mortgages, said: “Being able to remove the property value restrictions and increase our maximum loan size is the latest in a series of changes we have made to get back to our pre-Covid criteria wherever possible.
“Following last week’s successful launch back into the 90 per cent LTV market we are also pleased to expand this range by re-introducing loans available up to £600,000.
“We first launched this offering back in November last year and had a very positive response from brokers, so it’s great to be able to meet the demand for these products once again.”