‘Shame on regulators for not solving the mortgage prisoner situation’ – Star Letter 18/10/19
This week’s top comment came from John Azopardi, who reacted to the story: Mortgage prisoners talking directly with lenders to find solutions.
He said: “There must be a way of saying if customers have a satisfactory record of payment for so many months, maybe 12 or 18, then they can afford a mortgage irrespective of their income – particularly if they are paying a rip-off rate.
“This mortgage prisoner situation is a complete injustice. Shame on the lenders who are taking advantage of these circumstances – and shame on the regulators who have failed to come up with a sensible work-around.
More factors driving age up
Kirstie Caneparo also had something to say this week, as she responded to the article: Underwriting must become more flexible to deal with older borrowers – Cleary.
She said: “I agree there is a need for more later life lending, willingness and underwriting capability to look at what older customers can afford based on a realistic projection of how their earned income and retirement/savings income will interact over time.
“The additional driver you didn’t mention for more later life lending is people joining the housing ladder later in life and potentially with a smaller percentage deposit.”
She added: “These factors result in the average age of customers at maturity of mortgages increasing.”
Free right to extend
Lastly, Trevor Barnett replied to the article: Brokers must emphasise overpayments as longer terms become the new normal – analysis.
He said: “In my experience, it is the lenders forcing the longer terms for ‘affordability reasons’ because of having to take into account future interest rate rises.
“The client can often afford the higher payment now and should be paying it. With overpayments, it is only ever an option and in most cases they spend their money elsewhere.”
He continued: “Clients should be motivated to have the shorter term now and if – and when – interest rates do go up, there should be a right to extend the mortgage term then, for no admin fee.”
Top 10 most read mortgage broker stories this week – 18/10/2019
Mortgage prisoners were also of interest, as the campaign group took further steps to solve their situation by engaging directly with lenders.
Wrongdoers were also the talking point this week, as the illegal activities of a solicitor involved in a property sting and some mortgage fraudsters who went on the run were the subjects of some of the most read articles.
How brokers are keeping landlord clients profitable in buy-to-let – analysis
Crazy regulation quirks of buy-to-let need overhauling – Syms
Solicitor struck off for fleecing client in property sting
Liquidation for Kevin McCloud-backed property firms
‘Chunky fee’ a key concern with ‘intriguing’ Habito loan
Mortgage fraudsters on the run handed Brexit reprieve
Mortgage prisoners talking directly with lenders to find solutions
Customer impatience will require mortgage brokers and lenders to co-operate – Trussle
First-time buyer mortgages hit 12-year high in ‘near perfect’ conditions
Brokers ‘unearth’ opportunities during purchase slowdown – analysis
Nationwide ordered to refund up to £2m for PPI breaches
The Competition and Markets Authority (CMA) has also ordered the building society to put in place procedures to ensure that similar problems do not happen again.
As well as these legally binding directions, Nationwide has already repaid more than £100,000 to customers who did not receive reminders and apologised.
This order makes Nationwide the fifth largest provider of PPI in the UK to be issued directions from the regulator.
It most recently took action against Santander and RBS, resulting in the latter having to pay customer refunds of £1.5m.
Nationwide breached the order in two ways. First, by failing to provide reminders to customers over a six-year period, from 2012 to 2017, meaning those affected did not have all the relevant information to help them decide if they wanted to continue paying for PPI.
Second, the building society sent out inaccurate reminders from 2012 to 2019 which contained incorrect information about the yearly cost of insurance, meaning customers may have been misled into thinking their PPI was cheaper than it actually was.
These practices may have stopped people from shopping around, could have meant they did not know they were still paying for PPI or could have encouraged customers to keep or renew their insurance with Nationwide.
‘Nationwide failed customers’
Adam Land, senior director of remedies, business and financial analysis at the CMA, said: “Nationwide has failed its customers by denying them important information, and the directions we’ve issued today will lead to affected customers receiving the refunds they deserve.
“Such breaches are serious and, if we had the extra powers we’ve proposed to the government, could have resulted in fines.”
Sara Bennison, chief marketing officer at Nationwide Building Society, added: “The PPI order requires providers to send customers with PPI an annual review to remind people of the cover they have in place and alert them to the cost, giving them the chance to shop around if required.
“Unfortunately, in these cases the society failed to send out an annual review or sent one with incorrect information.
“The society has rectified the issues and is in the process of providing redress to affected customers. On this occasion we fell below our usual high standards and for this we apologise,” she said.
TMPE to be first sustainable Mortgage Solutions event
It will be the first event hosted by the publication to partner with the SEA.
The publication will reduce the volume of printed material by 75 per cent at TMPE this year, all of which will be printed on 100 per cent recycled paper.
As most delegates drive to the event, Mortgage Solutions will aim to offset the carbon generated by this travel by planting 134 trees in the local areas where each event is held.
The carbon generated equates to approximately 100 tonnes of CO2.
Danielle Moore, director of events at Mortgage Solutions said: “Our goal is to take responsibility for the environmental impact that our events are having.
“Through improving our business practices and working closely on initiatives alongside our business partners we are committed to building a cleaner, healthier and more sustainable events portfolio.”
Venue and dates:
The Mortgage and Protection Event will take place at:
6 November – Etihad Stadium, Manchester
7 November – Cranmore Park, Birmingham
12 November – Allianz Park, London
13 November – St. Mary’s Stadium, Southampton
For more information visit:
Zephyr joins PMS and Sesame panels; Cambridge BS adds exclusive deal with Liquid Expat – round-up
Directly authorised members of PMS and Sesame Network members will now have direct access to Zephyr’s buy-to-let product range.
Speaking to Specialist Lending Solutions earlier this month, Zephyr managing director Paul Fryers, said the lender was ready to begin the second phase of its broker market expansion with more distribution agreements on the horizon.
Commenting on the deal, Fryers added: “In this dynamic buy-to-let market, we aim to support mortgage advisers to help them meet the diverse needs of their customers.
“We are delighted to launch with PMS and Sesame and look forward to working together over the coming months to further this important partnership.”
Stephanie Charman (pictured), specialist lending relationship manager at Sesame and PMS, said: “The buy-to-let landscape continues to evolve in terms of choice and complexity.
“It’s essential for us to ensure we have an extensive lending panel available for mortgage advisers, which comprises both standard and specialist buy-to-let products and criteria.”
Cambridge BS partnership with Liquid Expat
The Cambridge Building Society has announced it will be taking its expat lending proposition to a wider audience, by partnering with Liquid Expat.
Liquid Expat is a specialist expat mortgage service, and The Cambridge said it hoped this partnership would further demonstrate its ongoing commitment to this type of borrower and the private rental market.
Additionally, The Cambridge has launched a three-year discounted rate product at 3.09 per cent, exclusively to Liquid Expat customers.
Kathy Bowes, intermediary manager at The Cambridge, said: “We’re delighted to partner with Liquid Expat who offer expertise in finding expats the most suitable mortgage deal for their circumstances.”
Stuart Marshall, managing director of Liquid Expat Mortgages, added: “We’re very pleased to partner with the Cambridge Building Society on an exclusive basis, and our specialist, qualified mortgage brokers are looking forward to delivering jargon-free, straightforward advice on this new to market expat mortgage product.”
Self-employed safer to lend to than first-time buyers – Kensington
The average self-employed mortgage customer in the UK could have taken out a mortgage 29 per cent larger than the original loan borrowed while the average first-time buyer could borrow only 19 per cent more, research from Kensington Mortgages has shown.
Furthermore, first-time buyers in the South East were borrowing the maximum sums, as house prices remain high relative to incomes.
The Kensington Mortgages Affordability Tracker (KAT) also showed that those who took out a mortgage between March and June were borrowing more than homeowners who took out loans in the first quarter of the year.
KAT models the finances of British homeowners, based on information supplied on successful mortgage applications to banks, building societies and other lenders.
The data captures the sums spent by families on household bills, travel, food, insurance, debt repayments, and all other expenses, to give a granular picture on the true amount of disposable income left at the end of each month.
In the second quarter of 2019, the KAT dropped by 1.5 percentage points to a reading of 30.3 per cent, which indicated the households who took out a new mortgage or refinanced their home in the period had less disposable income each month than the households who took out a mortgage in the previous quarter.
Overall, homeowners were borrowing more in the second quarter of 2019.
When tracking the affordability of the mortgage market, households in the South East commuter belt were borrowing the most, with the average customer only being able to borrow eight per cent more than the initial amount secured.
By contrast, borrowers in the North had the most financial headroom with the average homeowner able to borrow 52 per cent more than the initial sum secured.
Mark Arnold (pictured), chief executive of Kensington Mortgages, said: “What’s interesting is that self-employed borrowers are leaning more towards the cautious side, as they have plenty of scope to borrow more if desired compared to first-time buyers.
“Unsurprisingly though, the North/South divide still exists. Borrowers in the North have the greatest room for affordability while in contrast, higher living and house prices mean those in the South East can only borrow slightly above the original amount.”
Execution-only warning: Only a third of borrowers read mortgage agreement – Trussle
A survey of 2,001 people carried out by adviser firm Trussle also found that 44 per cent of customers did not consider upfront fees when deciding on their next mortgage deal.
Speaking on Mortgage Solutions Television in association with NatWest, Dilpreet Bhagrath (pictured), customer experience manager at Trussle, said due to this the sector needed to be “very careful” with vulnerable customers and those with lower financial literacy when it came to execution-only products.
She said: “When you’re looking at this information in front of you, I think it’s very important that we are careful with execution-only because we don’t want customers to be getting into a deal which isn’t suitable for their circumstances and they may end up paying over the odds.
“When it’s a lot simpler to switch directly with your lender somebody may choose to stay with their lender even if it’s costing them a lot more money. We need to level the playing field before we let customers just go out there.”
Dilpreet Bhagrath, customer experience manager at Trussle
Luke Christodoulides, senior corporate account manager at NatWest
Ken Deegan, chief technical officer at Mortgage Brain
Together and F4B provide £2m re-bridge for historical site in four days
The customer had a short deadline to complete the purchase of a Victorian grade II-listed former malt house, which was built in 1864 and had previously been converted into offices.
His property investment company had a bridging loan in place with a bank but approached master broker Finance 4 Business (F4B) to buy the property when the lender decided to “move the goal posts”.
After reviewing the case, instructing a valuation, and working closely with its legal partners at Priority Law, Together agreed a £2,018,451 re-bridge to pay back the client’s initial lender – and provided the funds in four days.
The investor had already secured planning permission to turn the former office block, and two associated outbuildings on the two-acre site, into 90 one- and two-bedroom flats. These plans are expected to increase the site’s value.
Marc Goldberg (pictured), commercial CEO at Together, said: “We were happy to do this deal when we saw the investor’s plans for this historic site.
“Our partnership with F4B ensured a rapid turnaround and we were happy with the client’s exit strategy; an agreed development facility with another lender further down the line. In all it was a great outcome for us, the broker and their customer.”
Russell Martin, F4B managing director, added: “The client was delighted. He’d initially been skeptical about whether we’d be able to do the bridge so quickly but, having worked with F4B on a number of occasions, he was confident that Together would deliver following our recommendation.”
Octopus Real Estate promotes D’mitri Zaprzala to head of residential
Zaprzala (pictured left) will be responsible for all residential lending across the specialist real estate investor’s business.
His focus will be on improving customer service while creating innovative residential lending products. He will also be responsible for building the sales team and continuing to harness long term relationships with introducers.
Currently, the residential lending business provides residential bridging loans, bridge-to-let loans, refurbishment loans and buy-to-let mortgages.
Zaprzala has been working in property for nearly 20 years and joined Octopus in 2011. His most recent role at Octopus Real Estate was head of sales, a position he held for four years.
Alongside Zaprzala, Dan Murray (pictured right) has been promoted to head of sales.
Murray will be responsible for running a team of business development managers, supporting borrowers in the residential, commercial and development lending sectors across the UK.
He has been head of London sales for the past two years and has extensive experience in property and sales, both at Octopus Real Estate and in previous roles.
Benjamin Davis, CEO of Octopus Real Estate, said: “D’mitri has already made a huge contribution to our business particularly having led our successful Octopus Real Estate sales team over the last few years.
“Residential lending is an important part of our business and the newly created role acknowledges our commitment to this sector.”
Zaprzala added: “Having witnessed the evolution of Octopus Real Estate over the last decade I am looking forward to both the challenges, and opportunities of leading to the residential part of the business.”
Earlier this week, Octopus Real Estate opened an office in Manchester, its first outside of London.
The lending criteria in the North will be tailored to the region and the company will consider loans from £75,000.
Chris Timms, head of sales for the North, at Octopus Real Estate, said: “Having worked closely with our loyal broker network in the North for several years we have listened to what they want from a lender.
“We have responded by opening an office in Manchester to fully support them. This has been something we have wanted to do for several years and it’s exciting that our doors are now officially open.
More than one million adverse credit borrowers could need advice over next year – Pepper
According to Pepper Money’s Adverse Credit Study of 4,163 people in the UK, 15 per cent had experienced credit problems, including missed payments, CCJs, defaults, unsecured arrears and secured arrears, in the last three years.
Of those, 16 per cent said they were planning to purchase a property in the next year, suggesting around 1.26 million people in the UK, a sizeable and potentially lucrative market for mortgage brokers to tap into.
Some 69 per cent of respondents with adverse credit who were looking to get on the property market or remortgage said they were worried about an application being declined however, 95 per cent of those with adverse credit who applied for a mortgage had it approved on the first attempt.
Furthermore, although adverse credit history affected the application process of 50 per cent of respondents, just five per cent had been rejected the first time they applied.
Just 40 per cent of those with adverse credit who were planning to get a mortgage or remortgage in the next 12 months said they would go to a broker for advice.
A further 30 per cent said they would would seek help from family and 28 per cent from friends.
The multiple choice question allowed respondents to select all answers which applied, including going to a bank, to which 44 per cent said they would do, while 36 per cent said they would look for advice online.
When seeking broker support, 49 per cent would research online to find the right adviser while 44 per cent would refer to an existing relationship with a broker.
Some 36 per cent would rely on recommendations from family and friends.
Paul Adams, sales director at Pepper Money, said: “This research shows that the potential adverse credit mortgage market is larger than probably anybody had assumed.
“The good news is that there are plenty of competitive options from lenders, where decisions are made by underwriters who will take a pragmatic view of the customer’s previous circumstances and future ability to maintain payments on a mortgage.”
He added: “The not so good news is that many of these potential borrowers are writing off their own chance of getting a mortgage before they even speak to a broker.
“Our research proves that we all need to work harder to spread the message that previous credit problems do not have to mean future mortgage problems and professional advice can help people to find the right mortgage for their requirements.”