Top 10 most read mortgage broker stories this week – 10/07/2020
The biggest news for the mortgage industry was the stamp duty holiday, which will run until 31 March 2021 on purchases up to £500,000.
The opportunity for landlords as a result of the changes was the most read story this week, but some experts suggested the tax break wasn’t the right solution for the market.
Aside from the statement, Accord and Halifax changes grabbed reader attention, as well as a solicitor who has been struck for his part in a number of mortgage frauds.
Landlords have ‘huge opportunity’ to expand portfolios as stamp duty bills halved by chancellor
Homeowners to receive £5,000 vouchers for green renovations
Stamp duty holiday in Sunak’s plans for economic recovery
Stamp duty holiday confirmed including BTL and second homes
Stamp duty holiday won’t ‘fix’ property market, say experts
Brokers see instant demand as stamp duty cut rescues high LTV borrowers
Solicitor struck off after being jailed for aiding mortgage frauds
Halifax makes changes to income and affordability criteria
Accord halts 90 per cent LTV as lenders say expect ‘patchy’ provision for months
HSBC error sent bounce back loans out in wrong name
Oxford Economics: Stamp duty holidays are rarely effective
In the research firm’s weekly newsletter, Goodwin said: “We are sceptical this will deliver much additional housing market activity, with much of the tax cut likely to be capitalised into the value of the housing stock, pushing up prices.”
This week, chancellor Rishi Sunak announced the stamp duty threshold would be increased from £125,000 to £500,000 until March next year. This is expected to create an average saving of £4,500 for buyers and see nine out of ten forgo the tax completely.
The bulletin referred to Oxford Economic’s research in 2017, which followed the then-chancellor Philip Hammond’s move to provide relief for first-time buyers on property purchases up to £300,000. This concluded that as the burden of a tax holiday would fall on the seller, house prices would be pushed up by an average of 0.4 per cent.
As for other measures announced in this week’s Summer Statement, Goodwin said there were “major question marks” over the effectiveness of them and said it was hard to see how it would have a “material impact” on the growth outlook.
Other initiatives included a Job Retention Bonus and £5,000 voucher for homeowners to make environmentally friendly renovations to their home.
West Brom BS revises mortgages and rates
Changes include the removal of the fee-free two year fixed at 60 per cent LTV with a rate of 1.59 per cent. This has been replaced with an equivalent product with a rate of 1.62 per cent.
The £999 fee version of the three-year fixed at 60 per cent LTV has been replaced with a product with a rate of 1.49 per cent, an increase of 0.15 per cent compared to the previous offering.
Among the 75 per cent LTV tier, the fee-free two-year fixed has been switched with a deal which has a rate of 1.79 per cent, down from 1.84 per cent.
The £999 fee option now has a rate of 1.25 per cent, down from the 1.44 per cent product the mutual offered before.
Applications which have completed a decision in principle for withdrawn products will be processed until 16 July.
Labour calls for landlords to be excluded from £1.3bn stamp duty cut
In an open letter to housing minister Robert Jenrick, the party has said the tax cut is worth £1.3bn to property investors.
The cash could fund the gap in local councils’ finances, Labour argued.
In the summer statement this week, Sunak axed stamp duty on homes worth up to £500,000 for all buyers until 31 March 2021.
Second homebuyers are still subject to the three per cent stamp duty surcharge.
In 2019/20 more than a third of homes bought were second properties, according to Labour.
Shadow housing minister Thangam Debbonaire said: “It is unacceptable that the chancellor tried to sneak out this huge bung to second homeowners and landlords while millions of people are desperate for support.
“He should be targeting support to those who need it, not helping people invest in buy-to-let properties and holiday homes.
“An unnecessary subsidy for second home-owners will only worsen the housing crisis by reducing the supply of homes overall.
“We need a credible plan from Tory ministers to build the homes our country needs and get people on to the housing ladder. We didn’t see that this week.”
A Treasury spokesperson said: “The housing market has been hit hard by the outbreak with 175,000 missing sales – so we are doing everything we can to get the country moving again.
“Our cut in stamp duty will help drive growth and support jobs across the housebuilding and property sectors.
“Those buying second homes or buy-to-let properties will continue to pay an additional three per cent on top of the standard SDLT rates.”
Further house price falls predicted as Scotland values dip – IHS Markit
Scotland was the only area of the UK to see a house price fall over the last year and the nation also saw prices drop on a quarterly basis by more than four per cent.
According to the national data, prices slipped by 0.9 per cent in the second quarter compared to the previous three months – the sharpest fall recorded since the first quarter of 2009 at the height of the global financial crisis.
Despite the fall on the quarterly measure, prices were still up by 2.6 per cent compared to the same period a year earlier.
At the regional level, all English regions and Wales registered higher prices compared to a year ago. The strongest inflation was seen in the North West, where prices were reported to have risen by five per cent on the year, followed by Wales and then the East and West Midlands.
Relatively subdued gains were seen in southern England, but Greater London recorded an increase of 2.8 per cent, its best gain in over three years.
However, prices were little changed since the first quarter peak in London and were noticeably lower in Eastern England and the South East.
But the performance in Scotland was in stark contrast to England and Wales.
Further falls most likely
Paul Smith, economics director at IHS Markit warned it was tough not to expect a further fall in prices.
He noted the second quarter had seen opposing forces acting on the housing market, with the return of on hold transactions and listings for houses for sale remaining low, the release of residual demand from earlier in the year was currently providing crucial market support.
“However, there are signs of growing uncertainty among buyers as worries mount over the effect on incomes and employment from the Covid-19 economic shock,” he said.
“As the macroeconomic landscape in the UK becomes clearer in the coming months, especially with regards the impact of the pandemic on the labour market, it’s hard to look past the downward risks to prices over the medium-term.
“While low mortgage costs, quantitative easing by the Bank of England, and government measures to lessen the impact of Covid-19 should soften the blow, on balance further price falls seem most likely in the second half of the year,” he added.
Five winners revealed from The Buy to Let Online Forum prize draw
The winners were among the almost 1,000 people who registered for the online conference and exhibition which focused on the changing world of the buy-to-let market.
Presentations included Richard Rowntree, managing director of mortgages at Paragon, with his observations on how landlords and the buy-to-let market can weather the pandemic.
Landbay managing director Paul Brett discussed how to diversify a property investment strategy, while Hampshire Trust Bank managing director of specialist mortgages Charles McDowell talked about how to maximise buy-to-let yields.
Other talks came from Dynamo chief executive Ying Tan, Kensington Mortgages new business director Craig McKinlay, Aldermore, national sales manager for intermediary mortgage distribution Matt McCullough, and BVA BDRC director of financial and business Mark Long.
A panel debate between Phil Rickards, head of BM Solutions and Adrian Moloney, group sales director at OneSavings Bank, closed out the event.
The five winners are:
- Robert Denton, Regentia
- Brian Roberts, Malbon Townsend
- Keval Nagaria, KN Mortgage Management
- Sonja Roosten, Indigo Mortgage and Financial Services
- Hugh Dokter, Cavalier Financial Solutions
The AE3Media team will be in touch to let you know how to claim your prize.
The content from the forum is still available to view. Please contact firstname.lastname@example.org to get access.
For more information visit: https://www.mortgagesolutions.co.uk/events/buy-let-online-forum/?pfat=e103e0bc86d148eda1d842290bcf0d33
Third of people plan to work from home after lockdown – Halifax
Many people who want to permanently do their job from home say environmental concerns are one of the biggest reasons.
The pandemic has acted as a green wake-up call, found research by Halifax, as many expected to never return to ‘normal’.
Four in 10 surveyed by the bank said lockdown had made them more aware of climate change.
More than half said they were hopeful the world could make real changes to tackle environmental issues.
Younger people are more likely to feel this way, with three quarters reporting lockdown has helped them reduce their impact on the environment.
Eight out of 10 people believe working from home is a good solution to reducing emissions.
However, half of adults reported an increase in their energy usage.
The lender said making green home improvements was one way to keep energy usage lower at home – and added this could spark a wave of new efficient homes.
Halifax mortgage director Andy Mason said: “It’s clear that for many going back to business as usual isn’t going to be an option and instead they will continue to spend more time at home, believing it to be better for the environment.
“However, without taking steps to ensure homes are as efficient as they can be, these good intentions could be clouded by rising energy usage and monthly bills – at a time when many are concerned about their financial security as well as the planet.
“We know how much of a concern the environmental and financial impact of energy efficiency is for home owners and renters alike, which is why we welcome the announcement which highlights the benefits of making homes more energy efficient and will offer practical support for homeowners to make more positive changes.”
Openwork appoints Richard Houghton as CFO
He has more than 30 years’ experience in senior positions across the insurance and banking industry including CFO, chief operating officer and non-executive director roles.
Houghton began his career at Deloitte before moving on to the Royal Bank of Scotland Group, where he worked for nine years. He has also worked at Aspen Insurance Holdings, RSA Insurance Group and Co-operative Insurance.
Philip Howell, chief executive at Openwork, said: “We are delighted that Richard has elected to be our CFO for the long term. Since joining us in February, he has been instrumental in guiding the company and our partner firms successfully through the Covid-19 crisis.
“We will undoubtedly benefit from his extensive financial services as we take Openwork into a new era.”
Houghton added: “Since joining I have been immensely impressed with Openwork, which is an exciting business with a clear aspiration to grow and innovate.
“I look forward to building on the work of the last four months to support its ongoing expansion and development.”
BTL2020: BTL remains attractive investment despite challenging climate
Landlord sentiment around capital gains, rental yields, the UK private rental sector as a whole and their own lettings businesses have all returned to above or close to levels recorded at the end of last year, after falling sharply in Q1.
Only feelings about the UK financial market have remained depressed.
Mark Long, director of financial and business at BVA BDRC, told the Buy to Let Online Forum its research found landlords’ main concerns were missed or unpaid rents, void periods and the ability to manage portfolios.
“Landlords confidence crashed [with the introduction of the lockdown] but there are early signs of recovery,” he said.
“More than half [of landlords] experienced rent problems or unanticipated void issues but landlords are helping where they can.
“One in five applied for a mortgage holiday and a similar proportion intend to do so in the future.”
For half of those who took one, the payment holiday was critical to their business continuity and Long noted there was “quite a lot of compromise to make things work for both parties”.
Around half of landlords approved rent deferments, while more than a fifth had agreed to rent reductions of more than 20 per cent.
There was positive news, with 28 per cent of landlords planning to remortgage this year – a figure unchanged from the end of last year, with most of these being portfolio and limited company investors.
However, Covid-19 debts will cast a shadow over next 12-24 months influencing market activity and future policy decisions.
Reasons to be cheerful
In his talk, Reasons to be cheerful, Craig McKinlay, new business director at Kensington, said brokers and landlords had lots of reasons to feel positive including the performance of buy to let compared to other asset classes, falling product rates and increased opportunities to advise to different segments of the market.
Presenting to property professionals at The Buy to Let Online Forum, McKinlay used an example of a £150,000 investment into shares listed on the FTSE All Share Index between 1995 and 2019.
Over that time, the investment would have grown by 67 per cent. If the same amount of money was used to be an unencumbered buy to let property, between those years, the property would be worth £325,000, an uplift of 116 per cent.
Landlords who used a mortgage to buy the property, which requires them to put less of their own money into the purchase, would see an even greater increase in their initial investment. “This is what we call leveraged investment,” said McKinlay. “And it also shows you the advantage of buy to let over shares.”
McKinlay also highlighted the expansion of several sub sectors within buy to let that created plenty of opportunities for brokers to grow their business. The numbers of older and younger landlords were increasing, he said during his talk, and products to serve both demographics were on the rise.
Falling rates, said McKinlay, were also another reason to be cheerful.
“Rates are still low and have fallen further since Covid as lenders look for solid low risk business,” he said.
“Although landlords have increasing costs in some way, more taxes for instance, and more regulation, the cost of having a mortgage has reduced. That has allowed landlords to maintain their profitability over the last few years.”
In the live chat, McKinlay hinted that Kensington would be announcing cuts to its rates shortly, following the announcement it had recently finalised a securitisation.
Registration is now open for brokers who would like to access presentations and content from the Buy to Let Online Forum 2020 which took place yesterday.
Email email@example.com to request access.
FCA calls on brokers to help mortgage prisoners
The FCA is asking for advisers who have whole of market access and are able to advise on or refer to later life options and debt consolidation to apply to be on its list.
In February, Mortgage Solutions reported that the FCA was considering the best way to make such a list available to mortgage prisoners.
UK Finance asked the regulator to co-ordinate a list of brokers to work specifically with mortgage prisoners, and the FCA is now curating this group.
No pre-app fees
Advisers and secondary intermediaries must not charge a fee before an application is submitted and they will need to share relevant data with the regulator.
When referring for later life or debt consolidation options, secondary advisers must have access to options that represent the whole of the relevant markets.
The list will allow lenders to see which advisers need to be updated with any changes which could benefit mortgage prisoners. However borrowers will also be able to approach advisers who are not listed.
The regulator’s research in January estimated that of the 250,000 borrowers with mortgages in closed books or held by unregulated entities, 170,000 would be able to switch mortgages following changes to affordability assessment.
However, only 14,000 of those were expected to be able to make a meaningful saving by moving onto a new rate.
Mortgage administrators are required to contact mortgage prisoners who are eligible to switch by 1 December 2020.
Possible options available to mortgage prisoners include products which have the modified affordability assessment, debt consolidation and existing deals with relaxed criteria.
For older interest-only borrowers, alternatives include equity release, retirement interest-only and mortgages into later life.
Interest-only remortgaging with a repayment strategy including sale of the property, part capital, part interest-only or repayment mortgages for interest-only customers are also possible switching options.
To help monitor outcomes for mortgage prisoners, the FCA is asking participating advisers to collect data on the number of inbound calls from borrowers who have received information on the changes to affordability assessment and the number of cases where a fact find is completed.
Advisers must also record how many applications are sent to lenders on behalf of mortgage prisoners as well as the number of applications which are completed.
Information on how many mortgage prisoners were signposted onto other solutions such as debt advice must also be noted.
Directly authorised firms and the authorised principal firms of appointed representative (AR) networks can apply for the scheme.