Top 10 most read mortgage broker stories this week – 15/02/2019
This was followed by Twenty7Tec showcasing a raft of software partnership agreements with mortgage lenders and distributors targeting automated data flow, while brokers were also warned to beware of losing lead generation sources as new players and online advice models enter the market.
The Irish government’s first-time buyer mortgage scheme running into difficulties after 12 months broke into the top five, as well as research about the housing market failing first-time buyers.
‘Shocked and angry’ mortgage broker complains to regulator over Habito TV ad – exclusive
Lenders publish time to Mortgage Apply go-live; Connells confirms shareholding in Twenty7Tec
Brokers warned beware of losing client leads through online advice – NatWest
Irish government first-time buyer mortgage scheme in peril after one year
Housing market failing first-timers but broker share expected to grow – IMLA
‘Underhand’ free legal conveyancers adding on unnecessary charges – JLM
AMI fears ‘commission bias’ is driving lenders to offer cheaper product transfer rates
Lynda Blackwell on mortgage market competition: ‘Break the surface and things don’t seem so rosy’
Brodnicki: Removing broker commission fees in Oz will stifle innovation, restrict choice and hurt regulation
Overseas stamp duty surcharge ‘should not act as a barrier’ – HM Treasury
Savills: Average £73k profit for home buyers in last 15 years
They represented 55 per cent of all sellers in the market last year, according to the Savills research.
Of those who sold in 2018, one in five sellers had owned their property for five years or less and they made an average of £52,622 profit.
The research revealed that more than one in three had owned their property for ten years or less making an average profit of £67,496. Over half had owned their property for 15 years or less, making an average profit of £73,127.
More people bought in 2014 than in any other year, making an average profit of £57,874 and accounted for 5.6% of the market.
However, those who bought immediately prior to the credit crunch only made an average of £2,653 more than the 2014 cohort – despite buying seven years earlier.
People who bought in 2017 made only an average profit of £36,195.
North vs south
Those increasing profits were heavily driven by London and the surrounding commuter zone.
Whereas almost 40 per cent of sellers moved within ten years of purchase in the South East, in London it is closer to 35 per cent. A smaller percentage of sellers had moved within five years of purchase in London than in the South East.
Around 40 per cent of people who bought within the last 15 years made more than £100,000 across London and the South, with that reaching 70 per cent of people in the capital itself.
In the North of England that was just six per cent.
Similarly, there was a sharp divide in the number of people who made a loss when selling last year.
Just 4 per cent of vendors across London and the South who bought within the last 15 years made a loss by selling in 2018.
That grew to 19 per cent across the North of England and soared to 31 per cent in the North East.
In Middlesbrough, for example, the average profit was just £1,687, while in Kensingston and Chelsea the average profit was £576,187.
Outside London, the biggest gains were made in St Albans where the profit was £198,733.
Five-year forecasts for prime rental values across London
Savills also released its prime London rentals index which found early signs of rental values in London’s prime residential markets bottoming out as the annual rate of falls was at its slowest since the June 2016 Brexit vote.
Rents have fallen by an average 9.6 per cent across the capital’s prime markets since the referendum, but falls slowed to just 0.8 per cent in 2018, according to the firm’s index.
Savills forecasts that rents will rise by an average of 11.5 per cent over the next five years, and by 12.6 per cent across the prime commuter zone.
In London, falls have been concentrated in the high value prime central postcodes where rents have fallen by 16.5 per cent since the referendum, slipping a further 3.2 per cent in the past year.
Rents in lower value outer prime London markets are down an average 6.4 per cent in total in the same period, but stabilised by rising 0.2% in 2018.
Price sensitivity in the market is a major factor, with cheaper properties significantly outperforming more expensive ones, the estate agent found.
Properties renting for up to £500 per week have seen five-year price growth of 6.6 per cent, compared to 19.5 per cent falls for those at over £3,000 per week.
Secure Trust Bank to stop taking mortgage applications next week
Brokers will have until 5pm on 19 February to submit any decisions in principle and 5pm on 21 February to submit a full mortgage application, a statement on its website confirmed.
Applications must reach offer stage on or before 31 March.
“Any application not at offer stage at 5pm on 31 March will be cancelled, but regular updates will be provided throughout the process,” the lender said.
“We will look to lend on your application as normal and will contact you to confirm deadlines to submit documentation where required,” it added.
Extensions in exceptional circumstances
STB said extension requests would be considered “in exceptional circumstances on a case-by-case basis”, such as to allow for the completion of a chain or for delays in newly constructed properties.
For customers who have already paid a fee but may not be able to complete within the timescales, the lender said they should get in touch and try to assist them.
However, it added: “If we cannot, we will be happy to fully refund any valuation fees paid, provided the valuation has not been undertaken.”
Secure Trust Bank spent two years in the market after entering in March 2017, but last month announced it was consulting on a proposal to end its mortgage lending.
In its last interim report, published in August, Secure Trust said it had completed £37.3m total lending from its launch in 2017 to the end of June 2018, with £21.3m in the first six months of 2018.
Explaining the decision, the bank said: “The current economic climate, increased competition and continued uncertainties in the wider housing market have put the mortgage industry under huge pressure.
“These market pressures show no sign of abating, with competition intensifying as evidenced by increasing loan to value metrics and lower new lending margins.
“Having considered all of these factors, we have ceased origination of new mortgage lending until conditions become more favourable.”
It added that activities of other businesses within the Secure Trust Bank Group, including Commercial Finance and Real Estate Finance are unaffected.
High LTV market ‘staging a comeback’
The high Loan to Value (LTV) market appears to be buoyant at the moment, with new data from Defaqto released this week revealing that the rates charged on 95 per cent deals have dropped to record lows.
A year ago the average rate on two-year fixed rate high LTV deals came to 3.98 per cent, but it has since dropped to 3.46 per cent, while falls have also taken place on fixed deals over other terms.
There has also been an increase in both the number of lenders offering these deals, and the number of high LTV products to choose from.
These small deposit borrowers have also been pinpointed as the driver behind the jump in mortgage approvals by e.surv, accounting for 27 per cent of approvals in January, up from 25 per cent in December.
Richard Sexton, director at the firm, suggested first-time buyers were becoming “the new battleground” for lenders.
Filling the buy-to-let hole
Mark Dyason, founder of Edinburgh Mortgage Advice, said that he was delighted by the current state of the high LTV market, noting that there is currently far more flexibility on underwriting, meaning fewer ‘computer says no’ rejections.
Dyason pointed to the likes of Aldermore and building societies as being particularly good at providing that flexibility.
“All in all we feel this helps support the first-time buyers who are now filling the hole created by a drop in buy-to-let demand, or even buying the former buy-to-let properties now being marketed,” he added.
Working up the risk curve
Andrew Montlake, director at Coreco, (picturedsaid that it appeared that the first-time buyer sector had been “staging a comeback” over the past couple of months, noting that the combination of low interest rates and the greater availability of property due to buy-to-let changes had enticed buyers who had previously put their search on hold.
He added that competition among lenders had been so intense that they had worked up the risk curve to “where they can charge slightly higher rates and follow where the buyers are”.
“There has also been a welcome dose of innovation in this space, with lenders such as Barclays, Halifax and Bank of Ireland taking advantage of the ‘bank of mum and dad’ who want to hold on to their savings rather than simply give them to their kids.
“Family guarantee mortgages have been developed that fill a much needed gap and allow a borrower access to better rates and higher LTVs,” he concluded.
Time for more innovation
Dilpreet Bhagrath, mortgage expert at Trussle, noted that Virgin Money, Barclays, Halifax and Skipton all had competitive deals at 95 per cent LTV, with Skipton also offering cashback on one of its deals.
She suggested that lenders should expand their risk assessment criteria to include things like rental payment history so that more borrowers could take advantage of these deals and get onto the property ladder.
“We’d like to see greater product innovation take place, such as flexibility in over payments which will help those with smaller deposits gradually build more equity in their property, especially as these customers are at greater risk of negative equity,” she added.
Shaun Church, director at Private Finance, argued that there was room for innovation on income multiples.
He said: “We’ve already seen lenders such as Clydesdale increase their lending criteria to 5.5x income for newly qualified professionals, which will hugely benefit prospective buyers with smaller deposits. The more lenders are able to relax their lending criteria for suitable borrowers, the more first-time-buyers will benefit.”
Steve Carruthers joins Iress to replace retired Woodcock
Carruthers replaces Henry Woodcock following his retirement last year.
His appointment will support Iress’s existing capability and expertise, it said, supporting growth ambitions and increasing demand for IRESS’ mortgage technology in the UK and other markets.
The technology firm said: “We continue to see change across the entire mortgage value chain, with lenders (of all shapes and sizes) investing in technology to improve processes for intermediaries and consumers as well as internal users.
“We are seeing the market shift away from stand-alone systems to a more connected and automated mortgage ecosystem. Greater integration between lenders, intermediaries and other third parties will increase efficiency enabling the market to serve more people, reduce risk, remove friction and provide better outcomes for consumers.”
Carruthers has 30 years of banking experience after intermediary jobs at Aldermore, RBS and Ulster Bank.
Carruthers said: “Lenders and distributors alike are increasingly turning to technology to strip out manual processes, provide greater transparency across the mortgage value chain and make the end to end mortgage application journey more engaging and rewarding.
“With more than one in four mortgages being processed through Iress technology, I saw a real opportunity to drive much needed change and make a valuable contribution to the mortgage sector. IRESS has the knowledge, experience, industry relationships, products and services to make a really positive difference and I wanted to be an integral part of this transformational capability.”
Paul Thornton, executive general manager, lending said: “We’re thrilled to have someone of Steve’s calibre on board. He is a recognised thought leader and has built up a huge amount of relevant experience working with lenders and distributors.”
He continued: “He’s naturally aware of the challenges both parties face, and the opportunities available by working collaboratively. He’s going to be a great asset to IRESS as we continue to work with the industry to drive change that benefits all participants and consumers.”
RBS mortgage lending slips to £30.4bn as competitive market bites
However, the bank, which includes the NatWest and Ulster Bank brands, increased its personal and business banking (PBB) mortgage lending by £1.5bn over the last year.
In a sign that the competitive market was beginning to bite, its 2018 net interest margin of 1.98% was down by 15 basis points compared with 2017.
RBS acknowledged that it had “maintained a prudent approach to risk and pricing in a very competitive market”.
The lender has also focused on its digital capability with 61% of mortgage switching done digitally, compared with 51% in 2017.
Sales increasingly online
PBB now has 6.4 million regular mobile app users, 16% higher than 2017, with 72% of active current account customers being regular digital users, RBS reported.
Total digital sales increased by 19% representing 45% of all sales – four years ago this figure would have been 26%, it added.
It’s AI chat bot, launched in partnership with IBM Watson, now handles an average of 83,000 queries a week and has been rolled out to commercial banking.
And the lender is piloting Bó and Mettle as two standalone digital banks.
Bó is a digital personal bank targeted at helping people to manage their money better, while Mettle is a digital bank for business customers.
Pre-tax profit up
Overall, pre-tax profit was up to £3.36bn from £2.24bn in 2017, and almost £1bn in dividends was returned to HM Treasury which still owns 62.4% of the bank.
Speaking to BBC’s Today programme, RBS chief executive Ross McEwan refused to confirm or deny reports that Treasury representatives had been responsible for making decisions within its GRG arm which has faced legal action for its mis-treatment of customers.
Mortgage Advice Bureau celebrates bronze at learning awards
Bedlow has headed up Mortgage Advice Bureau’s learning and development team for six years and won the award for demonstrating ‘exceptional performance and contribution to the learning profession.’
He picked up his award in front of 450 professionals at a ceremony at the Dorchester, Park Lane, hosted by TV star Claudia Winkleman and live streamed around the world.
MAB said the finalists in the awards are shortlisted from entries from across the globe and represent the highest achieving individuals and organisations in this field.
Tesco, Hugo Boss, IBM, Coca Cola and Santander were among the other names recognised at the awards.
Bedlow said: “I was delighted to make the shortlist for this award, but to win Bronze in a field of learning and development (L&D) professionals who are all at the top of their game was incredible. It’s fantastic to see the focus we put on delivering impactful L&D here at Mortgage Advice Bureau recognised in this way and to know that we are not only amongst the best in the UK, but amongst the best in the world.”
MAB is still the only mortgage intermediary to have floated on the London Stock Exchange, having joined the Alternative Investment Market (AIM) in November 2014.
Two-year mortgage rates stand at 2.5% – Moneyfacts
The average two-year fixed rate mortgage has just slightly dropped compared to last month, according to the latest figures released by Moneyfacts.
In the last five business days, the average two-year mortgage rates remained steady.
However, rates have increased by up to 0.13% from February last year, standing at 2.36% at its lowest level.
The two-year fixed rate hit its highest level in August 2018, at 2.55%.
A spokesperson from Moneyfacts told Mortgage Solutions that the mortgage market has experienced some fresh fixed rate reductions over the past week.
“Prominent brands are competing in the market, including Tesco Bank and TSB who now offer newly priced fixed rates, including those for borrowers with just a 5% deposit.
“Yorkshire Building Society also cut the rate on its two-year fixed deal by 0.07%, which is now priced at 1.46% for house purchase customers who wish to borrow at 65% loan-to-value. It will no doubt turn the heads of borrowers looking for a competitive rate alongside a decent incentive package, which includes a free valuation and £250 cashback.
“It is clear to see that the mortgage market is striving to entice new borrowers with these latest deals, so it’s worthwhile for borrowers to take advantage if they can. As with any deal, it is important borrowers weigh up all the costs involved, and seek advice if they need help.”
The Bank of England maintained the base rate at 0.75% in November, after last raising it from 0.5% in August 2018.
Brokers warned beware of losing client leads through online advice – NatWest
With mortgage technology continuing to advance it is even more important for brokers to maintain a strong relationship with their customers, NatWest has urged.
Speaking on Mortgage Solutions Television in association with NatWest, senior corporate account manager David Toulson argued technological progress would continue whether brokers thought it was a good or bad thing.
And he noted technology and the implementation of artificial intelligence would have an impact, particularly on the remortgage market.
“It’ll be those who embrace this as an enhancement of the service being offered who will see the biggest benefit from it,” he said.
“One thing to watch for is the new entrants coming in to the market, such as Podium from Moneysupermarket, where customers have traditionally used them to search for a deal and then referred to the broker market.
“But they aim to change behaviour and act as an onsite mortgage broker and there is an impact there in terms of the lead source,” he warned.
Toulson continued by highlighting that the stronger the relationship the broker has with the client the better.
“The more touch points and engagements that they have throughout the relationship I believe the better the chance brokers have of keeping customers and that customers keep coming back to them,” he added.
House prices limp to weakest growth since 2013
Scotland, Wales and Northern Ireland all actually saw house price growth strengthen compared to 2017, yet the poor performance of the English market served to drag the overall rate down. For example, growth in Scotland rose from 2.9 per cent to 4.6 per cent, Wales saw price growth increase from 4.3 per cent to 4.8 per cent, and Northern Ireland enjoyed a growth rise from 3.8 per cent to 4.6 per cent.
In contrast, English house price growth slumped from 4.8 per cent in 2017 to just 3 per cent in 2018.
This weakening level of growth was seen most keenly in the south and east of England, while prices in London actually dropped outright on a year-on-year basis.
The best performing local authorities
When broken down to a local authority level, some of the strongest annual growth was seen in Forest of Dean (11 per cent), Newport (10.5 per cent) and Torfean (9.4 per cent). The Land Registry suggested this may be down to the abolition of tolls on the Severn Bridge, making it more affordable for those who work in Bristol to live on the other side of the river.
West Dunbartonshire saw the strongest growth north of the border, which the Registry argued is likely down to the area’s direct trains to both Edinburgh and Glasgow.
The worst performing local authorities
At the other end of the spectrum, the worst-performing local authority table is dominated by London boroughs. The City of London for example saw annual growth of -7.1 per cent, Hammersmith and Fulham of -3.8 per cent, Wandsworth -3.3 per cent and Tower Hamlets -3.1 per cent.
The Land Registry suggested the slowdown seen in the London market over the last couple of years is likely down to a combination of the area being disproportionately affected by various regulatory and tax changes, as well as lower net migration from the European Union following the Brexit vote.
The City of Aberdeen is the only non-London local authority in the bottom five, with annual growth of -3.5 per cent.