Nationwide caps self-employed mortgages at 85 per cent LTV
The lender is continuing to offer mortgages at 90 per cent LTV for employed first-time buyers.
Underwriting for self-employed borrowers has become “much more complex” because of the Covid crisis, Nationwide said.
The reduction in the maximum LTV brings Nationwide in line with other lenders, the mutual added.
The move is a temporary one and Nationwide said it hopes to be able to relax criteria back in the “near future”.
Deals for people working for themselves have become tougher since the start of the coronavirus as lenders closely scrutinise their future earning potential.
Brokers have said placing self-employed borrowers has become much tougher as lenders ask many more questions and for more detail on companies, such as bank statements.
A Nationwide spokesperson said: “We’re committed to supporting those looking to move home and are currently the largest lender still offering 90 per cent mortgages to first-time buyers without any volume or time restrictions.
“We need to be able to maintain our high levels of service in the face of strong demand generated by the stamp duty holiday. Affordability must be at the forefront of any decision, even more so during these uncertain times. We must lend responsibly.
“As a result, the impact of Covid-19 means that underwriting mortgages for self-employed borrowers is much more complex than before as a result of the difficulties in being able to fully assess long-term affordability in these uncertain times.
“We are therefore temporarily aligning our maximum LTV for self-employed borrowers with other major lenders in the market. As with all lending policies, we will continue to review our approach and hope to relax criteria in the near future.”
Mortgage borrowers face ‘double blow’ of higher rates as choice halves – Defaqto
The average two-year fix at 75 per cent loan to value (LTV) now costs £585 more than it did six months ago, analysis by Defaqto found.
The company said more expensive mortgages was a “worrying trend” with rates up to 2.33 per cent from two per cent six months ago.
At the same time, the total number of mortgage products available has dropped by more than half since January, from 2,477 products down to 1,099.
First-time buyers are the worst hit as not only are mortgages more expensive but there are so few products available to them right now, the firm added.
Katie Brain, insight analyst for banking at Defaqto, said: “Although the Bank of England base rate hasn’t moved since March and there is talk of negative interest rates coming in, this is not the case for mortgages.
“Unfortunately, there is so much demand right now that lenders do not need to offer the incredibly low rates we saw earlier in the year. This could be the beginning of an upward trend in mortgage rates, as we are seeing rates creep up across the board.
“For anyone looking to get a mortgage right now, it is a particularly difficult time as the market is constantly changing with some deals only available for a few days at a time.”
However, Brain added that it was worth remembering that interest rates are still at historically low levels.
“Although rates may have been cheaper a few months ago, they are still much lower than they were two years ago,” she said.
No plan to extend stamp duty holiday – housing minister
With the housing market running red hot at present and many firms operating at reduced capacity due to coronavirus restrictions the time to complete purchases has lengthened significantly, putting many buyers at risk of missing the tax break.
As a result, representatives from across the industry have called for a temporary extension or tapering of the deadline to the stamp duty holiday.
Last week Conveyancing Association director of delivery Beth Rudolf revealed in Mortgage Solutions the trade body had been lobbying government to stagger the deadline and admitted some firms were turning down work to maintain service levels.
However, it appears the government is unlikely to consider such a move.
Pincher confirmed the policy would not change when responding to a written question from Labour MP for Hove and shadow justice minister Peter Kyle, who asked if the cut would be extended past the 31 March deadline.
Pincher (pictured) said: “The temporary increase in the Stamp Duty Land Tax nil rate band was designed to provide an immediate stimulus to the property market, where property transactions fell during the Covid-19 lockdown.
“The government does not plan to extend this relief and will continue to monitor the property market.”
Self-employment biggest reason for failed first-time buyer mortgage applications
This is a big change against pre-lockdown research results in March, said Aldermore Bank, when it was only the ninth most common reason for a rejected application.
As a result, nearly a quarter say they have given up being self-employed to secure a mortgage.
Other top reasons for prospective first-time buyers being turned down for a loan include deposit size at 18 per cent, salary intake with 16 per cent and poor credit history at 15 per cent of applicants.
Aldermore Bank’s index, a survey of 1,000 prospective first-time buyers, reveals many are struggling to secure a mortgage with six in ten saying buying a home feels unachievable at the moment.
Working on credit scores
Nearly a quarter of prospective first-time buyers say credit history is a big concern, with 34 per cent looking to actively improve their credit score to increase their chances of securing a mortgage.
The main barriers were having an overdraft, a gap in employment, student loans and credit card debt.
On a more serious note, eight per cent had taken out a payday loan, seven per cent had an account handled by collection agencies, and four per cent had County Court Judgments (CCJs) on their credit files.
However, prospective first-time buyers were improving their credit with half ensuring they pay bills on time, over a third or 34 per cent actively paying off debt, and nearly one third registering onto the electoral roll.
Other credit rating improvement initiatives include closing unused credit cards, reducing an overdraft and seeking debt advice, according to the report.
The survey revealed a lack of confidence on how to start the approach to homebuying, with two thirds admitting finding the process confusing.
These factors, alongside applying for a mortgage and waiting to see if it will be accepted, made three in four first- time buyers feel the whole process was stressful.
Jon Cooper, head of mortgage distribution at Aldermore said: “A decline for a mortgage can be a deflating experience for those looking to fulfil their dreams of home ownership, but do not despair as options for first-time buyers and the self-employed have broadened over the past decade.
“The growth of specialist lenders, who can handle more complicated applications, have allowed for credit issues to not be as much of a significant barrier to buying a home as it was before.”
Santander increases PT rates and Platform tweaks fee assisted remo
The increases will range between 0.05 per cent and 0.2 per cent and affect selected fixed and tracker residential product transfer rates at all loan to values (LTVs) up to 90 per cent.
Santander did not give details on specific products that will be changed.
In a notice to advisers, the lender said all end dates will roll on by one month to 2 February and the completion deadline will be rolled on by one month to 5 March 2021.
It added that product transfer rates are personalised to each customer and can only be obtained by logging on to the lender’s system.
Meanwhile, Platform has widened the availability of its fees assisted remortgages.
The lender has removed the £500,000 maximum loan limit to qualify for fees assisted remortgages.
The only restriction that will remain in place is the exclusion of unencumbered properties as well as standard LTV restrictions.
Platform also emphasised the importance of obtaining an email address for all customers submitting applications to support its conveyancing process.
Doing so allows the conveyancer to use the Land Registry E-Deed service which will speed up remortgage times and also allow for the online completion of conveyancing applications.
Homes England apologises for Help to Buy delays after stepping in to clear backlog
Multiple new-build broker firms have complained to Mortgage Solutions about delays in receiving an authority to proceed from Help to Buy agent three, which operates in the south of England.
One broker said requests to agent three were taking up to 30 days to process, raising concerns that borrowers who wanted to use the current Help to Buy scheme would run out of time.
Typical service levels for processing an authority to proceed are less than a week. To clear the backlog, builders were asked to bypass agent three and deal with Homes England directly.
Helen Pierson, director of MAB Network Partner, said: “This protracted timescale to receive an authority to proceed has provided an additional layer of challenges when trying to forecast exchange and completion dates.
“It has left purchasers particularly confused when considering, for example, when to give in notice on rental properties, book removals and enrol children into new schools.
“That everyone involved is under immense pressure is well documented. I don’t doubt that errors on reservation and property information forms and solicitor documentation is only adding to Help to Buy Agent delays.
“Perhaps we all need to take a step back and focus on ensuring greater accuracy.”
Since January, a new system of using three Help to Buy agents was implemented to process all applications in England. Agent one covers the north, agent two deals with the Midlands and London and agent three covers the south of the country. Brokers say since the agencies have been consolidated, service levels have suffered.
Homes England said that its southern agent had seen the largest rise in demand for Help to Buy homes since the start of the pandemic, but all three agents have been under pressure to maintain performance levels.
A spokesperson said: “Homes England has been working with [agent three] to ensure that authority to proceed or exchange notices are issued within agreed timelines and to reassure homebuyers.
“Where this hasn’t been possible and the sale is due to complete by the end of October, we have implemented a process for builders to come straight to Homes England so we can process the application quickly.
“We would like to apologise to any homebuyers who have experienced delays and hope your purchase is now on track for completion. If any home buyers are still concerned, they are asked to contact their builder direct.”
Agents one and two are working close to agreed service levels and builders are being asked to follow the usual procedure.
Pierson added: “With many developers approaching critical accounting periods parity of service across the three agents is going to be key to delivery.”
The top 10 biggest mortgage broker stories this week – 23/10/20
There has also been a slew of lender product updates, especially at the higher loan to value (LTV) levels.
At the same, this week’s Marketwatch was in the most read list, which warned some high LTV home movers may have to stay put for the time being
Start by November or risk missing stamp duty savings, homebuyers warned
Reliance launches key worker mortgage range including 90 per cent LTV deal
Santander pulls two-year fixes at 85 per cent LTV and increases rates
High LTV home movers may have to stay put for now – Marketwatch
TSB launches first-time buyer range with lower stress rate
HSBC cuts 85 per cent LTV rates
Clydesdale and Yorkshire Bank add higher LTV products
UK faces ‘unprecedented uncertainty’, Bank of England boss warns
Barclays adds resi and BTL deals up to 75 per cent LTV
Housing transactions return to pre-Covid-19 level – HMRC
FCA rejects pleas to compel closed book lenders to offer trapped borrowers new loans
Instead, the regulator said it was up to lenders to decide whether to implement its initiative that permits intra-group switching.
The FCA originally proposed the change, which will be optional for lenders, in July and having consulted is introducing it immediately without any alterations.
Publishing the feedback to its consultation, the regulator said there was general support for the rule change from respondents.
The FCA said firms and trade associations had emphasised it should remain a commercial decision whether lenders make use of the new rule.
These organisations noted that many eligible borrowers may not meet the risk appetite of the relevant active lender, due to the poor risk profiles of many of these borrowers.
Securitisation agreements would also have an impact, they argued.
However, others asked to make it a mandatory requirement for lenders to use this rule, with one respondent suggesting all customers within a single banking group should be offered the same deals.
Consumer groups also requested a compulsory communications strategy from firms, to ensure that that eligible borrowers would be aware of this rule.
Lending a commercial decision
“We intend to implement these proposals as consulted on,” the FCA said.
“We are aware that lenders’ appetite to make use of this rule change may be influenced by a number of factors, including eligible borrowers’ risk profiles, lenders’ risk appetites and wider market conditions.
“While we hope that firms may choose to make use of this rule change where it is within their risk appetite to do so, it will remain a commercial decision as to whether firms make use of this rule. We cannot force firms to lend.”
The regulator also said it was not appropriate to mandate a communications strategy.
“A mandatory communications strategy would add additional costs for firms. Also, if firms choose to use this rule, many closed book customers in their group may be outside their risk appetite,” it added.
The regulator highlighted that unlike the modified affordability assessment there was no requirement for borrowers to be up‑to‑date with payments to take advantage of the situation. However, it recognised that general industry practice is to not offer borrowers in arrears a new deal but instead provide more tailored support.
BM Solutions launches new mortgage application system
Initially, the system will only be available for new mortgage business, including buy-to-let purchases, let-to-buy and remortgage applications.
Product transfers, further advances and transfer of equity will move to the new system during 2021.
Enhanced features include improved self-service options, built-in document upload, ability to amend applications post submission and alternative lending proposals at decision stage where available.
Intermediaries will be invited to register for the new system as part of a phased roll-out and once online they will be able to use improved case tracking functionality which includes key milestone and valuation notifications, email updates and administrator features to enable keying by admin teams.
Phil Rickards (pictured), head of BM Solutions, said: “We have already made a range of digital enhancements and invested in technology and these latest additions are designed to improve brokers’ experience through the application process with increased functionality based on their feedback.
“We’re as committed as ever to supporting the buy-to-let market and we are working towards expanding the new features early next year.”
Product transfer and further advance applications will continue to be submitted using the current One Minute Mortgage process and transfer of equity transactions will continue to follow the existing application process in the meantime.
TSB launches first-time buyer range with lower stress rate
The range has a follow-on rate of 2.49 per cent above the Bank of England Base Rate, lower than the lender’s current homemover variable rate of 3.59 per cent.
As a result of the lower follow-on tracker rate, first-time buyer applications will be stressed at a lower rate of 5.6 per cent instead of 6.6 per cent.
“This will help more first-time buyers to be able to buy the home they want, while ensuring doing so remains affordable for them over the full life of their mortgage,” TSB said.
The range includes just one two-year fix at up to 60 per cent LTV with a rate of 1.39 per cent and £999 fee.
It includes just one two-year fix at up to 60 per cent LTV with a rate of 1.39 per cent and £999 fee.
However, a full range of five-year and ten-year fixes are available up to 85 per cent LTV.
This includes five-year fee-free products with stepped down rates which progressively reduce during the course of the fixed-term.
A standard five-year fix with £995 fee has a rate of 2.99 per cent.
The step down fee-free version starts in years one at 3.29 per cent, before dropping to 3.19 per cent, 3.09 per cent and then 2.94 for years four and five.
TSB has also updated its house purchase range alongside the move.
The sole two-year fix available at up to 60 per cent LTV is at 1.39 per cent with £995 fee, while five-year and ten-year fixes are available up to 85 per cent LTV.
TSB head of mortgages Nick Smith said: “We know that buying your first home can be difficult and we want to do more to help first-time buyers get on the property ladder.
“That’s why we’re introducing this new suite of mortgage products giving customers money confidence to search for their first home.”