Third of furloughed workers turn to remortgaging
That is according to new research from Canada Life looking at how currently furloughed workers have supported their finances throughout the pandemic.
Its study found that 34 per cent have considered their remortgaging options in order to keep their finances afloat, though this was a particularly popular move for younger workers with 49 per cent of those aged under 35 adopting this route. By contrast just five per cent of those aged over 55 considered remortgaging.
Taking a break from mortgage repayments was also common among homeowners, with over a third having taken or considered taking a mortgage holiday.
However, making use of the equity held in a property is far from the most common measure employed by furloughed workers. Credit cards were the first choice for almost half, followed by 42 per cent who borrowed money from friends or family and the 41 per cent who took out a loan.
Alice Watson, head of marketing insurance at Canada Life, noted that while the furlough scheme had provided much-needed support to millions, those with fragile finances had had to look to other sources to boost their bank balance.
She continued: “As we navigate through the pandemic, it is likely many people will feel additional financial strain as the furlough scheme draws to close this month.
“Property wealth is playing an increasingly important role in financial plans. Anyone considering accessing their property wealth should speak to a financial adviser, whether that be remortgaging or equity release.”
Leeds BS launches green buy-to-let mortgages up to 80 per cent LTV
The launch also marks the mutual’s re-entry into the 80 per cent loan-to-value (LTV) tier for landlords, up from 75 per cent LTV. It has also raised the maximum LTV from 70 to 75 per cent for first time landlords.
The products are available to properties with energy performance rates of A to C, offers a free valuation and comes with a £999 fee. The options at 75 per cent LTV offer £500 cashback on completion.
The range includes a two-year fixed rate mortgage up to 75 per cent LTV priced at 1.62 per cent and a five-year fixed rate alternative with a rate of 2.06 per cent.
At 80 per cent LTV, the corresponding options have rates of 2.99 per cent and 3.15 per cent respectively.
Matt Bartle (pictured), director of products at Leeds Building Society, said: “We’re always looking for more ways to share our knowledge and support our borrowers as they look to reduce their environmental impact.
“By offering the society’s first green buy-to-let products and increasing the maximum LTV on our buy-to-let lending up to 80 per cent LTV, we’re ensuring we continue to create products that widen choice and respond to the needs of borrowers.”
Last month, Leeds Building Society launched green mortgages for residential borrowers and signed up to the Green Finance Institute’s home finance principles.
Emma Harvey, programme director at the Green Finance Institute, added: “Housing is responsible for 14 per cent of the UK’s total emissions, therefore it is vital that homeowners and landlords can access the advice, tools and finance needed to decarbonise their portfolios.
“We welcome today’s announcement by Leeds Building Society to offer green mortgages to buy-to-let customers, which align with our green home finance principles, and will support investment flows towards net-zero homes across the UK.”
Nationwide cuts rates for first-time buyers and homemovers
Rates on first-time buyer deals are being chopped by up to 0.10 per cent across two‒ and three-year fixed rates, available up to 75 per cent, 80 per cent and 95 per cent loan-to-value. For example, the new range includes a two-year fixed rate at 95 per cent LTV at 2.89 per cent, with a £999 fee.
For homemovers, rates across two‒ and three-year deals have been reduced by up to 0.16 per cent, while reductions of up to 0.12 per cent on two‒ and three-year fixed remortgage deals are also taking place. As a result the remortgage range now includes a two-year fixed rate at 80 per cent LTV at 1.47 per cent with a £999 fee.
In addition, Nationwide is revamping its shared equity range, with rates dropping by up to 0.35 percentage points on two‒ and five-year fixed rates between 60 and 80 per cent LTV. Rates now start at 1.09 per cent for two-year deals and 1.24 per cent for five-year fixed rates.
The mutual has also announced rate cuts of up to 0.17 per cent on selected further advance, family deposit mortgage and switcher rates between 60 per cent and 95 per cent LTV.
Henry Jordan (pictured), director of mortgages at Nationwide, emphasised that the lender regularly reviews its rates to ensure it remains one of the most competitive around for all types of borrowers.
He continued: “These latest cuts and the introduction of market-leading rates on our shared equity range show we are doing all we can to support people as they look at all the options available to get into a home of their own.”
Coadjute creates first UK cryptocurrency for mortgage transactions
A stablecoin is a digital currency tied to reserve assets, such as traditional currency. Coadjute’s stablecoin will be linked to the Pound sterling.
It has been developed in partnership with blockchain technology company R3.
Dan Salmons, chief executive of Coadjute said the idea came about when the firm noticed the process of completing on a property transaction had not been innovated in decades.
He said: “That process where you’re sitting in the removals van waiting for the estate agent to give you the keys but he can’t because he hasn’t heard from the conveyancer yet, she’s on the phone and everybody’s waiting on a Friday afternoon is caused by the fact there is no infrastructure that connects all the different parties that need to move money.”
Salmons said the current method was also vulnerable to fraud.
“It’s a very insecure process that’s a burden on conveyancers, inefficient for the banks and is horrible for the buyer and seller. No-one benefits,” he added.
How it works
Digital currencies can be programmed for various uses. As Coadjute’s stablecoin has been designed to only be used for property transactions, it cannot be misappropriated for another purpose.
When the buyer or seller is ready, their funds are locked into their respective traditional bank accounts. Coadjute then issues stablecoins representing the money onto its ledger, a system which records transactions. The stablecoins are moved around and allocated to the necessary people ahead of the completion date.
The money is not released until the day of completion. When it is released, the money is converted back into traditional currency.
Salmons said this could speed up the transactions by not relying on bank transfers which can be slow and subject to working hours.
The system also allows for the parties involved to be certified. Only approved bank accounts can be used during the transaction, minimising the risk of funds being transferred to fraudulent or incorrect accounts.
“You can use blockchain to hide someone’s identity which is what happens with Bitcoin or you can use it to absolutely guarantee someone’s identity, which is what we do with Coadjute.
“Every party is a verified person and they really are who they say they are, any movement is happening between verified people,” Salmons said.
Additionally, each person can transfer their money over as early as they wish meaning funds can be ready ahead of time.
Salmons said: “Because the work can be done in the days and weeks leading up to it, there will be much less hassle, inconvenience and time.
“It will make the process of completion quick, efficient and secure – it is none of those three things today.”
John Reynolds, COO of Coadjute, added: “If you think about what a mortgage offer is, it’s a commitment to pay. It’s legally binding. At the point of offer, if we issue tokens onto the ledger, it’s a commitment that they can be redeemed for cash.”
Simplifying the process
Reynolds added that the stablecoin and Coadjute platform could simplify property transactions going forward.
He added: “The mortgage process is complex but the complexity comes from the need to use multiple systems.”
Coadjute will enable conveyancers, solicitors and lenders to use its system to provide a “joined up view” of the transaction. It allows each party to see how much money other parties have requested as well as who may still be waiting for payment.
The platform also provides a secure internal form of communication where parties can engage with each other, removing the reliance on email which can be prone to interception and fraud.
Salmons said he hoped that eventually the platform would be able to involve the buyer and seller to simplify the process further.
Reynolds said it would also reduce the risk faced by professionals.
He said: “The cost of all the payments that get pushed around is unnecessary.
“Professional indemnity for conveyancers has gone through the roof and a big chunk of that is attributable to the movement of cash.”
Coadjute will launch a sandbox for the digital currency in November where lenders, solicitors and conveyancers will trial the system. Respective compliance and risk teams will be able to understand and assess the process during this time.
Salmons said: “We anticipate coming out of that process at the end of the year with a view on the right way to do it.”
If all goes to plan, the stablecoin network will be piloted next year.
Reynolds said: “I think it’s enormously exciting. The completions process is beyond archaic. The way the process works with consumers pushing the money around is completely unnecessary.”
Salmons added: “Sometimes people find it hard to imagine that processes that have been terrible for a long time can ever be changed. We do not believe this should still be the same in 50 years’ time.”
House price growth in tourist hotspots pricing out young and low paid ‒ ONS
It noted that house prices in some rural and coastal areas rocketed by three times the national rate in the year to July. For example, Conwy in North Wales has seen prices jump by 25 per cent over the past year, while North Devon prices have risen 22.5 per cent. House prices in Richmondshire in the Yorkshire Dales have grown by 21.4 per cent over the same period.
By contrast, the seven areas which have seen house prices fall were all found within London.
The ONS said that there was some evidence of people house-hunting in rural areas, ahead of cities, because of a change in their circumstances brought on by the pandemic, including the ability to work remotely. However, it added that there had already been a trend of people increasingly moving from urban to rural areas in recent years.
The report also highlighted that people who work in these tourist hotspots tend to earn less on average than the people who live there. It cited the example of the Cotswolds, where residents earn an average of 28.7 per cent more than those who are employed in the area.
The ONS added that in tourist hotspots, workers tend to earn less than residents because of the types of jobs in these areas, which are often centred around hospitality. Not only do hospitality workers tend to earn less on average, but it is a sector that was hit particularly hard by the pandemic, with hospitality workers the most likely to be furloughed.
Locals can’t afford to stay
Sarah Coles, personal finance analyst at Hargreaves Lansdown, noted that this situation isn’t just difficult for families who can no longer afford to live in their hometown, but for the businesses whose employees are forced to leave town.
She added: “The ONS found this time last year that 29 per cent of people wanted to work from home at least part of the time in future, and 12 per cent of them considered relocating as a result.
“We can’t be sure all this enthusiasm for homeworking has endured, as some people have become increasingly fed up after staring at the same four walls for another year, but there are still significant numbers ready for a change. It means buyers are flocking to the seaside and the countryside, and locals looking for a home of their own increasingly can’t afford to stay.”
Optimum appoints Caroline Mirakian ahead of Pepper Money integration
She joins from Pepper Money, where she has worked as head of national accounts since 2019. Her previous experience also includes roles at Barclays, RBS, Lloyds Bank and Shawbrook Bank, where she was head of intermediary distribution.
Optimum Credit currently only offers second charge mortgages. The distribution and sale of these will be under the responsibility of Mirakian.
Under the integration, the Optimum Credit brand will be retired and its operations will continue under the Pepper Money brand. Pepper Money purchased Optimum Credit in 2018.
Pepper Money has said it wants to invest in its second charge business and recently announced plans to expand its second charge business development team.
Paul Adams, sales director at Pepper Money, will continue to oversee the first charge sales team.
Simon Mules, commercial director at Optimum Credit, said: “Caroline has extensive experience in intermediary mortgages and second charge lending and I’d like to congratulate her on this new role, which forms an important part of our plans at Optimum.
“We have said previously that our aim is to operate the leading second charge lender under the Pepper Money umbrella. We are currently working towards this milestone and will make a further announcement as soon as we are able.”
Mirakian (pictured) added: “I’m really excited about this new role and the potential we have at Pepper Money to grow our business by improving the lives of our intermediary partners and, ultimately, our customers.”
Fastest summer market in five years ‒ Zoopla
That’s according to the latest house price index from property portal Zoopla, which found that the average time between listing a property and agreeing a sale continues to remain under 30 days, as it has since May. The firm noted that usually at this time of year, the time to sell would have risen to above 40 days.
In addition, Zoopla pointed to buyer demand being 35 per cent higher than average levels recorded over the previous five years.
This heightened demand is continuing to push up house prices too, with Zoopla recording an average price of £235,000, the highest on record. Prices have now increased by £44 per day over the last six months, up from the £30 daily rise recorded in the preceding six months.
Looking at a regional level, Wales is seeing the highest rate of price growth at 9.8 per cent in the year to August, followed by Northern Ireland at 8.4 per cent and the North West of England at eight per cent.
In terms of cites, Liverpool continues to lead the way with prices up 9.8 per cent over the last year, ahead of Manchester on 8.1 per cent and Sheffield at 7.6 per cent. By contrast, London’s house price growth was recorded at just 2.2 per cent.
While the ongoing impact of the stamp duty holiday on house prices is open to debate, there’s no question it has boosted the Treasury’s coffers, with stamp duty receipts in July hitting almost £7bn, a new record.
Gráinne Gilmore, head of research at Zoopla, said that it was clear the ending of the stamp duty holiday had had little impact on buyer demand, with buyers still striving for properties that provide more space or allow for lifestyle changes.
She continued: “Balancing this however, will be the end of government support for the economy via furlough, and more challenging economic conditions overall, which we believe will have an impact on market sentiment as we move through Q4.
“We expect the market to remain busy compared to historical norms, and for price growth to remain in firmly positive territory at the end of the year, although lower than current levels of 6.1 per cent.”
Mortgage Advice Bureau reports record revenue as advisers hit 1800 – interim results
Brodnicki said: “Despite the Government-imposed restrictions and national lockdown that lasted for much of the first half, housing market activity was fueled by strong consumer demand following the re-opening of the housing market last year as well as the stamp duty holiday.”
He added that the group achieved record levels of mortgage applications and completions per adviser during the period to June.
MAB advisers achieved gross mortgage completions of £11bn in H1 2021 against £7.5bn in 2020 and £9.6bn in new mortgage lending against £6.4bn the previous year. Product transfers also rose from £1.1bn to £1.4bn.
Across the market, UK gross new mortgage lending activity (excluding product transfers) in H1 2021 rose by 58 per cent to £169.9bn compared to H1 2020, which was heavily affected by the closure of the housing market in Q2 2020, and by 34 per cent compared to H1 2019.
The only mortgage advice company listed on the Alternative Investment Market (Aim) said its market share of new mortgage lending represented six per cent of the UK market in H1.
Brodnicki said: “The increase in home-mover activity was particularly pronounced, largely driven by changing working and living patterns. The 30 June 2021 stamp duty holiday deadline in England, Wales and Northern Ireland generated record completion activity levels in June 2021.”
Mortgage adviser numbers rose seven per cent to 1,694 to the 30 June 2021, but reached 1,800 after the first half period on 24 September.
The average number of mainstream advisers rose 13 per cent to 1,584 with revenue earned by each adviser up 28 per cent.
Brodnicki added: “We achieved seven per cent growth in adviser numbers despite the delay in recruitment pipeline conversion due to the UK lockdown and restrictions for much of H1. We expect to see a significant increase in adviser numbers in H2 and moving into 2022.”
The firm also reported acquisition of a 49 per cent stake in specialist new build broker Evolve FS.
MAB signed a raft of lead generation deals in H1 targeting technology helping first-time buyers acquire new homes. The firm invested in and signed a strategic lead generation deal with Boomin, a ‘next generation property portal’, which matches property buyers with targeted streets and promises the most ‘accurate online valuation’ ever
MAB is planning to provide mortgage services across various parts of the Boomin portal, with the opportunity to engage and nurture passive consumers in a meaningful way as they move to becoming active buyers.
It also reported ‘significant progress’ with its commercial deals securing early customer capture with The Nottingham Building Society’s Beehive Money app, an online saving portal and Moneybox, a consumer-facing personal finance management website and signed a long-term agreement with Moneysupermarket this week.
Brodnicki said: “I am confident the recent developments in lead generation and continued enhancements to our technology platform put MAB in an ever-stronger position to accelerate the pace of its growth.”
He added: “As customers adapt their ways of researching and buying mortgage products and services, MAB intends to be at the forefront of this change and increasingly drive a meaningful flow of quality leads through AR firms, thereby ensuring both their and the group’s future growth and success.”
Housing market to slow after summer growth peak – Hamptons
As we move into Autumn and winter, price growth is expected to slow, ending the year at 4.5 per cent across Great Britain, according to the report.
A second wave of lockdown-induced demand will keep price growth in positive territory at 3.5 per cent in 2022, three per cent in 2023 and 2.5 per cent in 2024.
London is set to underperform the rest of the country until the house price cycle ends in 2024. Hampton’s forecast is for prices in the capital to end the year up 1.5 per cent and then rise by 1.0 per cent in 2022, 1.5 per cent in 2023, before accelerating to 3.0 per cent in 2024.
The North East will be the top performer over the next four years. House prices are expected to rise 21.5 per cent in Q4 2024, outpacing the Great Britain average of 13.5 per cent.
A record-breaking first half of the year
More homes will have sold in 2021 than in any year since 2007. Hamptons forecast 1.5m completions in Great Britain in 2021.
COVID induced changes mean households will make more moves than pre-pandemic times. Hamptons forecasts that transactions will fall marginally to 1.25m in 2022 before reaching a new normal of 1.3m in 2023 and 2024.
The rapid pace of rental growth will slow. We expect rents in Great Britain to end the year up three per cent, before slowing to 2.5 per cent in 2022 as affordability bites.
By the end of 2024 rents are expected to have risen by 10 per cent, led by Southern regions. Meanwhile, London will lag until growth accelerates in 2024.
Aneisha Beveridge (pictured) head of research at Hamptons, said: “Back in the autumn of 2020, such were the economic challenges being faced that we could not have envisaged the extraordinary demand for relocation which we have seen this year. There has been a huge attitudinal change towards property, which cannot be attributed to the stamp duty holiday alone.
“People now place a higher value on their homes, having have spent more time in them than ever before. Flexible and remote working, which look set to continue, have encouraged households to make bigger moves. As a result, more homes are likely to have been sold in 2021 than in any year since 2007. This is why we also think housing activity will surpass pre-pandemic times in 2022 and beyond.
The report states: “The pandemic has accelerated the closing of the house price gap between London and the rest of the country. Even so, we still expect London to underperform the rest of the country until 2024, when the cycle is likely to end.
“While we will see a degree of levelling up over the next few years, the gap between house prices in the capital and the other regions is likely to be wider than that seen at the end of the previous cycle in 2007. And this divergence will set the pattern for future performance.”
IFA offering mortgage advice banned for falsifying tax returns
The Financial Conduct Authority (FCA) said Anthony George, director, owner and sole approved person of 4Life Financial Planning, was not a “fit and proper person” and his conduct lacked “honesty and integrity”.
George mainly advised on insurance and pensions and only carried out a small proportion of mortgage business.
The regulator found that between the relevant period of 14 January 2015 and 15 May 2019, George understated the income in his self assessment tax returns for a five-year period.
He also provided the FCA with false information during a compelled interview, which is where the regulator uses its statutory powers to call on someone who is either a suspect of a regulatory investigation or a witness from the sector.
During the referred to period, George did not tell the accountancy firm which prepared and submitted his tax returns about his additional income outside of his work with 4Life. He received cash-in-hand takings from two of his businesses, a hair salon and DJ business and also earned rental income from a room he let out.
George also hired a separate accountancy firm to prepare an alternative version of his tax returns which included all his sources of income for the financial years 2013/2014 to 2015/2016.
He then submitted the lower returns to HMRC so he could pay less tax, but used the higher income tax returns for his mortgage application to obtain a loan of £630,000.
The income stated in his mortgage application was £367,757 more than the income he declared to the HMRC over the same three-year period. He also used the lower income to claim working tax credits.
During the tax years 2013/2014 and 2014/2015, George stated that he earned £40,360 from the DJ business before it appeared to cease in April 2016. He declared earnings of £53,404 from the hair salon during the tax years 2015/2016, 2016/2017 and 2017/2018. With a rental income of £647 a month which increased to £700 in June 2017, George declared an income of £32,713 throughout the tax years 2013/2014 to 2017/2018 for the room he let out.
The FCA withdrew his approval to perform senior management functions at 4Life.
The regulator said: “The Authority considers that in deliberately submitting false information to HMRC and misleading the Authority, George has demonstrated that he lacks honesty and integrity.”