Now is the winter of our discontent
Made glorious summer by this funds for lending;
And all the clouds that low’r’d upon our house
In the deep bosom of the ocean buried.
Many quote this when expressing displeasure, but Bigus Dickus (Richard III) spoke it with satisfaction and content. Peace fell upon England after a long civil war between the Royal Family of York and the Royal Family of Lancaster (that’s the end of today’s history lesson…class dismissed).
I’m happy with the state of the market at present. I would also suggest many mortgage brokers over the UK are, based on the strength of how busy we all seem to be at present. Peace, it would seem, exists between broker and lender.
The New Year has started very much where 2012 left off, with a host of market commentators asking if the Funding For Lending Scheme is working. I’d like to point out that we still have a year of this scheme to run, so it is a little early to evaluate, but I’d urge everyone to look at its merits before berating it as a failure.
We will be better served to cast judgement on its success in January 2014, but lets make no bones about it, the availability of cheap funding to lenders has given brokers some fantastic products. Whilst there is concern that these savings have not filtered through as significantly as expected to the smaller businesses, it is early days.
Like Usain Bolt out of the blocks, Clydesdale have launched the new year with great innovation and logic by launching the 80% pure interest only deal, reverting to repayment after three years. Whilst the affordability is based on repayment, having this option to go interest only is great innovation by the lender and shows logical underwriting others could well learn from. I love it.
It is innovation and logical lending that we have been crying out for since “interest only” was first labeled taboo in the industry. Clydesdale, we salute you! When backed up with their underwriting capabilities, they are going to prove strong contenders for “Lender of the Year” in 2013 in my opinion. I say this not just because of the brilliance they showed on a case of mine over Xmas (it did help though), but after hearing non stop praise regarding them as a lender from a number of brokers.
Woolwich have dared to believe as well. Its Family Springboard Mortgage looks to lend at 95% (albeit with assistance from the family) but lets be honest, most of our first time buyer clients of the past made a swift withdrawal from the ‘Bank of Mum and Dad’ (also open on Saturdays and Sundays) before proceeding anyway, so there is little difference between then and now.
The only difference is that Mum and Dad get their gift back PLUS interest after three years. Genius. This helps second steppers too and should prove a positive step for the property market as a whole, as well as the mortgage industry. Welcome back first-time buyers, and ‘bonjour’ to you too, second steppers. It’s game on!
Lenders are doing all they can to support us. Innovation is returning to the market and so too is logic, not to mention yet another 10 day sale from Accord (these sales are occurring almost as frequently as a Next sale, but no need to start queuing at 3am folks!)
Sure, its not 2006 but we are taking steps in the right direction and it would be nice if we all acknowledged that, rather than trying to find flaws in lenders, government schemes, lenders criteria changes, etc etc. Lets start 2013 as we mean to go on, by showing appreciation for what we have and what lenders are trying to do for us.
Back to Big Dick III, he was happy with the peace that fell upon England first of all. Then it all went pear-shaped as he tried to kill everyone with ridiculous and callous ambition. With house sales at their highest levels for five years, something is clearly working!
I can only see these stats getting better, so let’s not get greedy, let’s not get over-ambitious. Lender’s faith is slowly being restored and they are slowly starting to ease the pricing on higher loan to value lending, with more lenders starting to cater for this market. As the benefits of the Funding For Lending scheme start to trickle in, lets stop the damn whinging guys or before you know it…
“The World is grown so bad, that wrens make prey where eagles dare not perch” – Richard III, act one, scene 3.
Lea Karasavvas is director at Prolific mortgage finance
PS. This blog is dedicated to my English Teacher, who assured me that Richard The Third was not only a study of English literature, or history, but a study of life itself. He never mentioned mortgage finance though.
