Accord opens up 95 per cent LTV mortgages to all home buyers
The change, which takes place on 19 April, means all purchasers will now be able to apply for the lender’s five per cent deposit deals.
These had only been open to first-time buyers when first launched last month.
The 3.99 per cent five-year fix with a £995 fee will be available to all home movers under the same terms, with new-build homes and flats excluded.
Accord said demand from first-time buyers had been strong, but was confident that it will be able to maintain good service levels as it opens out.
The lender is not using the government’s guarantee scheme but several that are have announced their intention to go live with their offerings next week.
This will give greater availability in the market and help prevent those already active from being overwhelmed.
Jeremy Duncombe (pictured), managing director of Accord Mortgages, said: “We’re committed to supporting brokers and are pleased to have been able to give first-time buyers more choice, in what was a very limited market.
“We’ve been delighted with the response to our return to the 95 per cent market, and as more lenders have joined us in the market, we’re now in a position to offer it to more borrowers.”
Coventry joins handful of lenders in 95 per cent lending re-launch
The products are priced at 3.89 and 4.09 per cent fee-free and offered up to a maximum loan size of £400,000 at four times loan to income (LTI).
These products are not available for remortgages or further advances, with new-build properties and flats excluded.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, (pictured) said: “We want to help more people to be able to buy a home, even if they only have a small deposit. Saving for a 10 per cent deposit can be challenging for some would-be buyers and these products help to expand the range of options available to them.”
He added: “We would urge brokers to take full advantage of the affordability calculator and case packaging tools on our website as this will help us to deal with cases as quickly as possible.”
Chancellor Rishi Sunak announced the mortgage guarantee scheme in the budget with six lenders signed up to lend in partnership with the scheme from mid-April.
However, a raft of lenders have launched back into 95 per cent LTV lending outside the scheme with Accord first, followed by Bank of Ireland, which extended its 95 per cent range yesterday, Skipton, Aldermore, Danske Bank and Coventry today, with TSB promising an April launch.
Questions remain over the cost of the scheme and the fact none of the lenders launching without the scheme intend to lend on new build. However, brokers were quick to welcome its introduction as it spurred on an already frenzied homebuyer market given the extension of the Stamp Duty Land Tax holiday also confirmed on Budget day on 3 March.
The government scheme is open to all buyers with a five per cent deposit for properties worth up to £600,000. It has been largely modelled on the previous Help to Buy scheme launched in 2013 to help lenders transition back into the market and is open to second-hand and new-build properties.
The UK’s biggest banks confirmed participation in the scheme from mid-April and include Lloyds, NatWest, Santander, Barclays and HSBC with Virgin Money readying to launch in May.
All mortgages will need to be repayment, not interest-only, on a loan to value of between 91 to 95 per cent and are subject to the usual affordability rules. All participating lenders will be required to offer a five-year fixed rate product as part of its guaranteed range of mortgages.
Help to Buy
The government’s new Help to Buy scheme, which supports new-build lending, will replace the current scheme, which ends tomorrow and runs until March 2023.
The new Help to Buy scheme introduces property price caps and is restricted to first-time buyers only.
By understanding criteria and packaging requirements brokers can delight clients – Duncombe
The lack of sustained higher loan to value (LTV) products for much of the year, increased house prices and changes to criteria as a result of Covid-19 have all made it more challenging for potential borrowers to realise their homeownership dreams.
However, we’re seeing positive signs that the worst is behind us.
More lenders are returning to higher LTV markets, some first-time buyers have been able to save more money during lockdown and with the help and support of advisers knowing where to look and how best to apply, there is an increasing number of deals to be found.
The need for advice and support will also continue to be significant for the increasing number of self-employed people.
Changing and challenging criteria
Most lenders have amended criteria over the last 12 months, reflecting uncertainty in the economy, but this doesn’t need to be a “one size fits all” change.
Some customers are actually better off than they were before the pandemic, and some employment types have thrived.
Having the same underwriting rules for a restaurant owner and a delivery firm owner for example restricts choice and means that many good quality applicants could miss out.
But by being prepared, brokers have the opportunity to help more clients find a solution. Knowing what different lenders require and packaging cases to those requirements will save time and delight clients.
Lenders ready to support
We know that fewer cases going forward will be simple, and we’re ready for more complex cases.
We’ve invested in new technology to help brokers submit applications and we’ve increased our number of highly skilled underwriters, expanding our team by 21 new colleagues already this year.
We also know how important a common-sense approach to lending is for cases that don’t tick every box – that’s why our policy isn’t black or white; we look at cases to see how we can lend where it makes sense to do so.
For example, we recently supported a barber buying their first home whose income had been impacted by temporary closures as a result of lockdown, and a self-employed medical consultant experiencing less routine surgical work while operations were limited to essential only.
Our underwriters examined the cases in more detail and taking a rational view of the clients’ usual circumstances pre- and post-Covid, on top of the credible information they could provide, both received offers.
As the market bounces back from the pandemic, demand for advice from first-time or self-employed borrowers is likely to remain strong.
It’s a fantastic opportunity for advisers to explore the options available and offer support where it’s needed the most.
Top ten most read mortgage broker stories this week – 26/03/2021
Elsewhere, an opinion piece from Hiten Ganatra that dished out a healthy note of scepticism of the government’s 95 per cent LTV grabbed readers’ attention as did news that more shared ownership homes would be built using Right to Buy receipts.
Lenders tighten self-employed affordability – MBT
Let’s not expect miracles from government’s mortgage guarantee scheme – Ganatra
TSB confirms April return to 95 per cent lending
Vernon BS launches cheapest 90 per cent LTV mortgage
Shared ownership boost as councils will build more homes from Right to Buy income
Accord and Coventry BS cut high LTV rates
Skipton relaunches 95 per cent LTV mortgages but cautions on short-term availability
Virgin Money cuts high LTV rates by up to 0.16 per cent
Greedy, unethical brokers must not be allowed to pollute bridging market – Coates
Quarter of homeowners miss mortgage payments due to ill health – MetLife
Accord and Coventry BS cut high LTV rates
Accord is trimming rates on its 85 per cent and 90 per cent LTV range by up to 13 basis points (bps).
From 25 March it is also introducing new options at 80 per cent LTV to support more brokers and their clients.
Some of the biggest rate cuts come at the 90 per cent LTV level. This includes a two-year fix with £495 fee reduced by 13bps to 3.35 per cent and the fee-free version down by the same amount to 3.65 per cent.
The broker arm of Yorkshire Building Society has also introduced two new products available for both house purchase and remortgage clients requiring 80 per cent LTV.
A two-year fixed rate of 1.99 per cent and a five-year fix of 2.20 per cent are available, both of which come with a £995 fee, £300 cashback and free standard valuation.
A large loan product at 85 per cent LTV available up to £2m has been introduced at 2.74 per cent fixed for two years.
It is available to home buyers and those remortgaging and comes with a £995 fee, £300 cashback and free standard valuation.
Jemma Anderson, mortgage manager at Accord, said: “We’re pleased to have been able to make a number of reductions in our higher LTV mortgage range, giving brokers and their clients with smaller deposits more choice.
“We’ve also added new home loan options at 80 per cent, giving both house purchase and remortgage customers short- and longer-term fixed alternatives.”
Coventry Building Society
Meanwhile, Coventry Building Society is making rates cuts of up to 20bps on some of its mortgages on Friday.
For purchases the 90 per cent LTV fee free five-year fix is being reduced by 16bps to 3.69 per cent and the 85 per cent two-year fix with £999 fee is cut by 20bps to 2.85 per cent.
Remortgage changes include the 85 per cent LTV two-year fix with £999 fee being reduced by 20bps to 2.79 per cent.
Interest-only products are also being trimmed by up to 14bps
Jonathan Stinton, head of intermediary relationships at Coventry Building Society said: “We’ve sharpened our rates to help us continue to support the market.
“Hopefully this new range continues to appeal to brokers and their clients, as there’s plenty of demand out there from clients looking to purchase and those looking to remortgage.”
Top ten most read mortgage broker stories this week – 19/03/2021
The story divided opinion among readers who praised the banks for prudent lending decisions reflecting a change in buyers’ circumstances and criticised lenders for not honouring criteria available at the start of an application.
Elsewhere in mortgage broking news, two lenders brought out 95 per cent loan to value mortgage ranges, Lloyds Banking Group’s Esther Dijkstra shared her plans for the bank’s trio of brands this year and intermediaries were warned to check the risks that IR35 tax changes pose to their businesses.
First-time buyers say deals collapsed after banks back tracked on initial offer
HSBC increases high LTV maximum loans
Mortgage firms must check IR35 risks given complexity of April tax change – AMI
Nationwide cuts rates and expands £1,499 fee range to 90 per cent LTV
Accord launches 95 per cent LTV mortgage for first-time buyers
House prices forecast to lose 2020 gains – Reallymoving
Bank of Ireland reintroducing 95 per cent LTV mortgages including for self-employed – exclusive
Changes are coming: Esther Dijkstra, MD Intermediaries Lloyds Banking Group
Brexit could mean future mortgage process changes to go with current pains – Clifford
Mortgage advising is an opportunity for unemployed to reinvent themselves – Marketwatch
Mortgage lending in 2021 ‘likely to be higher’ than forecasts
Speaking to Accord Mortgages managing director Jeremy Duncombe on the lender’s podcast, Rob Thomas principal researcher at IMLA, said the government’s Budget announcements and a higher than expected demand for housing meant lending could reach higher levels than predicted.
He said: “If I was doing the forecast now it would be likely to be higher than that figure [of £283bn] actually.
“I think the market is likely to be somewhat more bullish.”
UK Finance director of mortgages Charles Roe, who also appeared on the podcast, said if he was reforecasting UK Finance’s figure of £215bn, he would also revise gross mortgage lending upwards.
According to the Financial Conduct Authority’s figures, new mortgage lending for 2020 was £249bn, down by 10 per cent from £276bn in 2019.
Roe said a combination of positive market indicators, including the success of the Covid vaccine rollout, have convinced him that overall lending in 2021 will be higher than originally forecast.
He added: “I think we can expect increased demand from borrowers looking to squeeze in a purchase before the first or second step down in stamp duty.
“But advisers also need to take into account the end of the furlough scheme and what that means for borrowers and the ending of the mortgage payment deferral scheme as there will be some customers who may find their mortgage is unaffordable and look to downsize.”
Remortgaging will lag behind
Despite his predictions that lending will be higher than £283bn this year, Thomas said remortgaging will lag behind forecasts.
He said: “[Remortgaging] may remain weak [and] has been running significantly below the levels of our forecast.
“I think part of the reason for that is that I believe lenders have probably been prioritising customers who want to buy a house because lenders have had limited resources because so many people have been working at home.”
Thomas said remortgaging had the potential to return to pre-pandemic levels when bank staff returned to the office but it may have been permanently overtaken by product transfers as the dominant way to change mortgage deals.
Accord launches 95 per cent LTV mortgage for first-time buyers
The lender, which is part of Yorkshire Building Society, will not be using the government’s mortgage guarantee scheme for the introduction and said the deal will be available only through brokers.
However, it said the product would not have been possible without having the government’s scheme launching as well to bring more lenders into the market.
Accord emphasised that it will monitor demand for the 95 per cent LTV mortgages to ensure service levels were managed carefully and warned that it could be withdrawn at short notice.
The 95 per cent LTV deal is a five-year fix at 3.99 per cent and comes with a £995 fee and free standard valuation.
Accord said its standard underwriting policy and terms will apply, but with a maximum 4.49 per cent loan to income ratio (LTI) “to ensure prudent affordability”.
The maximum loan size is £500,000, and flats and new build homes are not permitted.
The deal is the first 95 per cent LTV offering from a major high street bank since the pandemic hit. Moneyfacts said it is the first available in England, Wales and Scotland not to be tied to a support scheme or regional restrictions.
Last month Mortgage Solutions reported that at least one mainstream lender was hinting at a return to the 95 per cent LTV market.
Monitoring market closely
Jeremy Duncombe, managing director of Accord Mortgages, (pictured) said: “Increasing house prices, the need to save for a larger deposit and limited choice in the higher LTV markets, means the goal posts have continually moved for many.
“We were one of just a handful of lenders that continued to offer 90 per cent LTV mortgages during the pandemic and have been monitoring the market closely to ensure we carefully broaden our support to those with even smaller deposits.
“This new 95 per cent mortgage will give brokers another option to help clients with smaller deposits realise their home ownership ambitions.”
He added that, being the first major lender to launch, it was important to balance demand with being able to offer the high levels of service brokers and clients expect.
“As such, this product may be withdrawn at relatively short notice, but we will continue to communicate our intentions proactively wherever possible,” he said.
“However, as more lenders join us in the 95 per cent LTV mortgage market, either with or without the mortgage guarantee scheme, we’re hopeful buyers with just a five per cent deposit will be able to benefit from a more sustained offering in the market.”
Yorkshire Building Society chief executive Mike Regnier told The Guardian there were more than 200 underwriters ready to service the demand.
The re-entry is likely to be welcomed by brokers who have been short of options to support borrowers with smaller deposits.
Reacting to the government’s scheme launch earlier this month, brokers said they were pleased it would bring more lenders into the market.
“This initiative is very welcome at a time when the availability of high LTV mortgage products is at an all-time low, and it should hopefully assist more buyers onto the ladder,” said Sharon Duckworth, director at Key Mortgage Advice.
Accord reveals sourcing system integrations and new BTL deals
The lender, which is part of Yorkshire Building Society, also revealed details of its integrations with mortgage technology providers to improve application submissions processes for brokers.
Accord has developed application programming interfaces (API) to work with the Iress, Mortgage Brain and Twenty7Tec sourcing and CRM systems allowing brokers to pre-populate client details into its MSO platform.
It launched with L&C Mortgages and is conducting a further pilot with Quilter on the Iress Xplan Mortgage system.
Initially the functionality will be rolled out to the Iress Lender Connect system followed more widely with all three major sourcing systems – the Iress Trigold and Xplan Mortgage, Mortgage Brain and Twenty7Tec – during the first half of this year.
Jeremy Duncombe, managing director at Accord Mortgages, said: “Broker and lender integration has been topical for some time, but the last 12 months have brought this into even more focus.
“We’re always looking for ways to improve our systems and processes to make things easier for brokers and are confident investing in this new technology will help them connect with us more effectively than ever before.
“Our MSO platform together with API connectivity means placing cases with us will be much more efficient, and speeding up the time taken to apply for a decision in principle means brokers will have more time to spend with their clients.”
BTL product update
The BTL changes include a range of products at 65 per cent loan to value (LTV) for purchase and remortgage.
These include a pair of deals with a £1,995 fee – the two-year fix is at 1.64 per cent and has £250 cashback, while the five-year option is at 1.96 per cent and has £500 cashback.
New three-year fixed rates for house purchase and remortgage are also being launched, available up to 75 per cent LTV with rates starting from 1.89 per cent.
Rates have also been trimmed on selected products across the range while cashback has been increased to £500 from £250 in some products.
Accord extends portfolio BTL limits and LendInvest trims rates
The lender has upped its maximum aggregate borrowing limit from £1m to £3m.
Accord has also increased the total number of BTL mortgages a borrower can have with it from three to five, with the total maximum portfolio size limit removed altogether.
However, landlords are still restricted to a maximum of 10 mortgaged properties in all.
Standard buy-to-let valuation and buyers fees have also been reduced for landlords in line with Accord’s residential fee structure.
Nicola Alvarez, corporate account manager – propositions at Accord, said: “Supporting landlords throughout the pandemic has been a real priority for us and so we have made the decision to simplify the fee structure by reducing standard valuation and homebuyers fees to align with our residential offering.
“We’ve also made changes to our lending limits for established landlords, offering them more flexibility to manage their property portfolios.
“We hope by increasing the range of options available, we can help support more brokers and their landlord clients.”
LendInvest trims five-year fixed BTL rates
Meanwhile, LendInvest has cut interest rates on its five-year fixed buy-to-let mortgages.
The 65 per cent loan to value (LTV) product is now at 3.29 per cent with a maximum loan of £1.5m.
The 70 and 75 per cent LTV deals, which both have maximum loans of £1m, are at 3.39 per cent and 3.49 per cent respectively.
Andy Virgo, sales director at LendInvest, said: “It’s very exciting to announce yet another set of improvements to our buy-to-let proposition as LendInvest continues to evolve its offering throughout 2021.
“Providing our landlords with choice when it comes to product selection is essential to assisting them with their portfolio growth plans, and these latest changes were developed with that aim in mind.”
Speaking at The Specialist Lending Event last week, Virgo revealed the lender was likely to enter the short-term and holiday let markets at the next opportunity.