Danske Bank appoints E.surv for valuation services
The bank will initially be launching its carbon neutral mortgage for residential homes in the South East, South West and the East of England. The mortgages will be distributed through brokers registered with the Mortgage Advice Bureau.
Homes will need to have an Energy Performance Certificate (EPC) or a Predicted Energy Assessment (PEA) rating of A to C.
The mortgage will be open to those with a minimum deposit of five per cent, including first-time buyers, home movers and remortgagors. The bank will lend up to 90 per cent loan to value (LTV) on new-build homes and will lend to borrowers using the Help to Buy scheme.
Danske Bank is working with Carbon Trust to offset the emissions caused by the mortgage process with wind energy projects in India. This includes electronic activity and its use of paper documentation.
Carbon Trust calculates that the bank emits 96kg of carbon for every mortgage.
Richard Sexton, business development director at E.surv (pictured), said: “We are extremely pleased to have been selected by Danske Bank to support their lending activity as they move into this new phase of their strategy. With national coverage we are a good fit for Danske’s plans and we look forward to assisting in the development of their valuation policies as part of our new relationship.”
Patrick Mullan, head of GB mortgages at Danske Bank UK, added: “We’re already a market leader in Northern Ireland and have a significant presence in the mortgage intermediary market there, so it’s a natural step for us to bring that expertise and capability to benefit consumers in England.’’
Chancellor should focus on green agenda, cost of living and cladding in Spring statement, brokers say
The Spring Statement is due at around midday tomorrow and the Office for Budget Responsibility will release its economic and fiscal forecasts.
In the statement, Sunak typically provides an update on the performance of the economy and usually does not include major tax or spending changes of the budget.
However, the Chancellor is facing increased pressure to fight the rising cost of living, with financial adviser Hargeaves Lansdown calling on the government to delay the proposed 1.25 per cent hike in National Insurance.
It also advocated an increase in Universal Credit from 2.1 per cent already reserved and a reduction to fuel duty and/or VAT.
Ahead of the statement, Mortgage Solutions asked the mortgage sector what it would do if they were Chancellor, what they think he would announce and what he could do to further support the market.
What would you do if you were Chancellor?
Jonathan Stinton, head of intermediary relationships at Coventry for intermediaries, said if he was Chancellor he would put “green issues on the top of [his] agenda”.
He said he would “fulfill the promises” in the Conservative manifesto around the Home Upgrade Grant, which aims to help low income household in worse performing off-gas-grid homes in England to become more energy efficient.
He said he would further back the Social Housing Decarbonisation fund, which was allocated £800m last year.
Stinton said he would also alleviate some of the burden posed by National Insurance increase and rising energy costs. He suggested that one way to relieve the cost of living could be a temporary fuel duty break.
Vikki Jefferies, proposition director of the Primis Mortgage Network, said the focus should be on supporting households in what is “financially one of the toughest years many will have ever seen in a long time”.
She added: “The squeeze individuals are seeing on their outgoings is unprecedented and it effects all kinds of borrowers, so helping them weather this uncertain time is vital. Putting in place policies to help families meet the rising cost of living by freezing duties, cutting the tax rate in universal credit, and increasing the national living wage will certainly help.
“The previous focus the Chancellor had on the housing market during the pandemic really helped the sector, so a continued emphasis on it would be very welcomed.”
What do you think Rishi Sunak will announce?
Stinton said it was unlikely Sunak would make any “drastic changes”, but it would be interesting if he took the opportunity to reaffirm the commitment to the green agenda.
He added that there had been debate as to whether the Chancellor would progress with the National Insurance hike. However, he thought it would be unlikely for the government to make a policy U-turn so expected the rise to go ahead.
Jefferies agreed and said Sunak would probably have a “large focus” on green initiatives, partially due to the UK’s attempt to reduce the use of Russian oil.
She added: “We are likely to see more investment in renewable power, but this could be announced separately to the Spring budget. We would welcome more support for green initiatives in the housing sector too.”
She expected Sunak to focus on relief and support for low income households to help them manage increased financial strain.
She said: “Inflation is at its highest levels in the last 30 years and interest rates are rising. It’s likely that the Chancellor’s hands will be tied in terms of doing anything truly radical, but he may look to make the energy bill rebate more generous.
“That would go some way to helping families struggling with rising household costs.”
Zarah Gulfraz, sales manager at Mojo Mortgages, said addressing the cost of living crisis was the “best thing” Sunak could do to support the mortgage market as this would have an impact on homeowners and first-time buyers.
However, she also did not expect any major announcements for the sector as the return to normal stamp duty rates “did little to slow the housing market” so “any further intervention would be a surprise”.
Chris Sykes, associate director and mortgage consultant at Private Finance, said this year’s Spring statement was another “exercise in crisis management” like last year.
“This statement will therefore focus on taking the pressure off household finances as much as possible. This will inadvertently help prospective purchasers and borrowers, as any help in this regard will have an impact on affordability, which for many people is becoming increasingly constrained especially given the quickly rising interest rate environment,” he added.
He also predicted there would be no stimulants for the mortgage and housing sectors but coveted an incentive to “help older homeowners downsize, freeing up housing stock for younger families looking to move up the ladder and helping older homeowners reduce their bills”.
Additionally, he suggested a stamp duty incentive to encourage the purchase of sustainable homes and reward retrofitting.
What other changes should be made to support the mortgage market?
Stinton said he would like to see incentives for borrowers to accelerate the green agenda.
He said: “As a nation, we still rely on imported oil and gas, but the introduction of subsidies for improving energy efficiency and making green home improvements could be a significant step in the right direction to independence from fossil fuels.
“With the changing EPC regulation coming into force, more incentives for landlords to improve the energy ratings of the properties in their buy-to-let portfolios will ultimately support the private rental sector. It could both reduce the likelihood of landlords passing costs to tenants and also help to reduce the living costs of those in rented accommodation.”
Jefferies agreed that more needed to be done to support homeowners wanting to improve their EPC rating.
She said: “With many suggesting that the measures to do so are too expensive to even consider, more in the way of government support is needed. The deadlines set to reach an average EPC rating of C will creep up on us quickly, so the more that can be done now to help homeowners the better.”
Stinton added that tax exemptions for homeowners and landlords could also work and suggested a reform of stamp duty to link it to sustainable home upgrades where new homeowners who made changes in the first few years of purchase would get a portion of it back.
He said there should also be an emphasis on urban regeneration and social housing to help the property shortage.
“This could be achieved, for example, by converting unused office buildings into homes which could help to rejuvenate town and city centres,” Stinton noted.
He added that there should be a focus on housing affordability, with one example he cited was the introduction of stamp duty relief for downsizers similar to that offered to first-time buyers.
“This would help to free up more properties for growing families to move up the ladder, and thereby provide more choice of first homes for those looking to step into homeownership,” Stinton said.
Jefferies added that she wanted to see more options available to replace the Help to Buy scheme, which is due to expire next year.
Mark Harris, chief executive of SPF Private Clients, said the Chancellor should prioritise “sorting out the cladding crisis once and for all”.
He added: “For far too long, far too many flat owners have been trapped, unable to sell or move, through no fault of their own. The bills for proposed remedial work which some leaseholders have received are eye-watering and it’s a disgrace that they are expected to foot the bill.”
Gulfraz agreed this should be addressed as she said cladding had become a “pressing issue”.
Harris said affordability would only become “more of an issue” as property price growth continues to outpace wages.
“It is hugely worrying that capital cities such as London are becoming beyond the means of your average first-time buyer, unless they have significant financial help from the Bank of Mum and Dad,” he said.
He added that removing the stress test for mortgage borrowers would help, but as first-time buyers were the “lifeblood of the market”, stamp duty reductions and other incentives would be “necessary to boost the sector”.
Harris continued that a “detailed review” of the stamp duty system would be welcome to evaluate how well it was working and whether large family homes could be freed up.
He explained that stamp duty costs were a barrier for those moving up the ladder, those downsizing, and could put off elderly people from doing so.
“The stamp duty holiday proved to be such a boost for the housing market; surely the Chancellor needs to look at it again?” he said.
Brian Murphy, head of lending at Mortgage Advice Bureau, said stamp duty had been a “major focal part” of the UK housing market for years.
He said in hindsight the housing market was already in “good health” despite the pandemic and the stimulus of the stamp duty holiday resulted in a significant increase in housing transactions and stamp duty revenue relative to previous years.
Murphy added: “This appears to demonstrate that the structure of the current stamp duty system is not fit for purpose as by suspending parts of it for a finite period has clearly motivated more buyers to move but not at the expense of the Treasury coffers.
“This suggests that now is the perfect time to consider a route and branch review of the current stamp duty system, to encourage people that want to move to do so without fear of taxation issues that have for so long held the market back.”
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.”
MAB appoints director of commercial operations to Scotland arm
Gaughan previously worked at Countrywide Mortgage Services for four years, with his most recent role being national sales director and where led a 500-strong adviser team.
Prior to that, he held a senior role at Slater Hogg and was head of Halifax for Intermediaries.
Dominic Taddei, managing director of MAB’s regional network partner Scotland, said: “I am delighted to welcome Kevin to our senior team. With his experience and knowledge in leading large mortgage intermediary businesses, Kevin will be integral to the ongoing success and future of our organisation, especially as we look to expand once again.
“His appointment marks a significant milestone in the history of our business.”
Gaughan added: “I am really looking forward to joining such a fantastic and progressive business.
“I’m excited about working closely with the team and utilising my learning from previous roles in the lender and broker world to support the business in progressing further.”
Primis’s value could be ‘arguably more than smaller peer’ MAB
MAB’s market capitalisation was £698.7m today.
The valuation of Primis came as merger and acquisition activity is heating up in mortgage broking, which is seen as a fragmented market ripe for consolidation.
Trussle was acquired by US lender Better this month, while Foxtons is “reviewing strategic options” for its broking business Alexander Hall.
The research was produced by Zeus Capital, which was appointed as joint broker by Primis’s parent company LSL Property Services in November 2020.
Its note ranked Mortgage Advice Bureau (MAB) as a “smaller peer” compared to Primis.
The possible valuation range was based on size, with Primis having 2,681 advisers compared to MAB’s 1,694.
As well, LSL’s mortgage completions reached £32.6bn in the year to 31 December 2020. MAB’s completions were £17.6bn that year.
The valuation comes after a new strategy was brought into play by David Stewart, who joined LSL as group chief executive on 1 May 2020.
Stewart, who was formerly chief executive at Coventry Building Society from 2006 to 2014, has set a target for the financial services segment of LSL to become the group’s largest profit contributor by 2023.
It contributed 30 per cent to the group’s underlying operating profit in 2020. Surveying contributed 40 per cent, and estate agency services 30 per cent.
On 21 April, LSL announced a joint venture with investors Pollen Street Capital, with funds of £200m to create Pivotal Growth, a vehicle “to buy and build a major UK mortgage broking business”.
Potentially, this could provide a route for owners of firms within the Primis network who may be looking to exit.
Top 10 most read mortgage broker stories this week – 30/07/2021
Financial updates came from the likes of Barclays, Virgin Money, NatWest, Lloyds and Santander. The Mortgage Advice Bureau also issued their half-year results.
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The government’s decision to remove the need for an EWS1 form when lending on buildings shorter than 18 metres was also of interest, as it signified a move which could unlock the market.
Speculation that Foxtons was looking for a buyer for its broker firm Alexander Hall also drew readers in, as did one firm’s decision to refund fees to clients unhappy with their advice.
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MAB to advise buyers on First Homes scheme pilot
Keepmoat’s development in the East Midlands is the pilot housing site for the sale of new-build homes under the First Homes banner. The homes must be sold at a guaranteed discount of 30 per cent off the local market value.
The site is located in Bolsover, Derbyshire and will contain 12 homes to be sold under the First Homes scheme.
MAB will support Keepmoat by financially qualifying buyers and working alongside Homes England.
To use the scheme, borrowers cannot earn more than £80,000 in combined annual salaries or £90,000 in London. Prices for new-build properties must not exceed more than £250,000 outside of London, or £420,000 in Greater London.
A mortgage must be used for at least 50 per cent of the discounted purchase value. Lenders supporting the scheme will offer loans up to 95 per cent loan to value.
First Homes is the government’s latest initiative to help first-time buyers get on the housing ladder.
The government’s target is to deliver 1,500 home by autumn and has ambitions to sell at least 10,000 First Homes in total if there is demand from buyers.
Seven lenders have signed up to the scheme so far; Chorley Building Society, Darlington Building Society, Halifax, Leeds Building Society, Mansfield Building Society, Nationwide Building Society and Newcastle Building Society.
Councils have discretion to extend the discount to 40 per cent or 50 per cent if needed.
The discount will be passed on with the property sale to future first-time buyers, which the government says will benefit local communities and key workers who can be prioritised for these homes.
Mark Pender, business principal and new-build specialist at MAB, said: “New build is often complex in terms of mortgage advice and requires specialists to understand the finer details of schemes such as this.
“We’re proud to be one of the first and only mortgage broker firms supporting the government’s next big affordable housing project, with the Help to Buy scheme ending in 2023.”
Tim Wray, group development director at Keepmoat Homes, said: “It is great to be part of this initiative which will help even more people realise their dream of owning their own home.”
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Lender’s latest rate cuts, new product launches and criteria changes were popular stories, while the new Deposit Unlock scheme was launched with Newcastle Building Society as the first lender.
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MAB hires FSE’s James Prosser to direct media and events strategy
Prosser will be tasked with engaging MAB’s advisers and lender community with education and insight content through various multimedia platforms including digital broadcasting, events and publications.
He will step down from his current position as managing director at the Financial Services Expo (FSE), which he founded in 2013. FSE was acquired by Shard Media Group in January last year.
Prosser (pictured) said: “I can’t wait to get going. This is a new role and opportunity to shape something spectacular. As the UK’s most recognised mortgage broker, MAB is an extremely reputable brand and has a direct influence on the lender community. I’m excited to enhance the already strong MAB proposition by delivering thought-provoking content to lenders and brokers through a variety of multimedia platforms.
“The pandemic has forced businesses to think differently about how they share information with individuals and collaborate with other firms, and I believe my wealth of experience in this environment will bring lots of value to the MAB group.”
He added: “I’m really proud of what we achieved with FSE and will be leaving the business in good hands. I’ve no doubt it will continue to flourish under the ownership of SMG, with the return of physical events just around the corner.”