The Money Group launches ‘out of hours’ support for members
The adviser network has 130 member advisers which it estimates will submit mortgage applications totalling £1bn in value during 2022.
TMG’s out of hours initiative means brokers will be able to refer their cases to the TMG head office team up until 9pm for any administration support they need help with.
Rebecca Taylor, operations manager of TMG said the network had received feedback from members who said they were struggling to cope with the ever-changing market, and most are working late into the night to deal with the constant changing of rates.
She said: “Our members’ wellbeing comes first so I am delighted we have been able to source extra resources in order to accommodate this. We all know the all-important need for a work life balance, and we hope this initiative will give the broker just that.”
Jonathan Needham, managing director of TMG, said: “We really appreciate this is a moving market and hopefully this initiative will alleviate any stress of for our members whether that may be the firm’s principal, advisers, or back office teams.
“As an industry we all need to pull together and support each other. We respect the enormous stress lenders, solicitors, and valuers are under at the moment.”
TSB and Natwest increase residential rates – round-up
TSB’s five-year fixed first-time buyer (FTB) and house purchase products at zero to 75 per cent loan to value (LTV) have been increased by 0.35 per cent.
On its two and five-year fixed remortgage deals, rate have been increased by up to 0.60 per cent and on two and five-year fixed shared equity remortgage rates haven increased by up to 1.25 per cent.
Natwest raises new business pricing
Natwest said it had increased rates across its new business residential range.
Its two-year fixed rate purchase product at 60 per cent LTV with a £995 product fee will increase by 0.43 per cent to 3.25 per cent.
A two year fixed-rate 85 per cent LTV with no product fee will increase by 0.35 per cent to 3.54 per cent. At 90 per cent LTV, with a £995 product fee, the two-year fixed rate will rise from 2.96 per cent to 3.31 per cent.
A two-year fixed-rate remortgage at 75 per cent LTV, increases by 0.37 per cent to 3.21 per cent. This mortgage has a £995 product fee.
At 90 per cent LTV, the rate on the fee-free two-year fixed remortgage will rise by 0.4 per cent to 3.69 per cent. With a £995 fee, the rate on a equivalent product will increase by 0.26 per cent to 3.34 per cent.
The rate on the five-year fixed purchase product at 60 per cent LTV with no fee will increase by 0.33 per cent to 3.49 per cent and at 75 per cent LTV, the £995 fee-paying product will see a 0.42 per cent rate increase to 3.31 per cent.
A 90 per cent LTV purchase product with no fee will see its rate increase by 0.35 per cent to 3.60 per cent.
The fee-free five-year fixed remortgage at 75 per cent LTV will increase by 0.45 per cent to 3.59 per cent. At 85 per cent LTV, the rate will increase by 0.46 per cent to 3.45 per cent.
Rates on two and five-year fixed purchase deals at 95 per cent LTV, with £750 cashback, will increase by 0.45 per cent.
Eleventh-hour mortgage changes can be rationalised but better management needed – Hunt
It’s a question that is continually asked by all and sundry when it comes to trying to understand lenders and the way they price their mortgage products. Especially so when there appears to be such a sizeable disconnect to the perceived cost of funds and the pricing.
The very simple answer to that question is, of course, that lenders do price for risk; it’s just the case that risk changes and, in certain market periods such as the one we’re experiencing right now, it can change a lot.
It would certainly be an oversimplification of the seemingly constant changes we are seeing in pricing right now, to suggest that all types of lenders – banks, building societies, specialists, and the like – are running the same playbook.
That’s obviously not the case, because each funds in entirely different ways, each has its own unique commercial consideration around share of market versus volume. Plus, each has its own credit risk appetite and restriction, and each will have an overall margin it wants/needs to achieve.
I could go on.
However, even with those very individualistic areas to consider, they also have to acknowledge this is a market full of competition, and even those with the best laid plans, those achieving their aims as set out above, can be driven off-course by the decisions of others.
Hence, why lenders who will genuinely have priced for risk with their products, are at the same time having to continually consider their position within the market, and where the moves by other lenders leave them. A market where their competition is likely to number tens upon tens of lenders and (at least) hundreds of other products.
For instance, will their current price points leave them exposed to an influx of business that they are unable to service, if their competitors move? And if this is the case, how best to manage their current position and the business they will receive, while they work out what their moves should be? And just how long will it take them to make those moves and what should be the decision process during that time period, particularly in accepting volume?
Now, I fully concur with some of the criticism that is currently being levelled at lenders around the ways and means by which they are reacting and acting, particularly in terms of the short notice periods being given to the adviser community. A couple of hours’ grace is never going to be enough and clearly the greater lead-in time advisers can be given, the far better it is going to be for all concerned, not least the adviser themselves and their client.
Plus, let us not forget that some of the action required in this regard is because they have chosen to take on far too much business at the very point that their pricing leaves them exposed when others move out of their vicinity. The point I was making about how they handle those periods between making the decision to change pricing and what they will accept on the current rates.
Operationally, I don’t think it is too strong to say that some lenders can get themselves into a right mess when making these decisions. Don’t get me wrong, I know full well that resources are currently at a premium and have been for some time, and many lenders are trying to get their resource levels up to match the service they offer with the business they are receiving.
However, again, with slightly better management of this, they can do themselves – as well as advisers and clients – a real favour.
Let’s be honest, it’s not like they’ve never done this before and, while I fully appreciate this current market is perhaps more ‘fluid’ than others, the fact that rates are changed and competitors shift quickly, should not be a surprise to anyone who has spent very long in our market.
We are not breaking new ground here. This is a fact of mortgage life, and all stakeholders, but particularly lenders, should be able to draw upon their experience to find ways to make the process as smooth as possible. To ensure advisers have enough time to place business and they do not swamp themselves with too much.
Advisers and distributors recognise the challenge to be faced but we have been here before. Let’s act like we remember.
Down valuations, impulsive buyers and estate agent pressure leading to abandoned mortgage applications – analysis
Andy Lawrence, mortgage and protection adviser at All Financial Advice, said: “People are seeing a bit more reality with the cost of living going up.
“People are suddenly concerned that they might get stuck when they think about energy prices and everything else.”
“We’re noticing more people that were pushing themselves to the absolute limit be a bit more cautious now,” he added.
Darryl Dhoffer, mortgage and protection consultant at The Mortgage Expert, said his firm was fortunate that most clients in its pipeline were completing but he was aware of abandoned applications.
He said some clients were being outbid on properties and subsequently losing out, whereas others put multiple offers in and were withdrawing to proceed with their final choice.
Lawrence also experienced people testing the waters on purchases and described their attitudes as the “biggest disappointment”.
He has come across clients who made a high offer but told him they were prepared to pull out of the process if the property was down valued.
Lawrence added: “I do a ton of work for it to never go anywhere. Fortunately, we haven’t had many people with that kind of viewpoint.”
To mitigate this, his firm now charges a cancellation fee to clients who cancel an application without a valid reason. Allowances are made for circumstances out of their control, such as a down valuation where the client genuinely intends to proceed.
Another client of Lawrence’s put in an offer of £560,000 for a home with an asking price of £460,000. This was down valued to £500,000 which Lawrence said still fits, but the client was going back to the estate agent to haggle on the price.
He warned the client they overpaid and probably would not have “much mileage” but said they could still try.
Lawrence said a home information pack would reduce this from happening as people would know how much higher their offer was compared to a property’s value and give them a heads up on the possibility of a down valuation.
Dhoffer has begun to preemptively tell clients to be conservative when considering putting in offers above asking prices, warning that anything 15 or 20 per cent higher could result in a down valuation.
Estate agent pressure
Brokers said ever-prevalent pressure from estate agents was also making the situation volatile.
Howard Reuben, owner of HD Consultants, said they were creating a false sense of urgency and making buyers feel they should make a high offer to secure a property.
He also said some firms were putting buyers through a pre-offer affordability check with their in-house broker, then instructing solicitors before a mortgage offer with a lender has been agreed.
Reuben said: “All in all, there is too much desperation to get a quick sale from the estate agents which massively adds extra anxiety to the process and this in turn leads to an explanation of why we are seeing so many deals being withdrawn, and purchases lost.
“We mortgage advisers are heavily regulated, we work tirelessly to support our clients’ expectations. We’re on the front line with hundreds of clients all the time, whilst the estate agent causes havoc and leaves us to manage the chaos they cause.”
Lawrence raised concerns around estate agency practices too, adding: “I think the estate agencies are not really helping, because they’re obviously creating this situation.
“They do all the viewings in two hours to get 15 people in their property at once, so buyers think it’s a shootout between who’s going to get it.”
Lawrence said the mood of the housing market during the stamp duty holiday impulsively inspired some people to sell.
He added: “Somebody sees their next door neighbour put the property up for sale and thinks, ‘wow, we’re going make a million on our property’. They put their home up for sale, sell fairly quickly, and are really proud of that.
“Then all of a sudden, they get in a situation where they realise that they can’t find a new home because everything else has gone up by so much. They spend two or three months trying to find something, but they’re not particularly motivated to move. So, they threaten to withdraw, and we’re living on tenterhooks.”
This observation of fickle behaviour mirrors a recent survey from Trussle, which found a tenth of people who moved during the pandemic felt they rushed their decision.
Jane Simpson, managing director of TBMC, said although most of her business came from remortgaging landlords meaning instances of abandonment were infrequent, cancellations occurred where clients changed their minds about a purchase.
She said: “We’ve seen several cases where applications have been made on rates just before they were withdrawn, and when the client has been unable to get that first choice product they’ve pulled out.
“The uncertainty in the market does seem to be leaving some landlords unsure about expanding portfolios and we will perhaps see a slight slow in purchase business until the markets steady.”
However, she said there was a “big rush of applications in early spring” suggesting landlords were getting ahead of rate rises which may have brought purchase activity forward.
Dhoffer said lenders reducing the amount people could borrow due to updated affordability calculators in light of the rising cost of living was also impacting client sentiment.
He said: “First-time buyers are very hesitant at the moment.”
Dhoffer added: “People are very keen to move but they’ve probably never experienced anything quite like this. Where there are nine or 10 viewings on any one property, and their offer is just one of many.
“For these guys that are renting as well, rents have gone up, so it’s become a situation where they think, ‘do we sit tight? Do we wait to see where the market goes? Is the market going to crash?’ These are questions that have been thrown our way a lot.”
Dhoffer added: “From a broker’s perspective, I think we’ve got a duty to bring confidence to any potential buyer. Tell them what’s to be expected in today’s market, to be aware of any pitfalls and just to not give up. There are a lot of people that will go through two or three of these and think, ‘Well, it’s never going to happen. I’m just going to hold off’.”
Lender backlogs extending the time it takes for a mortgage offer to come in, along with delays in a chain, do not help either as circumstances change in the interim.
Lawrence said for this reason, some six-month offer periods were not proving to be long enough.
He managed to get a client a 0.99 per cent rate mortgage in December, but that product has now gone up to 2.5 per cent. While the rate is still relatively low, coupled with increasing living costs, this has created nervousness in his client.
He said he understood that lenders needed to draw a line when it came to the lifespan of an offer, but said the current environment made the situation “fragile”.
Top 10 most read mortgage broker stories this week – 27/05/2022
Discussions around interest-only mortgages, mortgage porting, changing rates and long-term fixes were also of interest to readers, as was Santander’s announcement that it would lend to self-employed borrowers up to 90 per cent loan to value.
Interest-only is the ‘cocaine’ of mortgages, but must not disappear ‒ analysis
Aldermore’s Damian Thompson to depart – exclusive
Mortgage porting: ‘Sold as a benefit, yet sometimes, it’s the opposite’ – analysis
Longer term fixed mortgage deals will affect repeat business, so brokers have to adapt – Marketwatch
‘Fast changing rates are tough on both brokers and lenders’ – Skipton BS business leaders’ lunch
Mortgage brokers spared from FSCS levy as forecast drops to £625m
Santander ups max LTV for self-employed applicants to 90 per cent
Top-slicing and let to buy unexplored opportunities for BTL lenders, say brokers
Further mortgage innovation is not what borrowers need – Bamford
Landlords risk thousands mis-targeting green spending with out-of-date EPCs – Accord video
Nationwide ups select resi rates by up to 0.2 per cent
The changes come into effect from 5pm on Friday 20 May.
Rates are going up by around 0.15 per cent across the board for new business across first-time buyer, new member movers, shared equity and remortgage ranges.
For first-time buyers, select rates will be increased by between 0.05 per cent and 0.25 per cent, and for homemovers, rates will rise by between 0.02 per cent and 0.20 per cent.
Select remortgage product rates will be upped by around 0.10 per cent and 0.35 per cent.
In its existing business range, rates are increasing from 0.05 per cent to 0.15 per cent for select moving home, shared equity, additional borrowing, green additional borrowing, switcher and switcher additional borrowing ranges.
For example, green additional borrowing has shot up from 2.09 per cent across the two and five-year fixed rate products at zero fee, to 2.29 per cent.
The lender also has upped switcher additional borrowing rates by 0.1 per cent.
A Nationwide spokesperson said: “The changes made to our new business range are reflective of the current interest rate environment, which has seen mortgage rates increase across the market. As a member-owned organisation we are not immune to this, and we need to ensure our new business mortgage rates are sustainable, whilst also ensuring Nationwide remains well-positioned in the market.”
West One Loans cuts BTL lifetime tracker rates
Rates in its Lifetime Tracker Standard W1 range start from base rate plus 2.09 per cent, which is down from 2.24 per cent.
In its specialist lifetime tracker range it has also cut rates by up to 0.15 per cent, with rates beginning from base rate 2.34 per cent.
The specialist range is aimed at complex transactions, which includes houses, flats and maisonettes above or near commercial premises, houses in multiple occupation (HMO) and multi-unit freehold blocks (MUB).
The lifetime trackers come with early repayment charge (ERC) options, with a two-year term starting with a two per cent ERC in the first year and then falling to one per cent in year two.
Andrew Ferguson, managing director of West One’s BTL division, said that these were “uncertain times” for many borrowers and with more interest rate rises on the horizon “flexibility will be key”.
He added: “Many brokers will be approached by clients asking for help in reviewing the options available, especially those at the more complex end of the market.”
Ferguson continued that this was part of the reason it was cutting rates on its tracker range as it wanted to give brokers and clients “more ways to navigate their portfolios through this changing and challenging landscape”.
He noted that many investing in rental properties had been looking at specialist BTL products and due to its specialism in HMOs and MUBS it was well-placed to help new and experienced landlords.
Ferguson concludes: “Price will always be a factor when choosing a lender. However, our speed, flexibility and expertise are the reasons why brokers come to us time and time again. West One prefers a people first approach to underwriting, meaning we can say yes to more deals and are trusted by brokers to get deals done when it matters.”
Bluestone Mortgages expands Right to Buy to whole of market and cuts rates
Right to Buy is a government scheme where council tenants can buy their homes at a discount.
The product was previously only available via limited distribution through selected Sapphire Partners and will come into effect from 17 May.
It added that loans will be available up to 100 per cent of the discounted purchase price, and up to 75 per cent LTV open market valuation.
Five-year fixed rate terms are available, starting at 3.9 per cent and can be accessed at all the lender’s credit tiers.
The lender added that its buy-to-let, Help to Buy and Right to Buy products rates would be reduced by up to 1.57 per cent and will start from 3.85 per cent for a 60 per cent loan to value (LTV) product. Bluestone added that it can lend up to 85 per cent LTV.
Reece Beddall (pictured), sales and marketing director at Bluestone Mortgages, said: “By reducing our rates and expanding our proposition we hope to reinforce our commitment to support the growing number of customers with complex credit who are struggling to climb up or onto the property ladder.
“We believe it is our duty as a specialist lender to help those who have been traditionally underserved, giving them the opportunity to achieve their homeownership dreams.”
Virgin launches high LTVs; TSB and Platform up rates ‒ round-up
The new products will be available from tomorrow.
They include purchase fixed rates between 75 and 90 per cent LTV, which come with a £495 fee and £500 cashback.
The lender has also brought out 85 per cent LTV remortgage fixed rates, which come with a £1,295 fee, free valuation and free legals.
There is also a five-year fixed rate BTL deal at 75 per cent LTV and select product rates would increase.
It added that from 8pm today all 80 per cent LTV fixed rates would be withdrawn
This includes certain products between 65 and 90 per cent LTV, which will go up by 0.23 per cent. Rates begin from 2.23 per cent.
Selected BTL fixed rates between 60 and 75 per cent LTV will rise by 0.15 per cent. Rates start from two per cent.
TSB ups select rates and withdraws products
TSB has increased certain rates by 0.25 per cent, upped its variable rates and withdrawn select products.
In its BTL range, select five-year fixed rate house purchase and remortgage rates have gone up by 0.25 per cent.
Its five-year fixed rate for purchase and remortgage starts from 2.84 per cent and go up to 3.54 per cent.
In its residential range, the lender has increased select five-year fixed rate first-time buyer and house purchase products between 75 and 90 per cent LTV by 0.1 per cent.
Rates between 75 and 80 per cent LTV start from 2.99 per cent and go up to 3.19 per cent at 85 and 90 per cent LTV.
Its five-year fixed rates for new-build first-time buyer and house purchase rates have gone up by 0.1 per cent.
Rates begins from 2.96 per cent at 80 and 85 per cent LTV, and at 85 to 90 per cent LTV the rate is 3.09 per cent.
The lender has also withdrawn its two-year fixed rate first-time buyer, purchase and remortgage products with £995 fee.
Platform ups SVR, reversionary rates and tracker products
Platform has increased its standard variable rate to 5.24 per cent and upped the reversionary rate for its buy-to-let products.
Its BTL reversionary rate up to 70 per cent loan to value (LTV) is 5.5 per cent and is six per cent up to 75 per cent LTV. This applies to new business and product switch ranges.
In its product switch range, its two-year tracker mainstream products have increased by 0.25 per cent.
Average two-year fixed rates rise above three per cent for first time in seven years
According to Moneyfacts, it is the highest average two-year fixed rate since March 2015 when rates were 3.06 per cent.
The report added it is the seventh consecutive month of increases, with rates rising by 0.69 per cent since December.
It noted that the average two-year fixed rate at 95 per cent loan to value (LTV) was 3.35 per cent, which compares to 4.02 per cent a year ago.
It said product availability for two and five-year fixed rates had improved, reaching 369 in May, which is nearly back to pre-pandemic levels of 391 in March 2020.
Overall product availability has improved, with 5,087 residential products on the market, which is up from 4,925 in April and 3,927 in May last year.
The average rates for five-year fixed products have also risen, going from 2.79 per cent in May last year to 3.17 per cent in May this year. The report said that this was the highest for six years.
At 95 per cent LTV, five-year fixed rates now stand at 3.47 per cent, which compares to 4.17 per cent in the same period last year.
The report continued that the average shelf-life for products in May was 22 days, which is slightly up from April’s record low of 21 days.
It is also compares to an average shelf-life of 32 days in May last year.
Mortgage market could be fuelled by remortgagors
Eleanor Williams, spokesperson at Moneyfacts, said the mortgage sector had “demonstrated great resilience during unprecedented times” buoyed by strong demand and the race for space.
She said the market could continue to be fuelled by a shifting focus to remortgage borrowers as base rate rises encourage them to lock in fixed rate deals.
“This move may particularly be true for those who, by virtue of house price growth, could take advantage of increased equity in their home to potentially secure a lower rate,” she added.
Williams said the margin between two and five-year fixed rates was 0.14 per cent and the differential was the smallest since 2013 when it was 0.08 per cent.
“This could indicate that providers may be adapting their pricing towards borrower preference, potentially shifting towards longer term fixed rate options in order to protect themselves from further pricing volatility,” she explained.
Williams said first-time buyers could be “feeling disheartened” by rising house prices, mortgage rates and the cost of living, but pointed to improving availability of 95 per cent LTV deals.
She said: “While there may be some who are forced to delay their homeownership dreams due to wider economic pressures, recent movements in this sector seem to indicate that lenders could be keen to continue to cater to this demographic where possible.”
Williams also recommended that borrowers should “move swiftly to get the best option available” as product shelf-life remains low.