The better the pre-application discussions, the easier it is to process mortgages – Skipton BS
Featuring on Mortgage Solutions’ podcast in association with Skipton Building Society, Jon Rawley, business development manager at the mutual said it was about going “back to basics”.
He added: “The better the pre-application discussions that the broker has with myself or my BDM colleagues, the better the presentation of the application, the easier it is for us to make a quick decision.
“The broker is always going to have far more knowledge and insight about a client than we may be able to glean from an online application. So, if there are soft facts which would support the loan request, whatever those soft facts might be – assets or savings – then please, brokers, share those with us.”
Julian Raper, underwriter (SME), added: “The more information the broker can provide us, the easier the underwriting decision will be.”
He said the mutual had also invested in technology to work alongside its “human touch” such as its automated income verification function. This eliminates the need to submit payslips and bank statements to enable quicker decision making.
Listen to the podcast below [9.58] featuring Shekina Tuahene, commercial editor of Mortgage Solutions and Specialist Lending Solutions, Jon Rawley, business development manager and Julian Raper, underwriter (SME) at Skipton Building Society.
For intermediary use only.
Big banks likely to fill ‘void’ left by Help to Buy
Speaking at the New Homes Senate, Nick Parker (pictured), head of intermediary distribution at Aldermore, said: “I think from a new build perspective, direct Help to Buy replacements with equity loan features are more likely going to come from the bigger banks, they’re going to be the ones that have got the deeper pockets.
“Whereas if you look at for example those specialist lenders’ with securitisation and wholesale funding programs, they won’t want longer term returns in 20 to 25 years, their returns may need to be over a shorter-term than that.”
Help to Buy is an equity loan scheme launched by the government which allows first-time buyers to buy new build homes. Around five per cent of the purchase price is needed as a deposit and customers can borrow up to 20 per cent of the purchase price, or 40 per cent in London.
The next round of the scheme is available from April 2021 to March 2023.
Parker said that there was currently a bank in the market with a war chest of around £100bn to spend in the next year, and two and five-year fixed rates did not have margin to provide a good return on investment.
“It’s conceivable that they’re going to be looking at markets such as Help to Buy and how can they as a lender recreate it to look at long term sustainable capital growth,” he added.
Parker added that shared equity loan firms like Proportunity and Nested had piqued lender interest but there was still a lot of uncertainty around the space.
He said: “The private equity investment for secondhand resale properties at the moment is fine, it’s growing from a very low base but is getting attention. It’s interesting and I think there’s a lot of lenders out there that are just monitoring, engaging with those firms so they understand what’s on the table and there’s a few that are interested in sort of taking forward working with them.
“But it’s a lot of investment in changing your systems and changing the way in which you work when it’s really unclear what the size of that prize is going to be and what your potential market share of that is going to be as well.”
He said Aldermore was “taking a watching brief” currently on such schemes but was “open to exploring opportunities in the sector in the future”.
Buckinghamshire Building Society’s chairman Dick Jenkins said that not many smaller lenders participated in the Help to Buy scheme due to the “operational hassle” of joining the scheme was not worth the small number of cases that would come their way.
He said: “From our point of view the disappearance of Help to Buy won’t make a difference. But of course, there will be changes in the marketplace and that change will create an opportunity. For instance, firms like ours could see some people for whom we would be quite happy to lend 95 and 100 per cent loan to value.”
EPC ratings and affordability
Another “significant change” that will occur in the next 12 to 18 months will be on sustainability, according to Parker.
He said: “We’ve got the Green Finance Institute (GFI) and people like that going and visiting lenders now, sitting down with them and talking to them, which has never really happened on such a grand scale.”
Parker pointed to the open letter from the GFI to the government, which Aldermore along with other lenders signed, that called for stamp duty reform to encourage demand for energy efficient home and works.
Rachael Hunnisett, national account lead for Skipton Building Society, said that there was a “good debate” to be had around affordability and how that could be linked to EPC ratings, but it would need to done responsibly.
She said: “Lenders will be looking across back books and considering the average EPC rating of their portfolios. It’s important to think about how we can support the reduction of carbon emissions from UK properties and educate on the importance of the wider sustainability agenda. Not only through purchase business, but with remortgages and existing customers too. Specifically, with properties which have lower EPC ratings.
She added that innovation will first take place on additional borrowing, specifically when it came to customers funding retrofitting to improve their efficiency, but education was a key factor.
“We all have a role to play in educating homeowners and innovating to find new ways to support sustainable living, moving forward this has to be a priority,” she said.
Buckinghamshire’s Jenkins said: “I think one of the things that lenders can do is take a principled stand on and say that they won’t lend on the lowest EPC category. That’s an option, and something, we could consider as a way of trying to do our little bit to try and encourage people into more sustainable homes.
“But at the end of the day, what’s going to happen to those Category F homes? In the current housing crisis we need all the homes we can get. With low EPC category homes someone’s got to spend some money on retrofit and the payback is unappealing. I would find it quite difficult to tell a borrower that they need to spend £25,000 or more to improve the EPC and save diddly squat per annum.”
Tipton and Coseley BS hires Skipton’s Shand as finance director
He takes on the role with immediate effect and will also join the mutual’s board.
Shand worked at Skipton for just over five years, where he oversaw its business partnering and cost teams.
Prior to that he worked at Lloyds Banking Group for around seven years, most recently as a financial controller for mortgages and savings for nearly four years.
Before that he worked at Hbos for six years, initially as a senior manager for general insurance and then as head of finance for its insurance division.
Richard Newton, Tipton and Coseley Building Society’s chief executive, said: “I am delighted that Alastair has been appointed to the role of finance director.
“He brings a strong financial background, proven track record of developing high performing teams and extensive industry experience which will undoubtedly deliver benefits to the society as we continue to move our business forward and deliver against our strategic priorities.”
Skipton relaunches 95 per cent LTV new build range
Two-year fixed rate is priced at 3.74 per cent and its five-year fixed rate is pegged at 3.76 per cent. Both have no fees and come with £500 cashback.
Offers are valid for nine months as standard, with the ability to extend by a further three months should certain criteria be met. The mutual said its underwriters aim for a turnaround of no longer than 48 hours, with a maximum loan amount of £450,000.
Rachel Hunnisett, new build lead at Skipton, noted that the scale of recent house price growth meant that the amount first-time buyers need to save as a deposit has rocketed.
She added: “At Skipton, we’re committed to helping more people own their own homes, which is why we’re delighted to be back with 95 per cent LTV lending for new build houses, giving your clients the opportunity either as first-time buyers or home movers to buy with as little as a five per cent deposit.”
Skipton BS appoints intermediary lead for telephone BDMs
She replaces Simon Tipton, who has worked at Skipton for over 17 years and has moved to a role in financial advice at the mutual.
Goodall (pictured) has worked at the lender for the past eight years as a mortgage manager and has been integral in shaping the telephone BDM team when it was launched in 2018.
During her career, Goodall has worked in broker support, direct lending and mortgage advice teams. Her appointment was part of Skipton’s ambition to become a top ten lender.
Goodall said: “I’m delighted to be back on board and look forward to steering us in the direction of growth, efficiency and flexibility to support brokers and our key lending partners.
“My experience of people leadership and passion for driving change and progress is what I bring to this role, along with a strong belief that we continue to do the right thing for brokers and their clients.”
Skipton has made a number of appointments in recent months, appointing Rachael Hunnisett to the newly-created role of national account lead and making Charlotte Harrison its head of mortgage products.
The lender also promoted Carley Harrison and Keven Crawford to new roles in its mortgage distribution team.
Top 10 most read mortgage broker stories this week – 27/08/2021
AmTrust Mortgage & Credit’s business development director Patrick Bamford’s suggestion that a long-term government scheme of up to 20 years could give first-time buyers hope in the high-priced market was also one of the most read.
Keeping on top of product changes proved essential, as stories covering rate adjustments and launches were well received.
Nearly two thirds of first-time buyers use second source of income to raise deposit
A 20-year government plan could give FTBs much-needed hope in a high-priced market – Bamford
Newcastle BS promotes national account manager
Santander extends sub-one per cent offering in mortgage refresh
Skipton BS releases 95 per cent LTVs with below average rates
Just Mortgages builds on Wales coverage with director appointments
Atom Bank targets non-advised sales as report reveals upbeat return to lending
HSBC introduces differential rates by borrower type
High Court sanctions restructuring plan for Amicus Finance
Barclays slashes rates by up to 0.25 per cent and brings out sub-one per cent deals
Skipton BS releases 95 per cent LTVs with below average rates
The products include a two-year fixed mortgage at 95 per cent LTV with a rate of 2.98 per cent. This is available for residential purchase only and has a £495 fee.
Currently, the majority of 95 per cent LTV products on the market have a rate higher than three per cent.
Data released by Moneyfacts last week showed the average rate for a two-year fixed rate at 95 per cent LTV stood at 3.69 per cent, while a five-year fixed rate at the same tier had an average rate of 3.93 per cent.
There is also a three-year fixed product at 90 per cent LTV, priced at 2.23 per cent with a fee of £995. This is available for residential purchase and remortgage.
Additionally, there is a five-year fixed mortgage at 85 per cent LTV with a £995 and a rate of 2.16 per cent. Residential purchases and remortgages are eligible for this deal.
The mutual is also reducing rates across its Help to Buy and shared ownership ranges with cuts of up to 0.52 per cent and 0.48 per cent respectively.
The products will be available from tomorrow.
Charlotte Harrison, Skipton’s head of mortgage products, said: “We’re delighted to be able to offer a new range of mortgages, several of which are best buys. These are priced very attractively so I’d recommend anyone interested to apply as soon as possible as they will be limited in their availability.”
Skipton BS revises variable income criteria to increase borrowing
The changes include accepting up to 100 per cent of regular variable income, like quarterly bonuses where a similar amount is given semi-regularly, into a customer’s income calculation.
The lender will need 12 months’ evidence in the form of a P60 or payslip for the income to be considered.
For non-regular variable income, such as overtime or sales commission which is seasonally affected or occurs irregularly, the lender will include 50 per cent of this as part of a customer’s income calculation, or 100 per cent if the income is established as “sustainable”.
To ascertain non-regular variable income the lender will ask for two years’ worth of evidence.
The lender changed its criteria during the pandemic, having previously accepted up to 100 per cent of guaranteed other income if a borrower could provide two years’ worth of evidence.
It changed this to 50 per cent across the board during the pandemic due to uncertainty around job stability and other income such as bonuses and commission.
The lender said that if borrowers had received furlough or a Self-Employed Income Support Scheme grant it would need two years’ of evidence and would take the lower of the last two years when income fell, or an average if it increased, into its assessment.
Skipton enters 95 per cent LTV new-build market
Since the relaunch of mortgages for borrowers with a five per cent deposit earlier this year, many lenders have restricted lending on new-build homes. This included the providers that launched under the mortgage guarantee scheme which excludes newly built properties.
Skipton’s products include a two-year fixed rate at 3.74 per cent and a five-year fixed at 3.76 per cent. Both mortgages have no fee and offer £500 cashback.
New-build flats will continue to be restricted to 85 per cent LTV, but higher LTV lending is available through the mutual’s shared ownership offering which is open up to new houses and flats up to 95 per cent LTV.
Charlotte Harrison (pictured), head of mortgages at Skipton Building Society, said: “Looking at recent data from the Office for National Statistics, the average price of a new-build property now exceeds the Help to Buy regional price caps in five of the nine regions, with another two very closely aligned.
“As we look to the future, we recognise that government support, such as the Help to Buy scheme, can’t continue to be relied upon by those wanting to take their first step onto the property ladder, and we’re answering that call.”
“New-build properties are typically more energy efficient. We believe it’s important that home buyers across the board have products available to them that afford the opportunity to purchase such a property.
“We recognise that lenders can play a more active role in greening the UK housing stock. Aligning our policy for new and second-hand homes is a first step in our efforts to support the fight against climate change,” Harrison added.
Skipton reports £3bn of H1 lending and gives mortgage prisoners membership – results
The mutual lent £0.9bn more than the same period in 2020 and grew mortgage lending by 4.4 per cent, agreeing home financing for 16,087 home purchasers and remortgagors in H1.
The group’s arrears position improved slightly during the period for accounts in arrears by three months or more to 0.28 per cent, well below the industry average of 0.85 per cent.
At a time when mortgage prisoners continue to battle for rate caps and with a government reluctant to intervene in the closed mortgage market, on 1 June Skipton effectively brought 4,535 mortgage prisoners in to full membership of the mutual.
Customers of adverse credit subsidiaries, Amber Homeloans and North Yorkshire Mortgages, which both stopped trading in 2010 with £2.5bn of mortgage accounts now down to £500m of balances, will be able to access all of the society’s remortgage options, subject to affordability checks.
Speaking to Mortgage Solutions, David Cutter, Skipton group chief executive, said it was hard to say how many of these would be able to take advantage of their new situation.
“It will be far easier for these borrowers from a customer point of view, but it’s hard to say how many will actually move. These are seasoned mortgages, so by now because many are so seasoned, we don’t expect too much.”
Group profit before tax (PBT) leapt to £159.2m up from £34.4m in H1 the year before.
Profits in the period, under both performance measures, have benefitted from a clawback of loan impairment provisions totalling £14.8m reflecting the updates to the economic outlook in light of the improving COVID-19 situation, mainly driven by the successful roll out of the vaccine.
Meanwhile, Connells completed the acquisition of Countrywide on 8 March 2021, creating the UK’s largest estate agency network of 1,235 branches. The group said the buyout ‘will provide further diversification to the group’s business model, deliver enhanced returns over the medium and longer term and improve the mutual’s capital strength when margins on the mortgage and savings side come under pressure due to competition.
It said: “The higher returns from the estate agency business will support the society’s ongoing investment in its customer proposition and its people and continue to allow it to offer competitive mortgage products to our borrowing members and competitive savings returns to our savings members, in addition to further enhancing its financial advice proposition.”
Mortgage market projections
Cutter said he expected mortgage business to tilt away from purchase towards remortgage with a lot of maturities coming up.
“There’s also an opportunity to shift business back to two-year fixed rates and we expect distribution to remain strong,” he said.
On when rates might bottom out, he said: “I expect them to decline further but when and where they bottom out to depends on lender risk appetite. I expect competition to continue this year and rates have further to go.”
In conclusion, Cutter said: “At a time of continued uncertainty for our customers, colleagues and their families, Skipton’s performance seems a secondary interest while we all adjust to the ongoing impact of the global pandemic. But it is against such a challenging social and economic backdrop that we’ve seen Skipton’s mutuality, agility, and first-rate customer service come to the fore and be reflected in our results today.”