Top 10 most read mortgage broker stories this week – 04/10/2019
Other popular stories included Clydesdale’s promise to give customers £100 if an application was not completed in 10 days or less as well as the expansion of The Mortgage Lender’s sales team, which saw the addition of five new staff.
Rogue landlord fined £40,000 over ‘dangerous’ and unlicensed HMO
Stamp duty receipts fall as transactions decline – HMRC
FCA warns P2P lenders to clean up act
Santander trims rates and warns brokers about self-employed income cut-off
Clydesdale makes ‘mortgage offer in 10 days or £100 cash’ commitment
Vernon Hill to depart Metro Bank
Brokers need to push ‘Bank of Mum and Dad’ borrowers to get legal advice ‒ analysis
Mortgage lender graduate among Apprentice contestants
‘In future, lenders will bid for borrowers’ — Platform Bristol Supper Club
The Mortgage Lender expands sales team with five new roles
Furness BS cuts FTB rates and TML adds to resi remortgage range – round-up
The range sees a reduction to the two-year fixed rate products, which now start from 3.08 per cent – down from 3.68 per cent – with an option of £1,000 cashback at 3.38 per cent, reduced from 3.99 per cent.
Five-year fixed rates now start from 3.38 per cent with an option of £1,000 cashback at 3.58 per cent. These rates have been brought down from 3.99 per cent and 4.15 per cent respectively.
Two-year discount products are priced at 2.69 per cent with a £500 cashback and 2.99 per cent with £1,500 cashback.
Alasdair McDonald, head of intermediaries at Furness, said: “We understand that first-time buyers need the best start they can get, and this isn’t always down to the cheapest rate.
“We believe that the reduction in our 95 per cent LTV fixed rates complements our other first-time buyer propositions, which include our joint applicant/sole proprietorship solution and lending on new build houses.”
The 95 per cent LTV range is also available for remortgages with free valuation and legal fees on standard cases in England and Wales and a contribution of £150 towards fees in Scotland.
TML adds to resi remo range
The Mortgage Lender (TML) has extended its residential remortgage products, introducing additional deals with no up-front fees and either £500 cashback or free standard legals.
The new remortgage products are available up to 85 per cent LTV, with a minimum loan of £75,000.
Initial rates start at 3.05 per cent for a two-year fix at 70 per cent loan to value and 3.79 per cent for a five-year fix at 70 per cent loan to value. There are no application, valuation or transfer fees.
Completion fees from £995 to £1,495 are payable but can be added to the loan.
The Mortgage Lender deputy chief executive, Peter Beaumont (pictured), said: “Remortgages are an increasingly important source of new business for our broker partners.
“It’s important we support our introducers by offering competitive rates and attractive products for those customers that do not meet mainstream criteria such as debt consolidation, self-employment and impaired credit.”
TML’s Beaumont warns mortgage market must ‘wake up to scale’ of work ahead of Libor changeover – analysis
This gives lenders just under three months to make a decision on which changeover rate to commit to on two-year loans for new mortgage customers.
Speaking to Mortgage Solutions, Beaumont, deputy CEO at TML, warned there may be lenders who have not woken up to the ‘scale of the problem’ suggesting this is potentially a dangerous place to be.
“The message is really clear. The Financial Conduct Authority (FCA) says stop issuing Libor contracts as soon as you can, get on to alternatives, minimise the size of the problem and make sure you’ve got a cohesive executive-led transition plan for your existing borrowers,” he said.
The FCA confirmed it had already engaged directly with the six smaller mortgage lenders issuing Libor mortgages back in 2018, adding: “We strongly encourage mortgage lenders, intermediaries and mortgage borrowers to avoid new mortgage contracts that rely on Libor continuing beyond end-2021.”
Beaumont said in TML’s discussions with the FCA it explained how central mortgage brokers will be to the changeover.
“We’re issuing contracts but they’re recommending the advice to the customer. So, they’re the ones that need to follow the reasons for doing this.
“We want to be able to start educating the advice community on this change. Brokers are going to be issuing or recommending contracts to customers, whatever that may be. There’s a huge education piece here,” he added.
Specialist mortgage lender TML said its transition plans were well advanced and underway for both new and existing customers.
Alternative risk free rates being considered by the industry include Bank Base Rate, Standard Variable Rate and Sterling Overnight Index Average (Sonia), currently the working group’s preferred rate.
The Sonia benchmark is based on actual transactions and reflects the average of the interest rates that banks pay to borrow sterling overnight from other financial institutions.
Mortgage industry impact
FCA figures suggest there are an estimated 200,000 or £30bn of Libor-linked mortgages outstanding in the UK, with four lenders – Foundation Home loans, Pepper Money, Kensington and The Mortgage Lender still offering new customers Libor-linked mortgages, according to a Moneyfacts listing.
Precise Mortgages stopped offering Libor-linked mortgages to new customers in July, swapping to Bank Base Rate (BBR)-linked home loans and is continuing to work toward a benchmark for existing customers.
Alan Cleary, managing director at Precise Mortgages said: “When it becomes clear what index the industry is to settle on we will make our decision. The terms and conditions in our mortgage contracts allow us to use a suitable alternative index in the event of the withdrawal of Libor.”
Precise ran a 12-month project before making its decision and the move to BBR. It considered direct alternatives to Libor, including Sonia, but said despite assessing Standard Variable Rate, BBR ‘fitted its proposition better.’
Cleary said as the changeover only involved new customers, its customer communication strategy has so far involved a change to the European Standardised Information Sheet (ESIS) document and general mortgage conditions.
“We didn’t do any specific communication on this change, it simply wasn’t necessary given how well known this index is. When we move our back book to a replacement rate for Libor, we will communicate the details to our customers directly,” said Cleary.
Brokers already understand BBR and SVRs, he added, so the lender is not planning any further targeted education at this point.
No confirmation yet
The other lenders, Foundation Home Loans, Kensington Mortgages, Pepper Money UK and TML have not confirmed a decision and continue to consult on next steps for new and existing customers.
However, all recent and new securitisations have been linked to the Sonia daily rate.
Jeff Knight, marketing director at Foundation Home Loans said Sonia has replaced the three-month Libor and its funding documentation has always incorporated Libor replacement language as has its mortgage documentation since 1998.
Knight explained: “As yet there has been no guidance from the FCA around replacement measures for mortgages and it is complicated by Sonia being a daily measure, whereas most mortgages are monthly.
“There needs to be transparency around how the rate is set and the current methodology which is an interpolated retrospective rate, so too complex for consumer use. Consequently, we are waiting for the FCA to advise on what needs to be a market-wide move away from Libor.”
Alex Maddox, capital markets director, Kensington Mortgages, said it has been working ‘hard’ on its preparations but that he expects the securitisation markets to be Sonia-linked as standard from now on.
The lender’s latest July-launched Finsbury Square 2019-2 residential mortgage backed securitisation was its first securitisation linked to Sonia.
He said: “The deal saw very strong demand with a number of investors saying they are reticent to buy deals linked to Libor.”
Maddox added that Kensington is due to make a decision imminently on its benchmark rate for its mortgages and will be in touch with brokers as soon after the decision as it can.
“We have undertaken an extensive review of the terms and conditions of the almost £6bn of loans that we have to existing customers and will communicate to those customers about what changes will need to be made to their loans and when that will take place. Our key focus is to make sure that the rate change is fair for customers and clearly communicated.”
Pepper Money UK said it has already set up its own working group to closely follow industry developments and written to customers to explain that alternatives to Libor are being explored.
Paul Adams sales director for Pepper Money UK, said: “We are currently exploring the different options available to us, for example our recent securitisation; Polaris 2019-1 was structured using Sonia in preparation for the end of Libor-based transactions.”
Edwin Schooling Latter, the FCA’s director of markets and wholesale policy, said: “The key to this is that the end of Libor should not result in mortgage customers being transferred to other reference rates that are expected to be less favourable to the customer than Libor would have been.”
Latter suggested mortgage prisoners are unlikely to suffer detriment from the changeover because Sonia may offer less volatility in the medium to-longer term because it does not reflect the lenders’ costs of unsecured borrowing in wholesale markets, unlike Libor.
However, he added: “Some mortgage lenders may prefer to reference the Bank Base Rate directly rather than Sonia because it is well understood by consumers, and already used in some floating rate mortgages.”
UK Finance director of mortgages Jackie Bennett said the key consideration for firms is acting in their customers’ best interests and ensuring that any changes made are fair to customers.
Bennett added: “In the UK, coordination of the process is being led by the Bank of England’s working group on sterling risk-free reference rates. The working group is reporting good early progress in derivatives market adoption of Sonia as a replacement for Libor and is looking to promote similar progress with respect to other product types.
She added the mortgage lender trade body is working closely with members to understand any communication challenges they face: “We will continue to monitor messages from the regulators and developments in adoption of Sonia across other market users.”
One of the challenges for the industry is that closed book lenders which often sit in an unregulated space outside of FCA supervision, and so outside of working group efforts, may not be as supported as other mortgage lenders.
But the immediate mortgage market-related focus is on the small to medium enterprise and retail space driven by trade bodies and the regulator.
The Bank of England (BoE) through its steering group, Dear CEO work, publication of best practices, speeches and industry outreach continues to encourage consultation, debate and offer the industry support as a priority for Q4 and into 2020.
Commentators suggest the BoE is working with trade bodies to get mortgage lenders to move in a ‘peleton’ formation given the benefits of agreement and is encouraging all lenders to be involved in the UK industry group consultations. However, lenders will be left to make their own decisions with regulators loath to stray into anti-competitive waters.
And time is ticking down.
Eight in 10 landlords set to expand property portfolio
The report entitled ‘The Mortgage Lender: Buy to let: The Landlord Experience’, was conducted by OnePoll and addressed a panel of 100 landlords, revealing that half of all landlords agree that swathing tax changes have reduced the number of private landlords.
However, only one per cent said they think that has led to an increase in quality of rental property.
It also highlighted that only one in eight landlords had arranged specialist tax advice to help them manage their portfolios while only four in 10 used a specialist buy-to-let mortgage broker when arranging borrowing.
This is despite 45 per cent stating that they already owned between two and four properties.
Peter Beaumont, deputy chief executive of The Mortgage Lender, (pictured) said: “Our special report provides an in-depth guide to the buy-to-let market, including landlord obligations and yields around the country.
“Our panel of landlords have shared their worries and opinions and we’ve included landlord case studies to demonstrate the depth of borrower circumstances we are dealing with on a regular basis.”
Doug Hall, director at mortgage provider 3mc, added: “[The report] provides a snapshot of how landlords feel about the market, their tenants and the impact the myriad of changes has had on their portfolio intentions.”
According to the report, property maintenance, care of property and tenant behaviour were the top three concerns for landlords.
The Mortgage Lender hires Pidgeon as fourth satellite underwriter
It’s TML’s fourth underwriting hire and Pidgeon is supported onsite in Southampton by 3mc, Dynamo and TFC Homeloans.
“We’re delighted to have Warner join our growing number of lender onsite underwriters,” said Complete FS director Tony Salentino.
“This will add substantial benefits to our packaging proposition, including consistency of decision-making at decision in principle stage, quicker turnaround times and faster completions.”
TML head of national accounts David Eaves said: “Warner has a wealth of experience and we’re thrilled to have him join our growing team.”
Pidgeon has previously worked at Lloyds Banking Group, Woolwich Building Society, Molo Finance and Fleet Mortgages.
“TML’s real life lending approach was particularly interesting to me. Like they say, you can’t fit a square peg into a round hole — borrowers’ lives are complex and TML’s products reflect that,” said Pidgeon (pictured).
TML adds onsite underwriter at TFC Homeloans
Haley is the third onsite underwriter for the lender and joins Jemma Pugh based at 3mc and Diane McLoughlin at Dynamo.
For the last six years Haley worked as a mortgage adviser at the Co-operative Bank having previously been an underwriter with the business for five years.
The Mortgage Lender head of national accounts David Eaves said: “Having Katie on board, with her experience of advising on and underwriting mortgages is a great asset for The Mortgage Lender and TFC Homeloans.”
Haley added: “I wanted to get back into underwriting and work with a company that is less corporate. The team at The Mortgage Lender and TFC Homeloans have made me feel very welcome.
TFC Homeloans director Andrew Brown added: “We are delighted to have Katie here at TFC – she is part of our growing team of onsite underwriters and has fit in perfectly.
“At a time when TFC and the specialist market in general are in high growth, having onsite underwriters is key in ensuring consistency of decisions and quick turnarounds for our advisers and ultimately their clients.”
TML goes whole of market with 2.83 per cent BTL deal
It has also abolished the application fee for multiple applications and reduced the completion fee by 0.25 per cent for cases submitted at the same time from introducer partners 3mc, TFC Homeloans and Dynamo – packager route only.
The changes mean all of its introducer partners can access its range with rates that start at 2.83 per cent for a two-year fix at 70 per cent loan to value with a £150 application fee and two per cent completion fee for individual and limited company applicants and 2.5 per cent for houses in multiple occupation (HMO) and multi-unit blocks (MUB) applicants.
The semi-exclusive change will mean brokers can submit multiple cases with no application fee and the completion fee will be reduced to 1.25 per cent for individual and limited company applicants and 1.75 per cent for HMO and MUB applicants.
The Mortgage Lender deputy chief executive Peter Beaumont said: “The changes we’ve made to our buy-to-let products are in direct response to what the market is telling us it wants. We’re listening to our broker partners and making the changes we need to help brokers help their customers and put The Mortgage Lender front of mind.”
This year, TML launched Help to Buy residential mortgages and its first Buy to Let remortgage product. It also completed its first UK mortgage-backed securitisation of residential assets for £238.5m.
Majority of providers now lending to DSS tenanted landlords – analysis
This follows a high profile campaign initiated by a Mortgage Solutions article by journalist Lana Clements involving landlord Helena McAleer, which resulted in NatWest removing all restrictions on landlords renting to tenants who are in receipt of housing benefits in March.
A survey by UK Finance found that firms with no restrictions against tenants receiving benefits now make up a collective 89 per cent of the market for new BTL lending.
Research based on information collected by brokers at Mortgages for Business, who phoned lender call centres for confirmation, although administrator confusion misled brokers and revealed differences in some cases between official lending policy and information offered to advisers.
After Mortgage Solutions completed a series of fact checks, a few lenders confirmed that this restriction has remained in their buy-to-let (BTL) lending policy. The lenders named are The Mortgage Lender (TML), Pepper Money, State Bank of India and The Family Building Society.
Jackie Bennett, director of mortgages at UK Finance, said: “Most lenders do not place restrictions on landlords letting to benefit claimants, with each lender’s policy varying according to their commercial business model. Any landlord wanting to let to benefit claimants should be able to find a lender that will allow this.”
However, some lenders may have reasons behind this restriction, while others are willing to change their policy.
A spokesperson from TML said that the lender is aware of the issue and will be removing the restriction in the future.
Meanwhile, Keith Barber, director of business development at Family Building Society, said: “As we are not a specialist buy-to-let lender our published lending policy is appropriately cautious and we are well known for looking at each mortgage application individually.
“Our approach means that our experienced underwriters can and do make lending decisions which are exceptions to policy when appropriate. These exceptions include lending where the tenant is in receipt of benefits, as well as other categories such as letting to diplomatic or limited company tenants, students, family members, and houses in multiple occupation (HMOs).”
Barber said that given the payment track record described, the society would certainly have considered lending on an exception to policy basis as long as other aspects fell within the criteria, though it does not lend in Northern Ireland.
He added: “As you know, the vast majority of our lending is done via intermediaries. We make the point to them that we will listen to their clients’ story and will be happy to lend when this makes sense.
“This approach seems to be welcome and our lending volumes have been growing, though our buy-to-let (BTL) lending represents just about 0.3% of the market.”
Finance for landlords renting to tenants on benefits
David Whittaker, chief executive officer at Keystone Property Finance, said: “When Keystone launched as a full lender in its own right in September 2018 we ensured that our lending policy left the determination of who landlords generally housed in their buy-to-let property down to them as a business decision based on the location of the property and who they deemed would best serve their interests in terms of level of rent and propensity to pay.
“Our discussions with funders as we prepared to launch last year were very clear in that respect and I even went on Radio 4’s You and Yours programme in March to suggest that BTL lenders would adapt their policies to better accommodate a broader range of tenant types.
“Getting that message to market is sometimes difficult when faced with a blizzard of price incentives but I genuinely believe most lenders have followed the lead set by Paragon on this topic quite some years ago and that we all generally now serve tenant interests better but there is always room for improvement.”
Gatehouse Bank also confirmed that since the bank launched its BTL offering at the start of 2018, it has been happy to provide finance to landlords who rent to tenants on benefits.
Dominik Lipnicki, director at Your Mortgage Decisions, said: “Now it is easier to place cases but not as easy as it should be.
“The issue began when the government started to pay benefits to claimants, not straight to their landlords. I think the BTL sector has been affected negatively by government’s decisions over the past few years.
“But at some point I reckon that all lenders will change their policy.”
Jonathan Clark, mortgage partner at Chadney Bulgin, said he has rented properties to tenants on housing benefit for years, and never had any problems.
He added: “BTL lenders really should not have a problem with tenants on benefits these days.
“At the time of a new mortgage application, few landlords would even know if they were likely to rent to such occupiers and most of these would be unaware of such lender restrictions anyway.”
David Hollingworth, associate director of communications at L&C Mortgages, said there was a big enough range of lenders satisfying this type of customers.
He added: “Small lenders may still have restrictions but they are willing to review their policy soon.”
Keystone Property Finance and TML join MCI Club’s mortgage panel – roundup
This partnership will give its members direct access to Keystone and TML’s products.
TML head of national accounts David Eaves said: “We are delighted MCI Mortgage Club members now have access to additional lending options for their borrowers that are priced competitively and designed to cater for borrowers’ real life lending circumstances.”
MCI members to find Keystone’s products on Twenty7Tec
Phil Riches, sales and marketing director at Keystone Property Finance, said that the members will find Keystone’s products available on the Twenty7Tec sourcing system.
“I hope to see a lot of MCI members registering and using Keystone in the future for deals they have struggled to place for clients previously.
“We have worked hard to make the Application In Principle (AIP) and application process as quick and simple as possible for brokers.
“They will be able to submit and track applications using the intuitive cloud-based platform called MyKeystone. MyKeystone can be accessed by members once registered using our online form.”
Members will need to register with Keystone before they can submit or track cases.
Technology to simplify application process
Phil Whitehouse, head of MCI Club (pictured), said: “Technology is at the heart of MCI’s proposition as most of our members will be users of the Mortgage Keeper CRM system and it pleasing to see Keystone’s emphasis on technology to simplify the application process.”
Phil Whitehouse added that TML also has a good brand and is a great addition to the panel.
“The range of residential and buy-to-let products have criteria that help people with less than straightforward circumstances and this panel appointment is a great opportunity for us to work together.”
The Mortgage Lender enters expat BTL market – exclusive
The products are available to expats with a minimum £40k employed – £60k self-employed – equivalent income and on a capital and interest, part and part or interest-only basis.
Rates start at 3.95% for a two-year fixed product at 70% loan to value (LTV) and 4.35% for a five-year fixed at 70 per cent LTV.
They are available for both purchase and remortgage applications.
To qualify, applicants must be able to pay the mortgage from a UK bank account and have an agent or family in the UK who can oversee the property.
The expat BTL products are available to the whole of the market, have a £150 application fee, a two per cent completion fee and a maximum loan of £750,000.
The Mortgage Lender deputy chief executive Peter Beaumont (pictured) said: “There has been a 30 per cent rise in the demand for expat BTL mortgages year-on-year and our new range, which is available up to 75 per cent loan to value, meets the increase in demand from expat landlords and gives BTL brokers more choice for their customers.”
In April, TML launched a BTL product range with free standard legal fees and no application, valuation or transfer fees.
There are 141 fixed BTL options on the market from 20 lenders.