Archive: Dec 2016

When The Who sang about My Generation it became a symbol of teenage angst. Released in 1965, “their generation” experienced the gaining popularity of the cassette recorder, could buy a loaf of bread for 9p (1970) and the average first time home owner in the 1960s was just 23, rising to 26 in 1974.

Today we are streaming our music, buying bread at over £1 and getting on the housing ladder at the age of 30. Not so much My Generation, as Generation Rent – over the last 10 years, there has been a significant increase in those aged 25-34 within the private rental sector: 46% in 2014-15, compared with 24% in 2004-5.

How can we help aspiring home owners?

At Ipswich Building Society we’ve long supported initiatives such as Shared Ownership to help first time buyers get on the housing ladder, and rely on our experienced manual underwriters to help borrowers with increasingly different, and complex, lending situations. The days of ‘2.4’ and ‘9-5’ have given way to those who are borrowing later in life; are self employed; are divorced with income through child maintenance; and those who want to build their own home.

In particular shared ownership is increasingly seen as a practical and flexible alternative to a traditional mortgage, with the difficultly of saving for a deposit against the scenario of rising house prices.

Shared ownership isn’t all we do. But it’s a great place to start. So, if you’ve got clients who are looking to get on the housing ladder talk to us.

Ipswich Building Society shared ownership lending criteria:
• We lend up to 95% LTV on houses and flats
• Must have ability to staircase to 100%
• Minimum share 50% – please refer if lower
• New build acceptable
• Open Market shared ownership considered on scheme by scheme basis
• No credit score
• Manual underwrite

Christmas is coming…

…and so are the bills to pay for it. I hate to sound like a humbug, but the reality is that Christmas places a big burden on many households’ budgets. A survey recently undertaken by OnePoll on behalf of Nationwide, reveals that on average Brits spend almost half (44%) of their monthly salary on Christmas, with some spending considerably more. In Northern Ireland, for example, families spend 67% of their monthly salary on Christmas and in the North East the figure is 56%.

And its not a simple matter of spending reflecting the North / South divide. In the North East, the amount spent on Christmas gifts for kids is £207, whereas in the leafy suburbs of the South East of England, it’s a much lower £121.

Christmas comes full of temptations to spend, spend, spend but when the time comes to take down the Christmas decorations, the truth of Christmas can become all too apparent as the credit card bills hit the doormat.

According to The Money Charity, the total credit card debt in the UK is already (Sept 2016) a staggering £65.7bn, which works out at an average of £2,434 per household. If borrowers repaid only the minimum repayment each month, it would take more than 25 years for them to clear their debt.

Yes, we need households to spend in order for the economy to remain strong, but there is a fine balance between spending our way to recovery and spending our way into trouble. And, as a nation, we’re good at spending. For example, in July this year 40 million plastic card transactions were made with a total value of £1.74bn.

The consequence for some is that their finances run out of control. The Citizens Advice Bureaux typically deal with more than 4,000 new debt problems every day and more than 2,000 CCJs are issued every day with an average value of £2,030.

It does make difficult reading as we approach the festive season, but it’s nonetheless a significant issue for some. And, of course, unsecured debt can have a knock-on effect with other finances. Making mortgage payments can often be put into jeopardy if borrowers are juggling their money to repay other debts.

But, like Dickens Christmas Carol, let me give this sorry story a happy ending. Most people do resolve their debt problems and learn to become better at managing their finances as a result. And an impaired credit record doesn’t necessarily mean being cast into the financial wilderness forever.

If borrowers can explain why they got into difficulties and show that they have regained control of their finances, then an historical credit record should not necessarily hold them back. Lenders such as Magellan will consider deserving cases. Arrears, CCJs and other debt issues may stay on a credit record for up to six years, but that doesn’t mean borrowers have to wait until that six-year period is up before they are able to access credit once again.

I do hope you have a very Merry Christmas and a prosperous New Year.

As 2016 is the year of surprises, Brexit, Donald Trump and Leicester City, what could we expect from the autumn statement?

Although no ‘bold statements’ or shock moves this time round overall good news for the Mortgage Industry, arguably the first in considerable time to try to seriously address housing shortages, Philip Hammond has been described as the ‘the listening chancellor’, it’s clear that he has an aim to get Britain Building across a cross section of society and not just the fortunate few.
So what is in it for the Mortgage Industry? A few notable areas, Philip Hammond did announce that there would be an extra £3.7bn for housing projects which were not aimed directly at first time buyers but with most of that being affordable housing it is likely to benefit them.

The chancellor pledged a £2.3bn housing infrastructure fund to provide 100,000 new homes in high demand areas. Alongside £1.4bn to deliver 40,000 additional affordable homes and rent to buy details still to be finalised. New Build focussed lenders such as ourselves will be watching this closely and be keen to react to broker and consumer behaviour giving us great opportunity in the coming months and years.

Despite some pressures from the industry over stamp duty there was no mention of the tax which considering this still remains a substantial barrier to homeownership (research has suggested up to 60% of potential homeowners would be more likely to buy if they didn’t have stamp duty or upfront costs).

It is clear from discussions amongst affordable and first time buyer developers that supply is nowhere close to demand. However, change has been alluded to for some time and I feel more optimistic that this time change will come……

You might be forgiven for beginning to think you can breathe a sigh of relief as the end of 2016 looms into view. It certainly seems to have been a rollercoaster of a year with some real highs and it feels like more than its fair share of lows. As the year draws to a close it’s inevitable that some of us turn to look back at what happened with a real mix of emotions.

Internationally, wars have continued to make headlines, displacing families and creating problems no-one should ever have to face. Politically, there have been many different contests and votes with results so unpredictable they couldn’t have been written better in fiction. And nationally, a swathe of celebrity deaths seemed to pique a collective sadness for individuals few of us could possibly have known as anything more than a media personality.

It hasn’t all been doom and gloom though. From the national events throughout the Queen’s 90th birthday celebrations, followed by the spirit, excitement, and huge medal haul, of both the Olympics and Paralympics, the year has had its positives.

As an industry I think there have been some significant steps towards creating a more positive future for protection too.

So what have we learned this year?

Listening can be seen as one of the best ways to learn. The industry has definitely taken note of the things both advisers and customers have been saying about their needs in terms of protection, and improvements are beginning to take shape.

With an increased number of improved online processes, the application journey made by advisers should have been a little easier this year. Advisers are now able to free-up time by using improved online underwriting systems from a variety of providers.

We’ve received positive press recognising our step away from the ‘numbers race’ when it comes to critical illness cover. By providing better quality cover for the most claimed-for conditions, advisers should find it easier to recommend the right product.

We know the industry continues to make efforts to improve the outcomes for those who make a claim. When your customer’s world feels like it’s collapsing after a life-changing diagnosis, it’s unlikely that their first thought will be ‘how will I pay the mortgage?’ Support around telling the family, or guidance through treatment is likely to be higher on their list of priorities. Added value services are becoming more commonplace because while the money at the point of claim is useful, the emotional support can often make the biggest initial impact.

New ways to reach customers

2016 saw the conclusion of the 7Families campaign. The campaign helped seven families from across Britain whose lives had been turned upside down by long-term illness or life-limiting conditions. By giving practical and financial support, the initiative successfully raised awareness of the importance of income protection.

Statistics show that individuals have a higher chance of needing income protection during their working life than life cover or critical illness cover. An ‘average’ 30 year old, retiring at 65 has a 38% chance of being off work for 2 months or more1. But with less than 10% of customers buying income protection2, advisers need more campaigns like this to give them the ammunition they need to sell more.

Our own income protection report has been well received by advisers. Allowing them to create tailored reports to give to clients, they highlight the risks individuals face and the fact that all budgets can afford to add a little income protection.

Giant strides for Royal London

We’re proud of our achievements in 2016 and can barely believe that it’s just 12 months since we rebranded to Royal London. In that time, we’ve improved our online service to make life easier for advisers: we now offer estimated decisions for non-standard cases and can give likely costs for rated cases. On top of the online improvements we refreshed our underwriting proposition to focus more on the most commonly disclosed conditions, improved our critical illness cover to provide better cover for the most claimed for conditions, and added help for carers to our Helping Hand service amongst other things.

But, ‘self-praise is no praise’ as the saying goes. And thankfully it’s not just us that thinks we’ve attained a lot this year. We were delighted to win Company of the Year not once, but three times in 2016. In June, we received the accolade in both the FT Online Innovation and Service Awards and Money Marketing Awards, and then just this week we received the same title in the FT Adviser 5* Service Awards. It means such a lot to us.

But this means that we can’t rest on our laurels. Innovation continues to be a keyword when discussing the future of protection. And while providers labour to develop better, pioneering products they also need to consider the new hooks that will convince more customers protection is a necessity, and design new tools to make the sale easier for advisers.

We’re looking forward to welcoming 2017.

This is a Royal London promotion.

Source :
1 – Hannover Re, March 2016. Statistics, assuming a 50% gender mix and 25% smoker mix, show the ‘average’ 30 year-old retiring at 65 has a 4% chance of dying, a 13% chance of getting a critical illness and a 38% chance of being off work for 2 months or more.
These figures have been produced based on their interpretation of the Institute and Faculty of Actuaries’ Continuous Mortality Investigation insured lives incidence rates together with their estimated view of future trends.
2 – YouGov Life and Health Protection survey, 2015

…The new Chancellor announced in his latest statement

Recent reports showing the number of house purchases increasing by 1% in October has led to some suggesting the summer “drought” was over. However, this was against a 4% drop in September as lending filtered through from post Brexit sales.

What remains clear is that there continues to be unpredictability in the UK housing market. Recent surveys from the RICs point to low numbers of new sales instructions and an increase in demand, with only one outcome.

It was therefore important that the new Chancellor gave the housing market some needed positive Christmas cheer for us all to hear in his autumn statement.

£1.4bn has been pledged aimed at delivering 40,000 new affordable houses, definitely a welcome boost for many families trying to buy their first home. A £2.3bn housing infrastructure fund has been earmarked to help build 100,000 new homes in high-demand areas. On the face of it Mr Hammond is certainly trying to continue where his predecessor left off and stimulate new UK housebuilding.

But with IPT increases planned for June and projected 5% rising household costs following Brexit, prospective buyers and remortgagers will be turning to their mortgage adviser for that much needed advice on affordability

Ho, ho, ho…and the message for 2017… build, build, build.

With festive cheer enveloping the world of finance, Positive Lending is looking forward to 2017 and also back at the year gone-by. As a specialist packager, this year has brought many changes to our sector, the most significant being MCD. Having adapted our business to meet the new regulation, and to best support you and your clients, we are in a strong position to continue to deliver market-leading specialist loan products and service into the New Year.

All I want for Christmas is…
falling Second Charge Mortgage rates?

In November second charge mortgage rates dropped to an all-time low of 3.85%; this product has a very limited distribution but is available to you via Positive Lending. At this level of pricing, second charge mortgages continue to be an excellent alternative for clients who are looking to raise capital or consolidate.

With loans available for any legal purpose, we are receiving enquiries regularly to raise funds for home improvements, business purposes, to help pay a tax bill or to raise a deposit for an additional property purchase as well as other uses.

A good client looking to raise £50,000 will have access, through Positive Lending, to three loan plans with rates of under 4.00% and a further 12 plans with rates under 4.50%. This means that a low rate second charge mortgage is an achievable solution for many clients.

‘Tis (always) the season to be jolly

At Positive Lending we take pride in finding a good solution for clients who are either unable to raise what they require through more conventional means or those who will actually benefit from a better outcome by taking a second mortgage instead of changing their first mortgage product. Whether that is because they have a fantastic rate on their current product, they may be tied in for a period and want to avoid paying a large ERC or they may be on interest only and wish to keep it that way. There is generally a lot of flexibility in the second mortgage market. Our aim is to assist you to ensure your clients have access to the very best loan outcome available. A good customer outcome always make us jolly!

He’s making a list, he’s checking it twice…

If you are unsure as to where and when a second charge mortgage may be a viable alternative, then please do get in touch with Positive Lending on 01202 850 830. Our Second Charge Mortgage experts will be more than happy to talk you through all the options for your clients so you can understand the benefits or alternative funding options.

With the new rates seen above and Positive Lending’s transparent fee structure, your clients could benefit from what is an ever-growing market.

Have yourself a merry little Christmas

On behalf of the team at Positive Lending, we wish you a very merry Christmas and a prosperous New Year. Our regional account managers will be available throughout 2017 to meet with you, at a time and place that suits you, to provide product training and discuss your specialist lending enquiries. We look forward to working with you in the New Year.

It seems hard to believe that it’s already time to decorate the tree and buy the turkey! As we starting wrapping the presents, it’s worth taking some time to reflect on what has been an eventful year in the mortgage world! The introduction of the European Mortgage Credit Directive and the tax changes on BTL investments kept us all busy in Q1, the outcome of the EU referendum in June has created some uncertainty around how this will impact the market and everyone is now focused on preparing for new standards required by the PRA for underwriting BTLs, some of which come into effect on 1st January. It certainly hasn’t been a quiet year in the market.

At Kent Reliance, we’ve been busy expanding our distribution throughout the UK, supported with the recruitment of top class talent from across the industry to help make our ambitious growth plans a reality. Joining Mortgage Intelligence’s panel in June was a key part in this. Since partnering with Mortgage Intelligence, we’ve had a great reaction from its members and I’m delighted to see that we’re helping you to create solutions for your client’s borrowing needs, with numbers growing markedly every month.

As we prepare for next year, the UK BTL market will require a greater level of underwriting knowledge and specialist expertise to meet the challenges of the new regulations in 2017. Not only is Kent Reliance ideally positioned to support both you and your client’s through these changes but we also have the desire to be the specialist lending expert of choice in 2017.

Although Kent Reliance provided limited company lending well before the recent tax changes were announced, we wanted to respond to increased broker demands for a product that catered more for this shift towards professionalisation. This is precisely why, earlier this year; we enhanced our limited company proposition to make it easier for landlords to transfer their existing buy to let property from their individual name into a limited company or a limited liability (LLP) partnership structure.

Switching into a limited company or LLP structure may not be the best option for every investor and we also encourage anyone considering this move to seek advice from a qualified professional before rushing into any decisions. However, with more and more limited company products becoming available, the choice in the market is greater than ever before and it may just bring back some much needed confidence for landlords. Just make sure you pick a specialist lender who understands how to make it happen and one which isn’t afraid to join in the debate.

Enjoy the festive season, and I wish you a prosperous New Year. We look forward to working with you.

2016 has certainly been full of surprises – Brexit and Trump to name just two – and yet the bookmakers failed to correctly predict either. Maybe we should now come to expect the unexpected, because uncertainty seems to be the new norm?

Despite all the changes, the market has remained resilient and the Council of Mortgage Lenders estimates that gross mortgage lending was £20.6 billion in October. House purchase transactions may be down, but brokers and their clients are seeing the benefits of remortgaging, with mortgage rates at an all-time low.

As we welcome in 2017 – we look set for another interesting year. There’s the introduction of a new BTL stress rate in January, and April marks the start of the phased tax changes for higher rate tax payers. Lenders will also be turning their attention to how they underwrite portfolio landlords to meet the September deadline.

But ahead of all this we look forward to Christmas. A time when the shops are pushed to their limits and customer service can be strained under the pressure. The mortgage market is not immune to this, but here at the Coventry we understand that our service has a direct impact on your reputation. We are continually looking at ways to improve and seek feedback from intermediaries through our monthly surveys. We’re always working hard to meet your expectations and over the last 12 months we have answered your calls in an average of 16 seconds and consistently processed documents within 48 hours.

And we’ve been given an early Christmas present! I’m delighted to say that at The Coventry we have been awarded 5 stars in the Financial Adviser Service Awards, something which we are incredibly proud of, because it is voted for by intermediaries – who have first-hand experience of what good service looks like.

I hope you all have a very happy and peaceful Christmas, and I wish you luck with your shopping – I hope you receive 5 star service!

Even at the most wonderful time of the year you need to be thinking about providing your clients with a quality insurance policy. Santa included. And, if Santa had quality Home Insurance with Paymentshield he could ensure he had a Christmas cracker rather than a Christmas crisis.

Festive flexibility

With all the presents he needs to deliver on Christmas Eve, along with the added festive treats, Santa has more contents in his home in the run up to Christmas than usual.
Thankfully, Paymentshield Home Insurance offers an automatic uplift in contents cover for the month before and after Christmas. So, if calamity struck and Santa had a December break-in, his insurance cover would protect him from being left out of pocket by having to replace all the gifts before the big day. Phew!

The Grinch

Speaking of theft, Santa would also be covered for any potential altercations he may encounter with the Grinch. Malicious damage caused from icy snow balls thrown through the window would be covered by Santa’s building insurance, as well as providing financial protection against theft from his shed while he’s out delivering presents.

Freezer failure

If the worst should happen and Mrs. Claus’ festive freezer stock gets damaged when it conveniently breaks-down, she should check to see if her policy covers it, as not all policies will. Thankfully, Santa’s quality Contents Insurance does provide cover for this – meaning the festive feast would be saved.

Snow storms

As you can imagine, the temperature in Lapland gets pretty low, which can lead to frozen pipes. Luckily, Santa’s buildings insurance would cover the cost of repairs should any damage happen – with his policy ensuring that all work by approved tradesmen is guaranteed for 12 months. Plus, with optional Home Emergency cover he’d be able to call someone out in double quick time to patch up any leaking pipes.

Defective deccies

If the lights on his Christmas tree caused a fire that resulted in a grotty grotto. His Home Insurance would cover all the fire and smoke damage to his buildings, as well as replacing his contents on a new for old basis.

If the grotto can’t be quickly repaired, Santa’s Home Insurance ensures that both he, Mrs. Claus and the Reindeer would be given alternative accommodation until their home becomes habitable again.

Christmas Eve

There’s zero room for panic on his busiest night of the year, so if Santa should lose his wallet or phone whilst out delivering, there’s no need to worry, as long as Santa has Personal Possessions cover for anything normally worn or carried away from the home. He’d even be covered for the loss of money in his wallet and for misuse of his credit card, meaning he’s not out of credit.

Plus, good insurers will even replace his locks and lost keys as standard.

Whether it’s Santa, or any other client, it’s good to remind them about the benefits of quality home insurance, to help them avoid any Christmas disasters. It’s also important to remind them that home insurance is for life, not just for Christmas.

If you’d like to know more contact our Sales Team on 0345 0615 700.

Intermediaries are a key component of today’s mortgage market, accounting for somewhere between two-thirds and three-quarters of all new business across the market in the UK.

For Virgin Money, intermediaries are even more important to our mortgage business, representing around 90% of our new business volumes.

We are absolutely committed to ensuring that we build successful partnerships with intermediaries, and want to ensure that we do everything we can to help them grow their businesses. We believe that when our intermediary partners are successful, we’ll be successful too.

That’s why, to show you what you mean to us, we have worked with you over the last two years to make some changes to our service, including the launch of a product transfer service – assuming the customer chooses to go back to their mortgage broker for help and it is the right thing for the customer to stay with Virgin Money. I believe that’s important, as many customers want independent advice when they are looking for a new mortgage deal, but they shouldn’t have to change lenders if the right thing for them to do is stay with their existing lender.

Taking time to give customers good advice costs money. We believe that intermediaries should be rewarded fairly for giving this advice, so we’ve introduced procuration fees for when they arrange a product transfer for an existing Virgin Money customer – often called retention proc fees. As with our procuration fees for new mortgage business, these new fees are both competitive and fair and reflect the true cost of giving good advice. We think that’s important.

We don’t think that it’s fair that some lenders prevent their existing customers from accessing their front book products at maturity. So to be transparent, we’ve added our retention products onto mortgage sourcing systems, to ensure it’s as easy as possible for intermediaries to compare them with what else is in the market. Importantly, our retention products mirror our core product range, ensuring that existing customers have access to the same products as new customers.

We have worked with you to transform our service, based on your feedback and what matters to you and there’s more to come in 2017. All that remains to say is that on behalf of everyone here at Virgin Money I would like to thank you for all your support over the last 12 months, and wish you all the best for the festive season and a prosperous New Year.