Category: Mortgage

Mortgage Intelligence Update: Buy to Let – Facing the winds of change

Head of Mortgages and Insurance Stephanie Charman reflects on an interesting time for buy to let with the upcoming changes to tax relief.

April’s alterations to tax relief will soon join several other key changes that the buy to let sector has faced in recent years. It is an interesting time for the industry, with the changes being another political step towards curbing a sector that has seen steady growth since 2008.

Once the changes are phased in, tax relief will revert to a flat rate of 20%, which means landlords on higher incomes may find themselves losing more in mortgage interest payments. But what does all this mean for buy to let going forward?

The story so far

The buy to let sector has been targeted for a raft of changes. One of the most impactful of these was the April 2016 stamp duty changes on second homes, which added 3% to the stamp duty bill. This was seen as a longer-term solution to reduce the incentive to invest.

The Prudential Regulation Authority’s consultation paper on lending standards has meant a tightening of criteria for buy to let lending. This includes stress testing against higher interest rates and increasing income cover ratios (ICRs) up to 145% or more.

Lenders have acted promptly to adjust their criteria. This means potential challenges for both those considering remortgaging who took out their mortgage under previous affordability, and investors looking to purchase another property. The effect that this has on landlords will depend predominantly on the amount of their mortgage in relation to the value of the property and the rent they receive.

Another contested change

Despite changes to stamp duty on second homes and new stricter affordability rules, it is the 2017 changes in tax relief that have seen some of the strongest protestations. To avoid the changes, some landlords will be considering a limited company set-up going forward, in order to be exempt from the reduction in tax relief.

A survey by the Royal Institute of Chartered Surveyors (RICS) revealed that as a result, investors will likely be reducing the number of properties they own. With the changes in tax relief adding to the previous alterations, the survey found that 26% more contributors expected landlords to scale back their portfolios, rather than expand them.

Although some of the extra costs may be passed on in the form of rent increases, it is just as likely to have the effect of freeing up property for first-time buyers. But with house building still not at the level required to reach government targets, affordability remains the overriding obstacle for many young homebuyers.

An uncertain future

Some lenders are already reporting a drop in buy to let lending, which has resulted in some traditionally buy to let-only lenders moving into the residential space. It seems that all involved in the sector, whether landlord, lender or first-time buyer, are keeping their eye on the effect of all these changes.

The government’s housing whitepaper, released in February, also looks to further assist developers in building the much-needed homes and streamline the planning system. The whitepaper also announced that the government would be generally changing policy towards supporting renters, as well as homebuyers, by removing agent fees and encouraging longer term tenancies.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.


Mortgage Intelligence adds Saffron for Intermediaries to their lender panel

Saffron for Intermediaries, the dedicated intermediary channel of Saffron Building Society, is making its full range of mortgage products available via Mortgage Intelligence.

Anita Arch, Head of Mortgage Sales at Saffron, said: “We’re delighted to be joining Mortgage Intelligence’s lender panel and are looking forward to supporting their Appointed Representatives and Directly Authorised members over the coming months. Not only will their brokers have full access to our Special Situations, Everyday residential mortgages and buy-to-let deals, but they will also benefit from our personal approach to underwriting.”

Brokers can submit a DIP and a full mortgage application via Saffron’s website based mortgage portal. Members of Mortgage Intelligence network who require further information or help can contact Debby Tedder, Business Development Manager, on 01799 582925 or by sending an e-mail to: deborah.tedder@saffronbs.co.uk

Sally Laker, Managing Director at Mortgage Intelligence, said: “Saffron for Intermediaries not only has competitive residential deals for straightforward cases, but also products specifically designed for borrowers with special requirements such as the self-employed, contractors, self-builders and landlords wanting to buy property for refurbishment before being let out.

“I have no doubt that both our Network and Next Intelligence mortgage club members will welcome Saffron as a very useful addition to our lender panel.”

**ends**

Journalists requiring further information can contact:

Josh Cooper, Cooper Consultants Ltd Office: 01654 767711
josh@cooper-consultants.co.uk Mobile: 07768 355265

NOTES TO EDITORS:

About Saffron Building Society

Saffron Building Society was established in 1849 by the Reverend John Marten, who was Minister of the Hill Street Baptist Church and Manager of the local gas company. From such humble beginnings the mutual Society has successfully grown to manage assets of over £1 billion.

Saffron Building Society is the largest regional building society serving the East of England, with 11 branches and 1 agency. The society has served the needs of the local community for over 165 years and is committed to doing so in the future.

A mutual organisation, Saffron Building Society is owned by its 90,000 members and exists solely for their benefit.

The Society employs more than 160 staff across East Anglia, who understand local customers’ needs and provide value for money products backed-up by a professional and reliable service.

Saffron for Intermediaries is the Society’s dedicated broker lending channel. Further information about the products and services available for brokers can be found at: www.saffronforintermediaries.co.uk

Editors’ notes:
To arrange interviews and find out more, please contact:
Sally Laker
Managing Director
Mortgage Intelligence Holdings
Tel: 01202 312955
Email: slaker@experiencemi.co.uk

Nadia Mahmud
Head of External Communications & Investor Relations
Mobile: 07721 439043
Email: press.office@countrywide.co.uk

About Mortgage Intelligence Holdings: Mortgage Intelligence Holdings was acquired by Countrywide in April 2011, the UK’s largest mortgage broker and property services Group. The following brands operate under Mortgage Intelligence Holdings.

Mortgage Intelligence and Mortgage Next: Established in 1996, Mortgage Intelligence, which merged with Mortgage Next in 2009, has become one of the UK’s leading mortgage networks. They offer award winning mortgage and insurance services to over 400 appointed representatives. Both networks focus on high quality of service and support offered to their intermediaries.

FYB Network: Mortgage Intelligence Holdings acquired Life and Easy trading as FYB Network in July 2012. FYB’s brand will join the Mortgage Intelligence and Mortgage Next brands under the umbrella of Mortgage Intelligence Holdings Ltd. They have over 50 advisers and offer both mortgages and insurance services. They were originally founded in 2004 and became a fully authorised network in May 2007.

Next Intelligence: Next Intelligence launched in April 2011 and brought together Mortgage Intelligence and Mortgage Next’s directly authorised clubs. They offer premium brokers services to over 5000 mortgage intermediaries including mortgages, general insurance and a new protection panel which was launched in September 2011.
For further information any of the above brands please visit www.experiencemi.co.uk.


Mortgage Intelligence Update: 60 Seconds with Product Development Manager Nathan Reilly

Sharon spoke to recently-appointed Product Development Manager Nathan Reilly about his role, his background and what it feels like to be one of the key team members of Mortgage Intelligence.

Since joining as a Marketing Assistant at Mortgage Intelligence in 2014, Nathan has quickly progressed within the company, holding positions as Marketing Executive and Product Development Coordinator, before becoming Product Development Manager earlier this year.

Receiving a first-class marketing degree from Chichester University, Nathan’s first step into the industry was through a leading lender as a Customer Service Adviser. Fully CeMAP qualified, Nathan brings not just knowledge, but a real enthusiasm for developing relationships and products with lenders, providers and other partners.

What exactly does your role entail and how do you help advisers through lender relationships?

“A key part of my role is building and nurturing relationships with lenders, providers and other partners. This means that as a Network and Mortgage Club we are always aware of the latest developments from across the industry, and in turn, considering the next potential opportunity.

“The relationships we have with our partners are ultimately in place to make sure our advisers receive the highest level of service and support, so another important part of my role is regularly sharing any adviser feedback I receive.”

Which aspect of your role are you enjoying the most so far?

“I love the variation and no two days are ever the same! I spend a lot of the time thinking on my feet as I look for ways to maximise broker value. This can include identifying which product criteria adjustments and special features will help our advisers the most. I spend time communicating with lenders and providers through different mediums, working with them on the right approach to ensure our advisers are looked after first.”

What changes do you think we might see in the lending space over the rest of 2017?

“As consumer needs change we are seeing specialist lenders and challenger banks positively influencing the market. This is something we have responded to over the past 12 months by welcoming a diverse range of lenders and their products to panel.

“Although there is an argument to say this has happened already, I think Buy to Let lending will continue to polarise. Lenders will fit in to one of two categories, they will either be a specialist Buy to Let lender with a proposition designed for professional landlords, or an amateur landlord lender that will focus on landlords with just one or two properties.

“More lenders are also looking at the first-time buyer market and making positive changes to products and services to support people looking to take their first step onto the housing ladder. It will be interesting to see whether other lenders follow suit or even make this growing market their own.”

I hear your golfing prowess is without equal within Mortgage Intelligence. What would therefore be your ultimate golfing destination?

“My dream golfing holiday would be a tour of the United States, including legendary courses such as Pebble Beach and Augusta. But as that won’t be happening anytime soon, I think I would settle for a day trip to Scotland to play a round at the home of golf: St Andrews.”

If you could meet one celebrity in person, who would it be and why?

“Can I have a fictional character instead? In that case it would definitely be Tony Stark AKA Iron Man. He is a genius billionaire playboy philanthropist…everything I’m not.”

Favourite sporting moment?

“As a golf fan it has to be the 2012 Ryder Cup, otherwise known as the Miracle at Medinah. I just couldn’t believe what I was seeing.”

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.


Mortgage Intelligence Update: The revival of the prefabricated home

Product Development Manager Nathan Reilly reflects on the up and coming trend of prefabricated homes.

What we associate with prefabricated homes has come a long way in recent years. Previously thought of as cheap post war buildings, they were built en-mas lacking character and individuality.

Yet modern day prefabricated homes are now recognised for their unique and modern design, energy efficiency and advanced technology. Prefabricated homes are becoming widely accessible even to the point where you can now order your new home online.

What exactly are prefabricated homes?

Prefabricated homes are a type of specialist building, which are manufactured offsite in panels, modules or transportable sections of the full structure. These sections are then shipped and assembled onsite to make the final construction where the foundations will have been laid.

How can they help?

Many people aspire to build their very own dream home, but decide it is unachievable. However, prefabricated homes are making this goal more attainable by helping people avoid the lengthy, complex and expensive process of building a home from scratch.

Some even suggest prefabricated homes may contribute to solving the housing crisis. At a time when we require 250,000 new homes a year, with only 130,000 being constructed, the efficient nature of a prefabricated construction may be preferred. Prefabricated homes may be produced twice as fast as traditional constructions, due to the fact that whilst the foundations are laid on site, the house is being built in the factory.

So what’s the catch?

One of the main problems with this style of home is finding the land to build it on. Clear building sites are few and far between, especially in the south of England. For this reason many self-builders are choosing to buy a house and knock it down, making the process of building prefabricated homes less time efficient and cost effective.

There is also the issue of planning permission, as the modern structure of prefabricated homes are likely to be too distinct from surrounding homes. But, they may be favoured by some local authorities due to their design status and environmental benefits.

It is worth noting that because prefabricated homes aren’t typically considered to be of standard construction, some mortgage lenders may have certain restrictions when lending against them. This will all depend on valuer’s comments, warranties and the location of the property.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.


Looking ahead to 2018 – Are you ready to help your clients?

Product Development Manager Nathan Reilly highlights some of the big opportunities for advisers to help clients in 2018

2017 was a big year for several sectors in the mortgage industry, with plenty for advisers to keep on top of. This has made helping advisers prepare for opportunities and adapt to change an even bigger focus for our network and club this year.

To help advisers stay ahead of the game once again, I have highlighted some of the top opportunities there will be to support clients in 2018!

The cessation boom

Current data predicts that £220bn worth of mortgage product cessations are due in 2018. This is a massive opportunity to help clients ensure they are on the most suitable product for them, especially if that means they can save money on their monthly mortgage repayments.

Some lenders are increasing the number of remortgage and product transfer products they offer. Data shows that remortgaging was responsible for 37% of valuations in August 2017, which is its highest share of the market in a decade. Early signs suggest remortgaging will have another big part to play in 2018.

Base Rate rises possible

Whether or not the Bank of England increases the base rate from its historic low on Thursday 2nd November, there has been definite movement from the Monetary Policy Committee towards an increase.

Even a small upward movement could create a substantial change in consumer behaviour. Moving from just talk of a rise to the increase itself will mean people may start looking more closely at those stress margins they were tested against. Advisers will be invaluable once again, as this may also trigger a new wave of remortgage opportunities.

Changes to HMO

A recent survey found that more than 85% of all landlords were unfamiliar with upcoming changes regarding Houses of Multiple Occupation. From April 2018, landlord clients may have to carry out expensive restructuring work on properties or risk being fined.

The new laws will impose tougher minimum standards on room sizes, waste disposal and storage facilities. After the changes, some landlords may even be left with rooms they are no longer able to rent out to tenants.

GDPR comes into effect

The General Data Protection Regulation, otherwise known as GDPR, will replace the existing Data Protection Act. This will become part of UK law from 25 May 2018 and apply to any organisation that handles any individual’s personal data. The new rules are designed to give more people control over how their data is stored and for how long.

Help for mortgage prisoners

The FCA has been calling for lenders to do more to help mortgage prisoners. These are borrowers that have found themselves trapped on a lender’s SVR, unable to remortgage due to complicated borrowing scenarios.

Experts are concerned at the growing number of mortgage prisoners in the market, who often as a result of changing circumstances no longer meet new affordability and stress testing rules. Fortunately, we have grown the number of specialist lenders on panel to bring advisers more options to help those with borrowing needs that require a specialist touch.

Second phase in BTL tax relief

After being introduced in April, the changes in tax relief that landlords can claim on their mortgage repayments for second homes will reach its second phase in April 2018. The level of income tax relief landlords can claim will be restricted to the basic rate by 2020. This will affect those that let residential properties as an individual, or in a partnership or trust.

All residential landlords with finance costs will be affected, but only some will pay more tax. Landlords that won’t be affected include UK resident companies, non-UK resident companies and any landlord of Furnished Holiday Lettings. It is of course important to ensure that clients are getting the required tax advice from an expert when considering the financial effects of any tax changes.

Advances in technology

It is hard to get away from changes in technology, and this is as much the case in the mortgage sector. Robo-advice is still being looked at as a possible way of streamlining the mortgage process for consumers. Freeing up time to spend with clients can only be a good thing, and far from replacing the adviser, changes in technology could simply mean more clients will be supported even more efficiently.

A certain portion of those needing to borrow money for a home will of course be looked after more quickly through automation. But human advice is still highly valued in a sector that contains numerous borrowing scenarios, which often need looking at in more detail than simply a series of questions.

Other things to keep an eye on

EPC changes – Energy Performance Certificates (EPCs) are used as a measure of the energy efficiency of a property. Although first introduced for those buying and selling homes, they are now prevalent in the rental market as well. From April 2018, landlords will need to reach a minimum EPC level before renting their property to new tenants.

Aging population – As people live and say healthier for longer, it becomes more common to borrow into later life. Lenders are adjusting their criteria all the time to suit the changing needs of older borrowers. This includes higher age limits and a raft of more suitable options to suit their needs, such as interest-only and specialist products.

Open Banking – The CMA (Competition and Markets Authority) retail banking market investigation found that larger banks did not have to compete for market space when compared with their smaller and newer counterparts. This has resulted in consumers paying more and not benefiting from new services. The CMA is therefore implementing one of their reforms called ‘Open Banking’, a transparency initiative that the FCA finalised requirements for in September.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.


Mortgage Intelligence Update: Will mortgage rates climb in 2017?

Head of Mortgages and Insurance Stephanie Charman takes a quick look at the current signs surrounding mortgage rates in 2017

It has been widely publicised that the Bank of England base rate remains at its lowest ever level. This means that many home buyers and home movers have seen relatively low interest rates. Those looking to remortgage could also currently benefit from a competitive fixed rate deal, to avoid moving onto their lender’s standard variable rate.

But is this era of low borrowing costs coming to an end? Are we about to finally see a return to higher interest rates?

The end in sight for rate cuts

After many months of rate cuts from lenders, some experts feel this period of intense competition is finally coming to an end. But despite warnings of an upcoming increase in rates in 2017, some big lenders are currently reducing their rates even further and announcing best buy contenders. It seems that as long as competition remains strong, lenders will continue to compete to reduce rates where possible to entice new business.

Uncertainty reigns

Talk of an increasing base rate took a back seat after the vote on the EU Referendum. But will Brexit’s eventual commencement actually act as a catalyst of change after a period dominated by a poor economic outlook? Only time will tell, but it was only last year that many in the market were factoring in for a rate increase that they were certain would happen. It seems that the only thing that is now certain, is uncertainty.

In the meantime, competition between lenders to offer low rates continues, which makes it an opportune time for low borrowing costs and remortgage opportunities.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.


Precise Morgages: Thinking of solutions for your customers 365 days a year

With the festive season just around the corner, thoughts will soon be turning to the once-a-year Christmas celebrations. At Precise Mortgages, however, we are thinking of solutions for your customers 365 days of the year.

By supporting customers who are underserved by high street lenders and developing new products to help brokers submit more cases, we are the specialist lender you can bank on.

In 2016, for example, we helped more customers with less than perfect credit scores get their first step up on to the property ladder by launching Help to Buy and Right to Buy loans. We also gave landlords more choice by introducing Houses of Multiple Occupancy (HMO) and Limited Company Buy to Let loans.

We streamlined a number of our existing products to ensure they remain competitive in an ever-changing marketplace. We enhanced the criteria for Residential and Buy to Let loans enabling customers to extend the term to 35 years and benefit from improved affordability. We have reduced the rates and maximised the loan size on our Residential Second Charge loans. We have even increased the size of our sales team to ensure brokers have support 24 hours a day, seven days a week.

With the PRA introducing changes to the way regulated lenders underwrite buy to let applications early in the New Year, and the effects of Brexit still to fully reveal themselves, 2017 promises to be a challenging year.

However, thanks to our robust product range, our flexible approach and our specialist understanding, we are well placed to offer the competitive products and support you need in the year ahead.

If you have never tried Precise Mortgages before, why not make finding out more about us your New Year’s resolution?

You can find out more by calling myself and team on 0800 116 4385. You can also log on to www.precisemortgages.co.uk

For all of our existing intermediaries, thank you for your business in 2016 and we look forward to working with you again in 2017.

Merry Christmas and a Happy New Year.


NatWest: New 95% LTV deals, new web site, New Build and a Happy New Year!

As we power towards the year end, there has been plenty to reflect on in 2016 – another year of change both in the world at large and in the mortgage industry.

For our part, at NatWest, we have had some changes of our own in recent weeks. With the Help to Buy: mortgage guarantee scheme coming to a close at the end of the year, we acted early in launching two new 95% LTV deals to replace the products that had been in place specifically to support the scheme. With less restrictive criteria it means that more of your customers will be able to apply for a 95% LTV mortgage on an existing, not New Build, property.

We also recently launched a new broker web site to provide you with a much improved online experience by redesigning the navigation and content.

From the NatWest home page, you are now able to quickly register or log in, submit business and access helpful tools including the LiveTALK instant messaging service, our popular affordability calculator, the ‘real-time’ Mortgage Application Tracker and find up-to-date processing timescales.

We’ve also introduced a new A-Z of lending criteria that provides a comprehensive run-down of many of the common policy queries that get raised.

Looking forward to the New Year, we will all have to get to grips with the new PRA regulations being introduced for assessing affordability for buy-to-let mortgage applications. We have already begun the communications process for this so you’ll be hearing from your BDM very soon.

New Build is an area of the market that will be keenly watched. Last month, we held a round table event, in conjunction with Mortgage Introducer, on this sector. The panel debated a number of issues that they felt that the industry needed to address. For the market to progress, they felt the priorities were:

• Look at planning regulation and how to free up planning at the start of the process
• Address the labour shortages by investing in apprenticeship schemes
• Get full lender support for the new tenures that are coming on board
• Have a housing minister that is in office for the long term
• Ability for lenders to offer higher LTV mortgages on New Build properties
• Large scale social and affordable housing whether for renting to buy or custom build

So, thank you for your support in 2016, have a great Christmas from myself and the team at NatWest, and we will see you in the New Year.


Virgin Money: There’s a lender that wants to build your business

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.


The Coventry: A year of surprises!

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!