Lenders Criteria Loosens
We have been in regular contact with our lenders and the common message being broadcast is that they anticipate a busy last quarter of the year.
Santander have just announced plans to remove all early repayment charges from their tracker range. This move will undoubtedly put them in place to receive new business that may have otherwise gone elsewhere. Fox Davidson expect lenders already offering products with no early repayment charges to price lower in order to remain competitive.
Swap rates increased slightly over the last few months which did lead to several lenders re-pricing fixed rates upwards but that move was reversed this week. We have seen Woolwich, Nationwide, Skipton and others reducing rates in what can only be seen as an attempt to gain market share in the last quarter.
Most of our clients are now taking out fixed rates, not necessarily out of fear of rate rises (which we don’t see increasing until early 2015) but mainly as the fixed rate money is offered cheaper than equivalent base rate tracker products. We believe that dependant on your requirements, as not each case is the same, to fix in now for 2 – 5 years could be wise.
Don’t get too comfy
This week we have seen the West Bromwich increase its variable rate by 2%. Clients with a West Brom mortgage may well therefore see a big increase in their mortgage payments.
A statement from West Brom said: “The West Brom has advised a number of buy-to-let borrowers who have tracker mortgage accounts with West Bromwich Mortgage Company that their rates of interest will be increasing by 2 per cent from 1 December 2013.
These changes, which are permitted under the terms and conditions of the accounts, are a reflection of market conditions and the need for us to carry out our business prudently, efficiently and competitively.”
This move follows on from other lenders such as Bank of Ireland who this year implemented rate increases from 1.75% to 4.49% for some of their customers.
The key thing to remember is that if you are sat on a lenders variable rate they can increase that rate when they see fit. Changing to a fixed rate now is the only way to ensure you can fix your payments for the next 2 – 5 years.
We have seen a marked increase in the number of clients looking to purchase multi million pound property in the UK. Our clients range from City bankers to foreign investors and family office’s who use us for our expertise and discretion.
The market for large loans dropped off considerably during the recession years with a lot of the high street lenders pulling out of interest only and capping individual mortgages at £300,000 or £1million. This move pushed our recommendations high value loans to private banks. By engaging a private bank we are able to tailor solutions for our high net worth clients who require a bespoke solution to their mortgage needs. We have however recently seen some of the high street lenders entering back into the large loan mortgage sector with facilities to create bespoke rates on a case by case basis, this is great news..
We expect the market for multi million pound mortgages to continue to grow as consumer confidence and house prices increase.
Mortgage Market Review
Next year will see ‘MMR’ implemented with changes to affordability checks and particular attention paid to risk areas of regulated lending such as Interest only mortgages and lending into retirement. We don’t expect to see huge changes to the market as most lenders have already changed criteria to ensure they will meet the changes that will come into force next year.
There are some lenders who are still operating on multiples of income rather than an affordability calculation and it is perhaps those that will see the biggest changes to their criteria and also their software systems but generally the market seems geared up for the changes and we welcome the responsible lending the changes are bringing.
We are looking forward to a busy last quarter of 2013 which we can now say was the year of the recovery. The re-mortgage, purchase, buy to let and commercial markets are all bustling at present and so our expectation is to remain busy sourcing and arranging finance for our client’s right up until the festive period.