Our latest John Charcol mortgage index reveals the return of the lesser spotted remortgager following increase in rates from many lenders. Click here to see the full results.
Following the publication of last month’s Quarterly Inflation Report there was little doubt that bank rate would remain on hold this month. The good news for borrowers is that while bank rate remains dormant, mortgage rates continue to drift lower. Availability of home loans above 75% loan to value has continued to improve and this has prompted more competition and a subsequent beneficial impact on pricing. Despite this, borrowers should be wary of politicians, if they are not already, and their impact on the market.The publication of the much-discussed poll in last weekend’s Sunday Times caused a sharp fall in both sterling and gilts on Monday, as the likelihood of a hung parliament began to creep further into the overall equation. One thing markets hate is uncertainty and a hung parliament would clearly bring that.This kind of market reaction cannot be ignored when considering future mortgage options. The economic arguments continue to suggest a tracker mortgage is the right choice for most borrowers because the economy is in such a mess that very low interest rates are here for some time yet. Yet the election cannot be ignored. The markets have been expecting a Conservative majority and what once looked like a forgone conclusion is now not so certain. This may have a negative effect on fixed rate pricing.The message for borrowers is simply that no generic advice will do. The political uncertainty may mean the right choice for some borrowers is to batten down the hatches and lock into a fixed rate for at least five years, but with the difference between these and the best tracker mortgages around 2.5%, there is a big premium for the security of a fixed rate. Seeking independent mortgage advice on your own specific situation has arguably never been more important.One month doth not make a trend – approvals should bounce backFinally, it is worth highlighting that some commentators have suggested the weak mortgage lending and approval figures for January are an indication that the steady improvement in the housing market is coming to an end. It is always very dangerous to take one month’s results as gospel. All the figures we see indicate January was an aberration, almost certainly caused by the snow which naturally had a significant impact on prospective buyers’ ability or willingness to look at properties. We expect to see a bounce back in February’s approval and lending figures.
Towergate Financial Acquires John Charcol Towergate Financial, the financial advisory business of the Towergate Partnership, today announces the acquisition of John Charcol, the leading independent mortgage advisory business.Under the terms of the deal, all John Charcol staff and directors will be making the move to Towergate Financial. John Charcol CEO John Garfield will work closely with Towergate Financial CEO Ian Darby to grow the business alongside his current management team.John Charcol is one of the UK’s best known independent mortgage brokers and a key element of Towergate Financial’s growth strategy is to establish a mortgage broking proposition to complement its private client and corporate solutions businesses.Towergate Financial is part of the Towergate Partnership, Europe’s largest independently owned insurance intermediary. Towergate’s business consists of a number of specialist underwriting agencies and regional brokers providing a wide range of niche and general insurance products to individuals and businesses.Towergate Financial attaches great importance to the skills and experience of the advisers and staff of John Charcol and believes that they will be vital for the continuing success of the business. Ian Darby said, “We believe there is an excellent fit between our business and John Charcol. John Charcol has an incredibly strong brand in the mortgage market built over many years, based on top quality advisers and great advice. We jointly have a great opportunity to offer financial planning and insurance solutions to Charcol's clients and vice versa.”John Garfield said, “Joining forces with the team at Towergate Financial will provide our business and people excellent opportunities to work with Towergate's businesses to our mutual benefit and to thrive in what is a very exciting time for the mortgage market."
The 2 Labour Ministers (Mandelson and Bradshaw ) who were due to attend this weekend's BAFTA ceremony have pulled out this afternoon (Hat Tip: Iain Dale).The most logical reason for such a mass withdrawal (OK, I know it is only two but it 100% of those who were due to attend) would be that it is the day the Prime Minister will call a March election and this adds to the strong rumours in Westminster yesterday afternoon that the election would be on 25 March or in April. We know already that Brown is making a speech tomorrow announcing Labour's four themes of the election (which have already been leaked), together with Labour's election slogan.
An election before 6 May would also explain why the Chancellor hasn't yet announced Budget Day (It is normally announced before the 2 week half term recess) and would avoid:
The Chancellor having to produce a Budget which would clearly not be able to be a vote winner. Avoid the risk of the 1st quarter GDP figures due to be announced on 25 April sinking us back into recession before the election.
If you are interested in politics it could be an interesting weekend!
It was clear from the Mortgage Market Review that the FSA had a very limited understanding of the value of a self cert mortgage for many, primarily self employed, people. Before finalising any new policy, even though the actual term “self certified” appears to be irretrievable tarnished, the FSA will no doubt reflect on comments made during its roadshows and in the consultation process.
Just because there was some abuse of the product doesn’t mean the product itself is fatally flawed. A more appropriate solution would have been to clamp down on the abuse, especially where it was fraudulent, but in the good times the FSA failed dismally to adequately discharge this part of its regulatory responsibility and consequently feels the need to overact.
A significant part of the blame for this regulatory failure has to lie with Gordon Brown. Despite blaming everyone but himself for our economic problems, “which started in America,” as Chancellor he dictated the “light touch” policy to be followed by the FSA. Of course, most of us in the industry were happy with a light touch policy but perhaps not that it should have been quite as light as it was.
Many mortgage practitioners were well aware of some of the companies whose business plans basically only worked if they adopted some dubious practices and there is no reason why the FSA couldn’t have been much more proactive in identifying which companies should be targeted for more active monitoring with a view to “educating” if possible but disciplining if necessary.
On the only occasion I reported a blatant breach of the rules to the FSA no action was taken over the next month and so I wrote about it and then very rapidly the company took action itself, possibly without the FSA ever getting involved. So even when given information on a plate the FSA proved itself unable or unwilling to act promptly.
A key test any half competent broker or lender would always apply to a self cert application was a ”sense check”. For example is it reasonable for someone who describes their occupation as a cleaner to be earning £80,000 p.a.? Maybe, but only if that person owns the company rather than does the actual cleaning!
Yesterday we had another example of politicians making a fool of themselves by failing to apply the sense check. This time it was in a document from the Conservative Party detailing the gap between the Britain's richest and poorest areas. Conservative Central Office released information claiming that more than half of girls – 54% – in the most deprived communities fell pregnant before their 18th birthday. This claim was not only untrue but also breathtakingly ignorant. A crucial decimal point was missing – the real figure is 5.4%.
Now if you had asked me before yesterday what the correct figure was I would not have known but my common sense would have told me that 54% looked highly suspect. Had a sense check been applied to the document by a competent person before it was released the document would have been corrected before it was published.
So, surprise, surprise, politicians can make mistakes as well as mortgage brokers and lenders, but of course they don’t have a regulatory body costing an arm and a leg looking over their shoulder and so won’t actually be disciplined. Politicians’ motto appears to be “do as I say, not as I do.”
Fortunately there is a sanction against crass mistakes by politicians. It is called The Media and with the mass ranks of the blogosphere and/or newspaper web sites now often picking up politicians’ cock-ups within minutes at least politicians are subject to as much, if not more, scrutiny than their subjects. Politicians may not be fined when they make crass mistakes but they stand to lose something more valuable - their reputation.
Let's make the first bit quick. Bank rate was held at 0.5% by the Bank of England today, no surprise there then...however, of more interest is...
The return of the remortgage?The slowly improving mortgage market will certainly make buying a property a little easier. However, with several lenders having announced increases in their standard variable rate (SVR) over the last month, it will also mean that more borrowers will find it worthwhile remortgaging. Remortgage activity fell steadily throughout the whole of last year but the combination of actual increases in SVRs, plus fears of increases, coupled with the cheaper rates now available for new mortgages, means that anyone paying an SVR of at least 3.5%, or about to revert to one, should consider a remortgage if they have at least 20% equity in their property. Assuming property prices continue to rise, even only gently, the number of borrowers with at least 20% equity will steadily increase, making a remortgage progressively worthwhile for more people. For this reason I expect the dramatic fall in the volume of remortgaging to be close to end and to see a slow increase in remortgage activity this year.
Just 40 minutes to go before February's announcement from the Bank of England on Bank Rate. You'd have to be a brave person to predict anything other than a hold but whether QE is stopped or not is not quite as easy to call. Whatever the decision, it looks like the remortgage market will start to pick up again soon. More to follow...
Bank of China (UK) has an advert on p.9 of Metro today promoting its Bank Rate + 2.3% lifetime tracker, available up to 75% LTV. If one assesses competitiveness purely on rate and ignores the criteria this rate is market leading for LTVs between 70.01% and 75%.
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To promote lower rates from today on a third of its 2 year fixes (those with a maximum LTV of 80%) Santander has put out a press release headlined:
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The big news today is that the Skipton Building Society has increased its Standard Variable Rate from 3.5% to a staggering 4.95%, at the same time breaking contracts with thousands of their borrowers.
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