Time to Review Your Standard Variable Rate?

Standard Variable Rates (SVR) have been stable for well over a year as a result of the low Bank of England base rate, last changed to 0.50% on 5th March 2009.  Great news for those clients who are on a SVR rate, however, the big question is when is this rate likely to change and if I am getting jumpy are there options open to me?

When this rate will change will depend upon many factors, the least of which are the Government’s austerity measures and how these will impact on inflation over the coming months.  These are likely to impact in an upward direct on inflation and this will put more pressure on the Monetary Policy Committees decision making.

Options open to you have now widened as Barclays is offering borrowers a Barclays Base Rate tracker mortgage at 2.18% above base rate (pay rate of 2.68%) at 70% LTV, with no application fee, free legal work and valuation as well as £300 cash back to cover their existing lender’s exit fee.  Customers will have access to its Switch & Fix offer, which enables borrowers to switch to a Woolwich fixed rate mortgage at any time without paying any early repayment charges.

Therefore, if you are on the Halifax’s SVR of 3.50% you are able to switch over to a lower deal and the only costs is the time and effort to move the deal to a more competitive rate.  If you want to discuss the options open to you please do not hesitate to get in touch, with your Independent Mortgage Advisors, Limetree Financial Services.

Andrew Fowler worked for Limetree Financial Services until December 2010. Feel free to contact another member of our team for help or advice.

Posted in Mortgages, News, Remortgaging

Wake-Up Time for the Self-Employed

To all of you who are self-employed -you know how your business is run and how you can afford a specific monthly payment for a mortgage each month.

But, do not lose sight of the fact that your mortgage is going to be underwritten and assessed by an underwriter at the Bank or Building Society, this person may have passed all of their ‘Risk’ exams.  This underwriter is likely to have an industry average of 24 years old (Being generous) and will not have been employed in a bank/Building Society during an economic down-turn like we are currently in.  But most importantly is unlikely to be able to actually read a set of annual accounts.

We have had a number of instances were we have been told cases have had to go to a more “Senior” underwriter as the “tick-box jockey” can’t possibly cope with a self-employed applicant.  So for all of those of you out there who are self employed make sure you are getting the right independent mortgage advice before looking to apply for that new mortgage, as the choice of lender could be key.

Andrew Fowler worked for Limetree Financial Services until December 2010. Feel free to contact another member of our team for help or advice.

Posted in Mortgages, News, Next Time Buyers, Remortgaging

Are Lenders Bagging Unnecessary Profits?

Lenders’ margins on mortgage products have hit an all-time high over the last week, as the difference between the rates paid by borrowers and the cost of swap rates has widened substantially. The average swap rate on two-year fixed rate money currently stands at 126 basis points (bps), or 1.26%, while the average interest rate charged on a two-year fixed rate mortgage is 4.55%, resulting in an unprecedented lender margin of 3.29% on these products.

Two years ago the margin on a two-year fixed deal stood at 1.28%.  The margin leaps even higher to 3.35% on an average five-year fixed rate product and 3.57% on a three-year fix.  Michelle Slade, spokesperson for Moneyfacts.co.uk, said: “Mortgage rates are falling, but only a fraction of the reduced funding cost is being passed on as lenders continue to repair their balance sheets.  Borrowers will be angered that they continue to pay the price for mistakes made by lenders, particularly those who have accepted government funding.”

Moneyfacts calculates that, going forward, were Bank Base Rate to rise as quickly as it has fallen, and were lenders to maintain their current margins, the average rates charged to borrowers on mortgages could reach around 8%.  Slade said in the current market mortgage availability and the maximum loan sizes continue to improve, but there is still a long way to go before any reasonable normality is returned.  “Swap rates are the traditional barometer of fixed rate mortgages, but with lenders still nervous of entering the money markets, many are opting for on balance sheet funding through their savings book.”

Andrew Fowler worked for Limetree Financial Services until December 2010. Feel free to contact another member of our team for help or advice.

Posted in Mortgages, News

The Key To Placing Mortgage Business

The Key to placing business for clients with the right lender the first time, is understanding the clients requirements and the lender requirements.  Due to the “Credit Crunch” lenders are a lot more cautious as to what they will and will not take on, they are a lot more selective with regards to the right client and are now all looking for the ideal client i.e. that client with the 40% deposit and who is able to provide a substantial income.

The reality is that these clients are few and far between, the key is therefore keeping up to date with what lenders will and will not consider and keeping a constant dialog with lenders to understand fully what they are looking for.  I recently help an American couple who have just over 2 years remaining on working visa in UK and who have only been in the UK for 9 months.  They had initially been turned down by one lender who unknown to the clients had altered their requirements for non-UK nationals. 

Mortgage Broking is complicated, lenders move the goal posts on a regular basis, it is important for clients to confident that their Mortgage Broker is working for them and concentrates on mortgages solely.  Be aware of the IFA who tries to do it all, i.e. Pensions, Investments, Insurances, Mortgage Broking, you would have to ask yourself how are they able to keep up to date with all of these complex areas of financial advice with only 24 hours in a day?

Andrew Fowler worked for Limetree Financial Services until December 2010. Feel free to contact another member of our team for help or advice.

Posted in Mortgages, Remortgaging

Property and Mortgage News

  • Fantastic news this week in that the Skipton Building Society have come back to the mortgage market with a new range of products.  They are offering a range of 2 and 3 year fixed and tracker deals with competitive fees for both purchase and remortgage.  They are also offering a couple of exclusive products at 90% loan to value which will bring some much needed competition to this end of the market.   
  • The FSA has announced today in a consultation paper that they are going to stop lenders from offering ‘Self-Certification’ and ‘Fast Track’ mortgages to both employed and self-employed mortgage applicants.  What does this mean, that going forward everyone will have to provide evidence of income from employer, bank, accountant or HMRC.  As usual this is the FSA with their finger on the pulse of the mortgage industry.  As any Mortgage Broker will tell you ‘Self Certification’ mortgages have not been available for the last 12 months, a classic example of the mortgage market regulating itself in spite of the regulator.
  • With the end of ‘Self Certification’ mortgages the question is now open to Accountants what stance will you take for clients?  Help them pay as little tax as possible so lowering their Net Profit or pay more tax have a higher Net Profit and be able to afford that next house purchase or remortgage?

Andrew Fowler worked for Limetree Financial Services until December 2010. Feel free to contact another member of our team for help or advice.

Posted in Mortgages, News