After a few days of frustration where a case I had been dealing with failed several decision in principle requests, I eventually found a good home for it! Unbelievable, the client had an excellent credit file (excellent being the very word used by the credit agency whose report we consulted!), only a tiny glitch for £20 or so 18 months ago, and only 10% deposit. But that tis hte poblem now, many lenders just hide behind the result of the credit check and make no attempt wahtsoever to look at the whole case. Well, it’s their loss as this was a very good case, good income, a solid job, experience with managing a mortgage, I can’t see any reason at all to decline it.

Thanks to the sensible approach from the lender I eventually contacted, we got the case approved. How painful, but we got there in the end! I hope these common sense lenders are going to stay around as without them the mortgage market would be a very very tough place indeed!

Well, can’t argue with facts and figures and it looks like the beginning of the year has been pretty positive for the mortgage market so far, at least according to Connell’s latest Housing Market Activity Report.

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The Bank of England just reported that the number of mortgage approvals in February 2012 dropped by 12%compared to the same time last year.

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Halifax just announced that from 1^st May 2012 they will be increasing their Standard Variable Rate (SVR) from 3.5% to 3.99%. The SVR is the default rate a lender will apply to your mortgage after the initial deal (for instance fixed for 2 years, or tracker for 3 years etc.) has expired. It is their internal rate, as indicated in the name is it variable and it doesn’t have to follow or track the BBR (Base Rate of the Bank of England), currently 0.5%. The BBR has been the same for nearly three years now, and so has been Halifax’s SVR. They could have changed their SVR at any stage and as many times a they wanted, but just decided now was the right time to do it.

Why the increase?

The reason Halifax invoked  was the higher of raising funds which are they lent to borrowers. These funds are typically raised from financial markets and from deposits (from savers): “The increase to the rate reflects the fact that raising money through retail savings and in the wholesale markets is currently very expensive by historical standards.”

What does that mean for borrowers on Halifax’s SVR?

From 1^st May, the interest rate used to calculate their monthly payments will jump from 3.5% to 3.99%. For each £100,000 borrowed on an interest only basis, the monthly payments will increase by 14% (there will be an increase too for capital and interest mortgages, but the increase will depend on the outstanding term on the mortgage – i.e. how many years are left before it is fully repaid).

… and for others?

There is a real chance that this move will trigger similar changes with other lenders. In a market as tight and competitive as the mortgage market, each decision by a given lender is always reviewed and analysed by competitors and the recent changes in interest only policies propagated very quickly from a lender to the next over the last few months. It is very likely I think we will see other lenders following in Halifax’s footsteps very soon.

Do I need to do anything?

This announcement is a timely reminder that things do change quickly in the mortgage market and that it is always a good idea to frequently review your mortgage. If you have a mortgage with the Halifax and are currently under their SVR, whether it is by choice or by inertia, it could well be there is no a better solution available, maybe somewhere else, but maybe with Halifax themselves. Halifax have had a streamlined retention policy for a while and they are definitely interested in offering alternative solutions to their existing borrowers. A full mortgage review would be worthwhile, even if your mortgage is not with Halifax, as it could be useful to explore options in case your SVR would increase too! Of course, all cases are different and there will be situation where for some borrowers the most suitable advice would be to stay put, even from 1^st May…

At JAM Mortgages, we will be delighted to discuss options with you.

Just a quick one to let you know that so far the tale over of Northern rock by Virgin Money has been well received in the industry. The communication from VM has been very clear and dynamic and they have shown their intention to be very much involved with the brokers community, which at the end of the day is the best thing that could happen for clients at the receiving end of our advice.

Over the last 2-3 years there has been some fierce competition between lenders  for the ‘good cases’, i.e. the cases presenting a reduced risk. Continue reading →

The Royal Institution of Chartered Surveyors (RISC) just predicted a fall by 3% for 2012 in the average house prices, and said there were unlikely to fall by more on the basis of lack of properties. Indeed, the number of transactions is thought to be the same as it was for the last couple of years, i.e. twice as much as 5 years ago.

Simon Rubinsohn, chief economist at RICS, said:  “The general economic climate is likely to be the biggest influence on the residential property market next year.”

I am talking here about deals available on the market when you are looking at taking out a new mortgage, not the BBR (Base Rate of the Bank of England)!

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Time flies! Already three years since the collapse of Lehman Brothers, which marks for most of thus the symbolic onset of the Credit Crunch.  Continue reading →

The British Buy-To-Let (BTL) market is not doing too badly at the moment. Continue reading →

I will be off to France from the beginning of August, but will still be checking emails on a regular basis. Not much time left to submit new cases before I go, but it is still doable as I showed earlier this week: I submitted a case on Monday and it went to offer on Tuesday!

What had been feared by many foreign property owners in France is set to be nipped in the bud, filling British expats with joy!

After reflection, Mr Sarkozy yielded to the evidence presented to him by the real estate comminity, and a new tax on second homes will not go ahead.

Lastly, not all is positive at the moment and we can brace ourselves for rising interest rates on (French) mortgages as most commentators widely anticipate an upward decision from the European Central Bank…

In a very recent interview with the Financial Times, the Bank of England’s chief Economist Dale Spencer said that he was in favour for an increase in the base rate of the Bank of England (BBR) in order to control an ever increasing inflation rate. Continue reading →

Last week the BBC asked a panel of experts of the financial industry their opinion about future fluctuations of the BBR (Bank of England base rate), in order to get a feel about when it is thought the BBR will increase from the low 0.5% it has been at for now over two years, but also a feel for then how quickly further increases might happen. Continue reading →