The number of borrowers on lenders’ Standard Variable Rates is now 2.3 million, representing 28% of the total mortgage market, according to Yorkshire Building Society. Again this week the minuets for the Bank of England last meeting came out with 1 member recommending an increase in rates.  An increase in the Bank of England Base Rate will come, whether this is late this year or early next year, but it will come.  Therefore, it would be a good time to now to consider moving onto a fixed rate deal as these deals are currently offering excellent value.  The advantage of the fixed rate will be that you will avoid the hit as rates start to rise over the next 12-18 months.  There are now a large number of competitive deals available for 2-year fixed rates at under 3.50% and 5-year fixed rate deals can be secured at around 4.35% and above.

Who should consider remortgaging, well currently anyone who is on a Standard Variable rate of 3.50% or higher, anyone with 15% or more equity in their property, someone with no adverse credit and anyone who has the ability to evidence their income.  However, if you are with the Halifax you are also able to consider a product transfer this all depends on product wants and loan to value.  If you would like to discuss the options open to you for a remortgage please do not hesitate to contact us.

Mortgage brokers increased their market share by 2% in Q1 2010, advising on 62% of total mortgage lending according to figures just released by the the Financial Services Authority and the Council of Mortgage Lenders.  The Intermediary Mortgage Lenders Association has taken this further by calculating that brokers accounted for 62% of total mortgage lending both by value and volume in Q1, up from a 60% market share in Q4 2009.  Broker activity was particularly strong among first-time buyers with 71% of loans by volume in the first three months of the year.

The above reinforces the message we try to spread.  For whole of market advice to secure the most appropriate deal, especially in these more frugal times, your best bet is to talk to an independent mortgage broker. In short, someone like me who can trawl the thousands of products available to get the right one for you.

Yet further evidence that the risk pendulum has swung too far, from reckless to ridiculous, has emerged this week. 

Two years ago a bankrupt person knew that once their bankrupcy was discharged someone would lend to them and even if they were only 2 years from bankruptcy they may have qualified for normal rates. How the market has changed, with most lenders now having a policy that says if you have ever been bankrupt, they won’t lend regardless of when it was. There is no discretion, no assessment of risk, just a straight decline.

I know this because against the odds I have just managed to place a mortgage for a client in this boat.  The client was bankrupt in 1980 and since then has been married, divorced, had kids who have grown up and moved house four times. He now runs a very successful business which has survived 2 major recessions and his last borrowing from his bank was two years ago, since when he has paid off £50,000 capital.

Looking for a 60% buy to let, Experian credit score of 999, doesn’t appear on the Bankruptcy register. Total borrowing is just under three times his main income, not accounting for rental income.  So all in all a good bet but because he answers the question have you ever been bankrupt truthfully he gets declined: initially by his Bank, but then by two other major lenders and two building societies.

The happy ending is that we have placed the deal for the client but his options were severely limited. 30 years ago we were all doing something different so where’s the understanding of risk and commonsense?

Mortgage lenders have adopted a new mantra of “Creditworthiness and affordability”.  The result is a heavier reliance on credit scoring as a primary assessment tool which is entirely in keeping with these risk-averse times but we wonder whether it goes a litte deeper.  We are seeing a return to quite heavy lender volume and rather than increasing capacity it would appear that lenders are using a higher criteria for borrowers as way to manage this uplift of business – result is that they control their cost base whilst also picking what they consider as the cream of the crop.  This will lead to borrowers who are perfectly creditworthy struggling to get credit, simply because they have not amassed enough points. However, as we know the layer of cream can be quite thin so it will be interesting to see how the rules are relaxed as the competitive juices begin to flow.

The other half of the story is affordability and this is now at the top of every brokers list of priorities.  Most lenders have abandoned simple income multiples, which were blunt tools in any case, in favour of more sophisticated affordability models.  Brokers now have direct access to the lenders’ affordability calculators, which means that we can give an accurate indication of potential loan size as well as being able to compare across various lenders.

All in all the need for a mortgage healthcheck has probably never been greater so give us a call and we will happily guide you through the maze.

In the age of the computer says Yes or No, every point on a credit score counts and if a lender can’t find an existing home owner on the voters roll the alarm bells start to ring. So when the slip to register comes through the door make sure that it is completed and returned. The longer the record the better the score, so if you have moved frequently make sure the voters roll is kept up to date.