Mortgage News

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  • loanarranger
    Virgin Money gets tough on Lending Criteria

    Tomorrow, Thursday 9 July, we will update our lending policy for customers who have County Court Judgements (CCJs) or who have defaulted on an item of credit.

    We will no longer accept cases where a CCJ or defaulted account remains on a customer’s credit file, whether satisfied or unsatisfied.

    We will also no longer accept cases where there has been two or more consecutive missed payments on any item of credit in the last six months

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  • loanarranger
    I fear that todays announcement by the Halifax Bank is a portent of things to come so far as residential homeowner mortgages are concerned.

    "Halifax for Intermediaries has reduced the amount of bonus, overtime and commission income it will use to support mortgage affordability while speeding up its underwriting process for self employed applicants.

    From 8 July, the bank will reduce the amount of bonus, commission and overtime income it will use in an affordability assessment from 60 per cent to 30 per cent.

    In an email to brokers, it said it had taken the decision because this type of income was likely to be less stable during the Covid-19 pandemic.

    The change to the amount of variable income used for affordability will apply only to new cases started on or after 8 July and will not impact any pipeline cases started before this date.

    For certain self-employed cases, unless an underwriter review is needed, brokers do not have to supply three months’ bank statements to support the application.

    The mortgage application system will tell brokers when the latest three months’ bank statements are required on a particular application.

    For pipeline cases that previously showed bank statements were required but no longer require an underwriter review, the bank’s system will be updated to remove the request.

    The majority of contractor cases will no longer require review by a Halifax underwriter. Income verification of contractors will be undertaken as part of standard processing.

    For contractors providing a copy of the contract as proof of income, a latest bank statement showing the salary credit or latest payslip must be provided.

    Halifax said changes were being made to the types of cases requiring review by its underwriters to ensure that only cases where further assessment around the income sustainability was needed were referred for review.

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  • loanarranger
    I have made mention of the impact that Covid19 has had on lenders that are Non Deposit Taking organisations and entirely dependent on institution funding, so to put everything into context I am copying in an excellent article which appeared in a Mortgage Trade publication written by Bob Young Chief of Fleet Mortgages.

    Non-banks need financial support to help borrowers in the future – Young

    by: Bob Young, chief executive, Fleet Mortgages

    • 22/06/2020

    As lockdown eases the mortgage market is trying to make sense of this period, how the future looks, and lessons we can learn from the handling of the pandemic and its influence on lending and housing.

    One future takeaway might be how we balance government support with the provision of mortgages by specialist, non-deposit taking, lending institutions.

    It seems likely this period will result in greater numbers of borrowers requiring specialist mortgage loans; buy-to-let, self-employed, contractors and freelancers or indeed the credit-impaired.

    It does not take a genius to work out that these borrower demographics might grow as a result of the economic impact of Covid-19.

    And where will they turn for mortgages? Specialist lenders will probably fill this particular breach so there will need to be a change in thinking around government support and who can access it.

    Specialist lenders have, once again, been placed in a tricky position during the crisis because, for the most part, they have not been able to make use of the government and Bank of England money that has been freely available to deposit-taking organisations.

    Costly funds

    The capital markets have effectively been closed for the past six to eight weeks, meaning the spreads have widened, and the cost of funds have moved from 90 basis points over the London inter-bank offered rate (Libor), to a peak of 310 points over Libor.

    Obviously the cost of this money was far too much to be passed onto borrowers.

    Hence, the decision by many specialists to either cease new business entirely or to pull back considerably. It has meant less lending and tighter criteria.

    The fact is that advisers would not have been able to sell mortgages to clients at the costs we would have needed to put on our loans.

    It has meant a specialist lending sector under severe pressure, and while there are some green shoots starting to be seen, this is a long-term ‘game’.

    There has been some talk that we might see movement in the capital markets by September or October. Other commentators have suggested the market could be in limbo until the Spring of 2021.

    That has serious repercussions for a number of lenders and it could mean the difference between survival or not.

    It would be incredibly frustrating to see fewer lenders and products in the specialist space, at a time when the need for these mortgages is only likely to grow.

    Need for a solution

    Fleet has been fortunate in that we negotiated lines with our funders to keep lending during this period, albeit at a reduced level. But it would have been incredibly helpful to have access to the government support.

    This was not, however, possible.

    If there are further waves of Covid-19, or indeed future virus strains which have a severe impact on our market, then we need to find a solution here.

    Specialist lenders contribute a great deal in terms of helping borrowers who would otherwise not be helped by the mainstream players.

    We talk a lot about the depth and breadth of the UK mortgage market and the recognition that this is not supplied in its entirety by deposit-taking banks and building societies.

    That being the case, I’m sure a solution can be found to support those lenders during future turbulent times – the benefits for the market and those borrowers would be huge. We must keep working towards it.

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  • loanarranger
    Barclays makes significant changes to BtL mortgages and Properties

    Barclays is to stop accepting new purchase and remortgage applications for multi-unit properties, special purpose vehicles (SPVs) and limited liability partnerships (LLPs).

    This will include unencumbered applications, with the last day for these submissions being 26 June.

    The lender explained the changes along with others in a notification sent to brokers.

    On the same day, Barclays is also closing further advance and transfer of equity applications through brokers on its legacy buy-to-let (BTL) platform. This will affect clients with a six-digit account number.

    Any client in this situation requiring further borrowing can still do so through direct channels.

    “Please be aware that we continue to accept intermediary applications for further advances for your clients with a Barclays BTL mortgage with a ten-digit account number,” the lender said.

    Brokers can continue to submit buy-to-let product transfers using the online tool in the lender’s hub, irrespective of whether they have a six- or ten-digit account number.

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  • loanarranger
    Nationwide has withdrawn its direct-only high loan to value (LTV) lending in the face of house price uncertainty to protect its borrowers from falling into negative equity.

    The move means the lender has ended its dual pricing plan of lending up to 95 per cent LTV in-branch but restricting lending to 85 per cent LTV through its broker channel.

    All new lending is now being equalised to a maximum of 85 per cent LTV.

    Henry Jordan, director of mortgages at Nationwide Building Society, said: “The outlook for the mortgage market and house prices remains uncertain.

    “As a responsible lender we must factor this uncertainty into our lending assessments, which is why we have taken the decision to reduce our maximum LTV for new business.

    “Our priority at this time must be to help members keep their homes. As such, we need to ensure our members can afford their repayments, while doing what we can to protect them from falling into negative equity.

    “We will continue to keep this situation under review and hope to return to lending at higher LTVs in the near future.”

    The society will still allow lending up to 95 per cent LTV for product transfers and existing members moving home but for all new borrower house purchase, remortgages and first-time buyer lending, borrowers will need a deposit of at least 15 per cent.

    Nationwide is also reducing fixed rates at 60 per cent LTV by up to 0.1 per cent for borrowers remortgaging to the society. Two-year fixed rates will now start from 1.09 per cent with a £1,499 fee and five-year fixed rates from 1.40 per cent with a £999 fee.

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  • loanarranger
    I posted a couple of days ago the news of lenders removing 90% loans for residential mortgages, the following article demonstrates the severity of

    Number of 90 per cent LTV deals almost halved overnight

    by: Owain Thomas
    • 12/06/2020 • 0

    The number of 90 per cent loan to value (LTV) mortgages available
    on the market fell by almost half in one day this week.

    According to data from Moneyfacts, 95 per cent LTV deals have also
    dropped by a quarter since the middle of lockdown, with 29 being
    available on 10 June compared to 41 on 1 May.

    However, the biggest fall has been in the 90 per cent sector.

    On 8 June there were 191 deals at this level, but a day later just 104
    remained with 87, or 45 per cent, having been withdrawn overnight.

    The total rebounded slightly to 118 on 10 June, but the figures serve
    to highlight the severity of the change in the market (see graph below).

    This drop took the availability back down to levels seen in the middle
    of the lockdown, where there were just 100 90 per cent LTV deals on 1 May.

    Since then Coventry Building Society has released a tranche of 90 per
    cent LTV lending, but these two products are only available for
    four days
    as the mutual said it wanted to manage its service levels appropriately.

    This echoes those lenders that left the market over the last week,
    citing a deluge in demand and wanting to preserve their service quality.

    Challenging situations

    Brokers have told Mortgage Solutions that they understand lenders
    are facing challenging situations with staff shortages, due to furlough, social distancing and a lack of homeworking options

    There are also pre-lockdown backlogs and lenders could also be
    concerned about the potential impacts of a substantial house price
    fall affecting loan books.

    But advisers have also urged lenders to return to the market to help
    prevent that becoming a self-fulfilling approach by restricting the
    number of borrowers available to buy properties.

    In contrast, the Moneyfacts data also showed that 85 per cent LTV
    deals have recovered significantly since the lockdown measures were
    eased in England as lenders have rebuilt their operations.

    During June they have actually increased from 318 on 8 June to 338
    on 10 June, and this in turn is 63 per cent higher than the 208 active
    on 1 May.

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  • loanarranger
    HMO’s & Student Lets

    It seems that there is increased nervousness amongst certain lenders towards HMO’s and by association Student Let’s . Following the announcement of Paragon Mortgages towards this associated combination , Aldermore and TMW have also stopped lending on HMO’s with or without these being let to students.

    It is evident that Landlords who have focused on letting to Students have seen a marked increase in rental voids due to the resentment by students to honour their rental obligations as their respective universities/ colleges are not operating because of Covid 19.

    In addition Lenders have seen a significant increase in the number of requests by Landlords to take mortgage payment holidays which forces them to take preventative steps to ensure no additional liabilities are taken on board by accepting new purchase or Remortgage applications.

    There still lenders accepting HMO applications with or without Student let’s , my only concern is that these could be overloaded by such applications even though their rates are slightly higher and prompt them to withdraw also. I will of course keep the Forum updated on this topic and anything else which has a negative effect on mortgage business.

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  • loanarranger
    Apologies for the continued negative news but The Mortgage Works have this evening increased the rates of interest to be charged on Limited Company borrowings for BTL.

    Leave a comment:

  • loanarranger
    And another lender The Furness has announced it is removing for the present its 90% Loan to Value products. I hope this isn't going to be the domino effect

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  • loanarranger
    It is disappointing to report that yesterday three lenders Accord Mortgages, Clydesdale and Virgin Money have withdrawn their 90% Loan range for purchases and Remortgages for Residential applications citing a need to maintain customer service standards, this may indeed be true but I suspect that this might be a continuance of lowering the maximum percentage loans because of concerns over the current and future ramifications of Covid 19,
    I really hope I am proved wrong and other lenders do not follow suit.

    Leave a comment:

  • loanarranger
    The FCA has confirmed that the current ban on lender repossessions of homes will be continued to 31st of October 2020.

    The regulator says this will "ensure people are able to comply with the government’s policy to self-isolate if they need to".

    The FCA also confirmed the support firms should give to mortgage customers who are either coming to the end of a payment holiday or who are yet to request one.

    It confirms last month's proposals that customers will be able to request a payment holiday up to the 31st of October.

    The FCA says mortgage lenders should "offer a range of options for how the missed payments will be repaid, if they are able to resume payments".

    Finally, the FCA confirmed that payment holidays will not have a negative impact on credit files, but stated that "lenders may use information obtained from other sources, such as bank account information, in their lending decisions".

    Christopher Woolard, interim chief executive at the FCA, said: "The measures we have confirmed today will mean anyone who needs to can get help from their lender, if they are still struggling to pay their mortgage due to coronavirus.

    "It is important that if a consumer can afford to re-start mortgage payments, it is in their best interests to do so. Customers should talk to their firm about the best option available for them."

    Leave a comment:

  • loanarranger
    The following article explains the potential ramifications of future lending by specific types of lenders because of Mortgage Payment Holidays.

    The extension of mortgage payment holidays will exacerbate funding issues and operational difficulties for non-bank and specialist lenders, UK Finance has warned.

    The trade body warned it was now “vital” that these lenders could access government schemes to continue to support their customers.

    It highlighted that customers of these lenders were often self-employed, vulnerable, or had specialist financing needs and were more likely to have taken a payment deferral.

    Trade bodies including UK Finance, the Finance and Leasing Association (FLA) and Intermediary Mortgage Lenders Association (IMLA) have already proposed possible solutions to HM Treasury and regulators at the Bank of England.

    However, despite saying discussions were continuing, HM Treasury has made no further move to support the sector.

    The issue was raised again as part of UK Finance’s response to the FCA proposals for extending mortgage payment holidays, with the trade body emphasising the urgency of the matter.

    “In extending payment deferrals for a further four months both in terms of granting payment deferrals to customers who have already had one and allowing new payment deferral applications, it is important that the authorities consider the impact on, and provide the appropriate support to, the non-bank sector,” UK Finance said.

    “Non-banks cannot currently access government support schemes to support residential and buy-to-let lending and are unable to access their core funding source given the disruption to securitisation markets and a likely reduced appetite by banks to provide wholesale finance to non-bank lenders.

    “The non-bank sector is supportive of helping its customers, many of whom are self-employed, vulnerable, or who have specialist financing needs through the crisis and have done so to date without government support.”

    Difficulties will be exacerbated

    It added that “as payment deferrals continue, funding issues and operational difficulties will be exacerbated”.

    These include the need to negotiate waivers on existing funding facilities and conditions as a result of offering or extending such payment deferrals.

    UK Finance noted that “serving the significant cohort of customers who have specialist financing needs that cannot be met by high street banks and building societies will become more difficult.”

    It concluded: “It is vital that authorities now allow non-banks to access government support schemes to ensure they are ready and able to continue to support customers, who otherwise may not be able to access mortgage, cards or specialist products from (high street) bank lenders, as we move towards recovery.”

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  • loanarranger
    Nationwide gives assurances of no Repossessions for Residential Homeowners for 12 months

    Nationwide Building Society has pledged none of its customers who fall into arrears due to the coronavirus will lose their home until the end of May 2021.

    The only caveat is that borrowers who are behind on repayments must work with the lender to get their finances back on track.

    Landlord customers are also being encouraged to pass on payment breaks to tenants who are struggling with rent repayments.

    Under plans announced by the government today, all mortgage borrowers will be able to extend mortgage payment holidays by another three months.

    Nationwide is to provide assessments for homeowners struggling with mortgage bills during the Covid-19 crisis to help the find best solutions for individual circumstances.

    The lender said there will be cases where a payment break is not in the best interests of the borrower and in these situations, alternatives will be suggested.

    From mid-June, the society may offer any struggling borrowers flexibility on repayments, for example, to move to interest-only payments or partial payments where suitable.

    More than a fifth of homeowners are worried they will not be able to keep paying their mortgage, with one in ten worrying they could lose their home, research commissioned by the lender found.

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  • loanarranger
    If we were to go into negative interest rates then using any monies into the linked savings account might ( I stress might) proved the right strategy.
    Bestof luck moving forward but don’t hold your breath over the MPH being extended even further as this could seriously impact of the number of lenders within the specialist mortgage market.

    Leave a comment:

  • Glover1862
    Thanks, i thought that would be the case,
    however I can see it extended again so might get 6 months anyway!

    I've posted on the CBS thread, I have a Offset flexx for the term
    residential mortgage with them, I'm loading up my linked saving account to mitigate any changes in rates, I did think of taking the MPH and put those funds directly into the linked saving account, 6 months worth could be £6k, I'd have the funds and they wouldn't be costing me any interest. I'm aiming to make my savings and mortgage balance then any interest changes have no effect, I'll keep it that way until the term ends. Might not be worth the hassle though!!

    Leave a comment:

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