Mortgage selection is not a precise science; it is a balance of probabilities...

Why use a mortgage broker?

Here's a clue or two!

There are a huge number of factors involved in mortgage selection:

Fixed, capped, variable, discount, tracker, libor-linked, hybrid and stepped rates (with or without various incentives such as free legal fees, free valuation and cash-backs), reversion rate (variable or tracker?), speed of service, availability of fast-track, ability to “Book” products, length of offer validity, judgement of need for AIP, lenders’ attitude to past credit problems (including arrears, missed credit payments, CCJs, defaults, agreements to pay, IVAs, past bankruptcies, debt agreements and historic repossessions), affordability calculators, income multiples, length of employment or self-employment, security of employment, lender honesty(!), underwriting flexibility, tariff of charges (arrears treatment etc), self-cert, property type/age/construction, length of lease if not freehold, guarantors, type of incomes considered (including state benefits, tax credits, child benefit and DLA), contract workers, treatment of existing commitments, attitude to imminent pay rises, occupation (e.g. definition of what constitutes a “Professional”), UK residency rights, religious/ethical beliefs, ecological factors, length of deal required, mortgage term, affordability, means of repayment, future plans (including relocation and current/future dependents), buy-to-let, let-to-buy, mortgages as bridging finance (and attitude to non-simultaneous sale and purchase), background buy-to-lets, likelihood of follow-on deals, mutual versus plc versus non-bank, credibility/strength of lender, geographical location of lender and property, loan purpose, credit-scoring risks and ability to appeal declines, effect of credit scoring on income multiples or amount offered, product withdrawal notice, age of borrower, age at end of the term, need for specific repayment vehicle, compulsory insurance with lender, loan to value and its effect on amount offered, the effect of possible down-valuation, potential retention, lender’s “Desire to lend”, packager-only deals, treatment of under-payments and over-payments, borrow-back, offsetting, linked current or savings account, pre-agreed reserves (and the rate at which they are charged), further advance availability, early redemption penalties (level or reducing etc), portability (and the ease with which the lender may lend again if portability is used), treatment of lump sum reduction, capital rest (daily, monthly or annual), use of securitisation and its potential effect, overhanging redemption penalties, “Lifetime Trackers”, level of arrangement fees (and whether up-front, refundable or added to loan), vendor-gifted deposits, family-gifted deposits, source of deposit, new-build incentives, ability to insure property and applicant, application method, distribution route (direct-only, broker exclusive or both and the availability of advice if direct). The impact of regulation and funding difficulties even puts question marks over the long-term ability of borrowers to change lenders in the future if their circumstances are unusual.

This is all before you combine these factors with other special situations such as self-build, shared ownership, shared equity, key-workers, new-build Homebuy, right-to-buy, high rise flats, medium rise flats, debt consolidation, flood areas, regulated buy-to-lets, semi-commercial, foreign citizens, expatriates, temporary or contract workers, studio flats, multi-roomed houses, agricultural ties, planning restrictions, acreage, past history, alterations/extensions, granny annexes and so on.

THEY are the reasons to use a mortgage adviser !

Mortgage market myths and misconceptions

Research by professional advice website Unbiased.co.uk suggests many of Britain's would-be borrowers may wrongly assume they are excluded from the mortgage market by the extent of lenders' tougher criteria.

One in ten think an average borrower needs a 40% deposit to get a reasonable mortgage deal, and 18% believe a minimum 30% is required.

More than one in four believe an individual could borrow no more than 2.5 times their salary, and over half feel that 3 times salary is the limit.

Several months of alarming news from the banking sector and high profile crackdowns by individual lenders appears to have left an extreme impression on the public. When asked what size deposit ‘the average borrower would need to get access to a reasonable mortgage deal', almost one in ten (9%) people said they would require a deposit of at least 40%, while 18% felt this typical applicant would be unsuccessful with any less than a 30% down-payment.

In reality however, the average deposit needed to get one of the current best buy mortgages is just under 22%. This number falls even further when looking at 5-year fixed rates, where the average deposit required is just under 19%. Londoners in particular feel the screw has tightened more severely than it has.

Confusion also exists when it comes to how many times an individual's annual income the average mortgage provider would consider lending. Over one in four (27%) Brits feel lenders would restrict a homeloan for a typical borrower to 2.5 times their annual income, while 52% believe 3 times salary is the limit. Again, Londoners are the gloomiest, with one in three (32%) expecting to be offered no more than 2.5 times their salary. In reality, whilst lenders are still being more conservative than in normal times, as a basic guide most lenders will offer between 3.25 and 4 times an individual's annual income.

Unbiased said "With the credit crunch in full swing and lenders tightening their lending criteria, it is not surprising that people are confused about the mortgage options available to them. Britain has been gripped by the recession doom and gloom and this has lead to an extremely pessimistic view of the mortgage market. In reality, whilst the lending criteria we have seen applied over the last few years are a thing of the past, there may well be options available to people looking to take out a new mortgage.

"Our research reiterates just how important it is in the current market conditions to seek advice from a whole of market mortgage adviser. Many people may be putting off looking for a mortgage simply because they think they won't be able to get a good deal. A whole of market mortgage adviser can look at all the mortgages available to and find the best deal not just by rate but also by income multiples and loan-to-value required."

Whatever your situation is, I can help you find the most suitable mortgage product for your needs. 'Going it alone' may cost you massively, so just call or email me (link on the right hand side above) and let's discuss your situation.

Shock horror, Independent Mortgage Advisers can save you money !

AMI Launches Value of Mortgage Advice Research

With all the industry 'fuss' about 'direct to lender or via a broker', the Association of Mortgage Intermediaries (AMI) has just launched crucial research which details the financial value consumers can receive from gaining independent mortgage advice. In some cases it has been proven that consumers can save £1,830 per year compared with going direct to lender. The report is called ‘value of mortgage advice’ and has been compiled by independent financial services research company NMG.

In the current financial climate, AMI thought it was important to put a physical value on the intermediary community for consumers. Not only do independent mortgage advisers find suitable products at competitive rates, whilst taking into account the individuals circumstances, Independent Mortgage Advice has a cost saving attached.

The research paper covers the following issues:

* Consumers’ attitudes towards advice, the role of intermediaries and also compares the service consumers receive from lenders and brokers
* The types of mortgages taken on by consumers following advice compared to those who go direct
* The role of intermediaries in helping those suffering repayment difficulties
* How intermediaries can assist those who are excluded by the traditional mortgage lenders

This research is further strengthened by recent figures released from the Council of Mortgages Lenders which states that over 80% of first time buyers chose to arrange their mortgage through an intermediary and 79% of remortgages are carried out by the same method.

There is an obvious demand from the consumer for high quality mortgage advice, and this must be appreciated and supported by the government, regulators or the industry at large.

With over 27 years of experience in offering Independent Mortgage Advice, I am well placed to offer my clients advice they can trust.

Click on the icons to the right to contact me. I promise not to bite !

FSA tells brokers to charge fees on direct deals

This is not a subject I have touched on within my blog's until now. For the last few weeks, lenders have been listing products through their branch networks the have undercut those available through independent mortgage brokers, the very brokers that feed these lenders with over 60% of their business, and up to 90% in some cases. To deliberately undercut the very people who have supported them and maintained their profits at a time when times have become hard, it an act of despicable betrayal.

Couple this with the FSA's reluctance to ban such practise, saying that they cannot tell lenders how to run their businesses commercially, it is very encouraging to hear that it was announced that The Financial Services Authority has urged brokers to charge clients a fee for advice when advising them to go direct to lenders for better deals. A spokesman for the regulator told Money Marketing that although chief executive Hector Sants has made it clear that dual-pricing by lenders is not a Treating Customers Fairly (TCF) issue, the FSA is not brushing the issue aside.

Jonathan Fischel, head of mortgages and credit unions department at the FSA, made the statement at the Mortgage Business Expo in Manchester today in an attempt to help solve the issue of dual pricing.

But the joint solution between the Association of Mortgage Intermediaries (AMI) and the FSA did not go down well with brokers in the seminar. Many fear they will soon be out of business if the FSA does not force lenders to offer a level playing field. Mr Fischel says "We have been working with AMI on key issues regarding dual pricing. Most sourcing systems do not show direct-only products. As a broker you could form your own KFI (Key Facts Illustration) and then charge a fee for the advice that you have given. You would not have to include the fee in the Key Facts Illustration. This would result in the customer getting two KFIs, one from the broker and one from the lender. As a broker it would be your job to explain to the customer why you are charging a fee and what the difference between your role and the lenders.” Fischel also told brokers that in order to call themselves whole of market they must disclose to the client that a cheaper deal could be found elsewhere. Of course this just adds to a brokers workload, in time and research telephone calls, with its increased costs.

The Federation of Small Businesses has voiced its support for mortgage brokers over dual-pricing, saying: "It is unacceptable for high-street banks and building societies to be freezing out small mortgage brokers in this way. If there are grounds for complaint by independent brokers to the Office of Fair Trading, the FSB would be right behind them."

Many brokers in the seminar called the solution impractical. One broker said: “Lenders make it as hard for you as possible, it’s impossible. It is just not right to charge the client a fee and then send them elsewhere.”

As an independent mortgage broker, I charge my clients a fee in all cases except for first time buyers - who have enough money to find as it is. I must charge such fees if I want to stay in business (which, funnily enough, I do!). The fee received from lenders for introducing clients to them is low enough, and insufficient to run a business such as mine, and make a half-decent living. For the amount of hours I have to put into each individual case, and the cost of telephone calls, dealing with the paperwork, contacting clients many times during the whole process and then to receive just a couple of hundred pounds for maybe 20 hours of time input would make no business sustainable. To have lenders offer dual pricing makes it more difficult to recommend a broker-sourced deal and puts businesses such as mine at risk. It is encouraging to see that the larger lenders (Abbey and Halifax) have already announced an end (in Abbey's case) and a reduction (in Halifax's case) to such dual-pricing practises. I hope the situation turns around soon, for everyone's mutual benefit.

Lending for purchases plummets whilst re-mortgages stay resilient.

Mortgage lending for house purchase has dropped almost 50% in March this year compared to the same month last year.

Data from the Council of Mortgage Lenders released this morning shows the number of loans for house purchase dropped 48% to 46,500 in March this year from 89,000 in March 2007.

It was also down 1% from 47,200 in February, but the CML says remortgaging levels held up well in the face of funding constraints.

Today’s figures relate to March mortgage completions.

The CML says the continued decline in lending for house purchase is partly due to the shortage of funding in the mortgage market as a result of credit market conditions.

Gross mortgage lending was £75bn in Q1, down from £83.9bn in Q1 2007.

The number of loans to first-time buyers declined in March to 17,800, down 1% from 17,900 in February and 45% from 32,500 in March last year.

Loans to home movers declined to 28,700, down 2% from 29,300 in February and 49% from 56,300 in March 2007.

Remortgaging activity has remained relatively resilient, increasing during Q1 2008 to £33.3bn which accounted for 44% of gross lending, up from 35% in Q1 2007 and the highest share in three years.

This is likely to be driven by the large numbers of borrowers exiting short-term fixed rate mortgages.

The proportion of other lending, which is predominantly made up of buy-to-let loans and further advances, increased in March to £7.2bn, accounting for 30% of gross lending and up from £6.3bn in February and £7bn in March 2007.

The average first-time buyer borrowed 89% of the property’s value and 3.35 times their income in Q1 2008.

Michael Coogan, director-general of the CML, says: “House purchase transaction volumes will continue to deteriorate in the coming months as recent approvals data from the BoE has shown.

“Since the introduction of the Special Liquidity Scheme, there has been a slight improvement in credit market conditions with LIBOR moving in a more helpful direction. But LIBOR still remains high relative to base rate and any improvement in credit market conditions will take time to feed through into the mortgage market.”

Tied turns as FSA splits the market

I don't believe that potential borrowers worry too much about the compliance issues that financial and mortgage advisers have to go through. As long as they hear the words such as 'qualified, or regulated, or licensed' most people seem happy enough to accept that the person they seek advice from is suitable to provide the information/advice/ placement service they seek for their own particular needs. However, behind the scenes (from consumers) there is general unrest within the 'advising community' relating to potential changes being proposed by our regulator, the Financial services Authority (FSA)

I saw the following report on an online financial news provider's website today to illustrates the unrest financial and mortgage advisers may soon be experiencing:

"Multi-ties could be stripped of their right to be called advisers as part of a radical shift in FSA thinking which sees the regulator acknowledge the value of whole of market advice.

In its interim report, published this week, the FSA calls for a clear separation between whole of market advice and sales. As part of this move, the FSA says multi-ties could be prohibited from using the advice label and would have to convert to a non-advised sales service or the FSA would have to create a new "simple products" regulatory sales regime. It considers that the prohibitive option may be easiest for consumers to understand.

Other options would be for them to operate under a label such as "sales with persuasion", although it says this would add complexity, or allow them to use the adviser label, which the FSA warns would compromise simplicity.

St James's Place, which operates a model which would fall outside advice, is furious with the report.

Chairman Mike Wilson says: "I do not think for a moment that this will see the light of day. It is incredible to suggest that our advisers are just salespeople and that anyone who sells products from the wider market is giving advice."

Other firms likely to be affected include Openwork, Intrinsic, Barclays, Vision Network and Sesame.

The British Bankers' Association has attacked the report, warning it could limit consumer access to advice, but Aifa has dismissed these concerns.

Director general Chris Cummings says he is delighted the FSA refused to be influenced by banks' vested interests to push through a sales-driven mentality that would have damaged consumer protection.

True Potential managing partner David Harrison says: "It is good to see the FSA recognising that independent financial advice is the only type of advice worth having."

FSA head of the RDR (Retail Distribition Review) Amanda Bowe says: "There is a lot more thinking and a lot more decision-making to do before we say whether we can make a split between advice and sales happen."

The report also suggests that the FSA would continue its work into whether it needs to restrict providers from taking financial interests in adviser firms, with a potential to look at reintroducing "better than best" controls."

I hope you feel better for reading that ! As always, the Financial Services industry is anything but dull.

Today's thing to ponder (an occasional series) :
Before they invented drawing boards, what did they go back to?

Grabbing headlines for the sake of it?

I've been away to Devon and Cornwall for the last week and have not been able to input these little nuggets of golden information in my absence.

As ever, the mortgage marketplace moves ahead without any time to draw breathe.

We were informed recently of a new product launched by HSBC called ‘Rate Matcher’, which one mortgage magazine presented with the eye-catching headline: ‘HSBC may deliver hammer blow to brokers’. HSBC are presenting this product to customers who are coming off fixed rate products this year and face the prospect of a hike in rates when they come to re-mortgage. By dealing with HSBC direct and switching to the Rate Matcher, the bank promises to match their old rate.

Given the market conditions, I would not be surprised to see other propositions like this enter the market. However, in a period of high inter-banking lending (LIBOR) rates and a worldwide lack of liquidity, these offers do not seem to make much economic sense – and as ever a more detailed examination proves to be revealing.

The facts behind the offer paint a slightly different picture:

1. Rate Matcher is limited to a £250K maximum loan, with a maximum of 80% of the property value– if you want more you have to top it up with another product from the Bank.

2. The minimum rate HSBC is accepting is 4.54% over two years.

3. There is the possibility of a large arrangement fee on the Rate Matcher product. HSBC are claiming that around three-quarters of clients will pay £999; however, the actual figure is based on interest rate and loan size and could be much higher. In their own example on their website, for a £125,000 loan with an interest rate of 4.89%, the arrangement fee is £1,119. Nowadays, £125,000 is much less than the typical average loan.

4. The Rate Matcher offer is only available until 18th May 2008, which is the deadline for fully competed applications to be made, which suggests its primary function is to grab the headlines (which it has been pretty successful at!).

5. The Rate Matcher offer is only available on 2 year fixed rate products, and not on HSBC’s Tracker, HomeStart, Buy to Let or Mortgage Specials. (Not everyone wants a fixed rate product, especially when interest rates are coming down.)

Looking at it objectively, I can’t imagine that other lenders will simply sit back and let HSBC pinch all of their clients! A move such as this by one of the big High Street brands might be the start of serious competition amongst the lenders once again.

Staying with the mortgage market, there is a serious issue currently facing the industry: the increase in lending rates from lenders at a time when the Bank of England is actually reducing interest rates (a further quarter per cent rate cut was announced on the 10th April).

Lenders rates are rising because of the increasing cost of inter-bank lending, reflected in the LIBOR (London Inter-Bank Offer Rate) rate. It is the LIBOR rate, rather than the headline Bank of England rate, that is the driving factor behind lenders’ rates on their products. We’re now in the midst of a liquidity crisis where the cost of inter-bank lending has risen significantly. This had its most publicised impact on Northern Rock at the end of 2007, but it is now affecting all of the banking sector.

Whilst any reduction in the interest rate by the Bank of England hits the headlines, it is changes in the LIBOR rate that affect the mortgage market. Therefore, the only clients who would see a reduction in their mortgage rate are those with Tracker products directly linked to the Bank of England base rate – and the majority of Tracker products are actually linked to the LIBOR rate. Thus we are seeing a situation where the Bank of England is cutting rates but borrowers are facing higher rates, even on some Tracker products. This is an important point for borrowers to understand.

With so much happening in the mortgage market at the moment, and the heightened level of media interest, there is no doubt that there will be further ‘shock announcements’ such as this over the coming weeks. My aim, as an Independent Mortgage Adviser, is to look beyond the headlines and present my clients with a more balanced view of the market with the benefit of my experience. There’s no question that this is a tough period, but one thing is for certain – clients need the help of their advisers now, more than ever. Far from being a ‘hammer blow to brokers’, the months ahead could well establish the dominant role of the mortgage adviser in the market.

As ever, I'm here, willing and available to offer any one looking for advice for their residential or business mortgage, with a personal service, and help them achieve their own goals and ambitions. The contact link is on the right hand side of this post!

More mortgage deals are withdrawn

More banks have withdrawn mortgage deals following First Direct's decision to suspend its entire range.

The bank, which is part of HSBC, said the withdrawal was to allow it to cope with the unprecedented demand for its range of mortgages.

The Co-operative Bank appears to have had the same problems and has withdrawn its two-year mortgage deals.

The US investment bank Lehman Brothers is also withdrawing from the UK mortgage market.

Its Southern Pacific and Preferred Mortgages will stop taking new business at the end of the day.

First Direct stressed that it is only temporarily ending mortgage offers to people who are not already its customers.

Many providers have withdrawn mortgages or raised interest rates this year, leaving some smaller banks and building societies unable to cope with demand.

First Direct says applications have been five times its usual levels.

"The flood of interest in our mortgages has meant we're taking longer than we'd like to handle applications, especially from people who are not existing customers," said First Direct's CEO.

We want to be back in the market as soon as possible

"Rather than increase interest rates dramatically to discourage new applications, we've decided to withdraw temporarily from offering mortgages to non-customers until we've cleared the backlog."

According to Moneyfacts, mortgage products on offer have fallen by 20% over the last week.

As a result of the continuing credit crisis, the interest rates at which banks lend money to each other are, unusually, far above the Bank of England's base lending rate.

And the banks are finding it much more difficult to raise money from credit markets for mortgage-backed securities.

That has made it uneconomic for some institutions to carry on offering mortgages and thousands of products have been withdrawn already this year.

Figures on Wednesday showed the number of new mortgages approved for house purchase fell slightly in February to just 73,000. This figure was 39% lower than the same month a year earlier.

First Direct is the first bank to withdraw its entire range to non-customers, although the Bath and Earl Shilton building societies took the same step last month.

Last week, the Nationwide building society, one of the UK's biggest mortgage lenders, raised its interest rates significantly on new fixed and tracker deals.

It said this was both because of the increased cost of raising the funds and the need to cope with demand.

Many other lenders are demanding bigger deposits with mortgages of 100% or more of a property's value having all but disappeared.

Although the number of first-time buyers and other house movers has been falling, more than a million people will see their short term fixed rate deals expire this year.

As a result, they are starting to look around to find a better deal from other lenders, as well as their existing one.

The situation has been made worse by the near-collapse of the Northern Rock.

What we have seen elsewhere in the market is a continual leap-frogging of rates where lenders have been re-pricing upwards

What was the UK's busiest lender last year has now withdrawn from the market, leaving many of its customers looking for another lender.

First Direct had taken a drastic step to cope with demand.

From having over 25,000 mortgage products on my sourcing system about 6 months ago, there are now under 7,000 !

More borrowers turn to interest-only

More borrowers are switching to interest-only mortgages to reduce their mortgage repayments.

Data from the Council of Mortgage Lenders showed around 24% of first-time buyers were taking out interest-only mortgages.

Many borrowers were taking out interest-only to reduce monthly bills.

A few words of advice from an Independent Mortgage Adviser ( i.e me, the blogger )...

Moving to interest-only repayments on your mortgage will help reduce your monthly costs.

It will be tempting for the 1.4 million borrowers whose fixed-rate deals are coming to an end this year. Many of them are on deals as low as 4.23% and with the current average fixed rate of 6% they face serious payment shocks.

However, borrowers may be storing up problems for themselves and should consider the move carefully.

However tempting switching from repayment to interest-only may be, unless borrowers have plans in place to eventually repay their loan they may be simply storing up problems for the future.

Getting to the end of the mortgage term and still owing the initial debt would be disastrous.

Think very carefully before making such decisions. Better still, talk to me and we can discuss your options fully, without obligation and without pressure.

After all, that's what I've been doing for the last 27 years !

As always, if you have any doubts about your current or proposed situation, and want to contact me, just click the link to my website on the right hand side of this page to get my contact details.

Negatives, positives, and ponderings.

What an interesting start to the day.

The first emails of the day announced that one of the leading commercial lendrs in the UK, Commercial First, had stopped lending immediately due to its failure to raise funds on the securitised money markets. They have put all its staff on Consultation (which means immediate notice that redundancies are likely to be made).

This was followed by Mortgages PLC (owned by the US firm Merrill Lynch) announcing late yesterday that they are withdrawing from the Prime Buy-to-Let mortgage arena, which is surprising as most other lenders are only reducing their exposure to risk by reducing the amounts they will lend on individual properties (typically from 85-90% maximum down to 75-80% maximum). Saying this, 85% loans are still available, for purchases and re-mortgages, but who know how long this will last for.

Following this was a news report that house prices are expected to fall (again) by up to 20% in the next two years, but a full blown recession is not expected.

If I was feeling negative, this group of news stories would seriously upset me, but I find the phone keeps ringing, and people still want to move, re-mortgage, buy an investment property (now is a great time to buy for investors!), so I cannot complain too much.

If we all keep a positive attitude, and concentrate on our own little worlds, we're not affected by what's apparantly happening in the wider world.

It works for me !

I had my regular visit from my Compliance manager today. We went through the business activities and he did his usual checks. I'm glad to report that nothing is untowards* within my business and I can carry on trading, giving advice and doing what I do every day - still !

* Writing this, I thought what a strange word 'untowards' actually is. I was prompted to search for it's definition, which is:

Definition of untoward

1. contrary to your interests or welfare; "adverse circumstances"; "made a place for themselves under the most untoward conditions"
2. not in keeping with accepted standards of what is right or proper in polite society; "was buried with indecent haste"; "indecorous behavior"; "language unbecoming to a lady"; "unseemly to use profanity"; "moved to curb their untoward ribaldry"

Similar Words: adverse, harmful, inauspicious, indecent, indecorous, unbecoming, uncomely, unseemly

It's so rare for this word to be written down, although we use it in everyday speech, it made me stop and think.

It's good to ponder such matters once in a while!

Tomorrow's thing to ponder:
Why is it called a building when it's already built?

Number of 100% mortgages still reducing, and help with repossessions

As a further sign of the tightening of the lending criteria, it is interesting to see that just 9 lenders now offer 100% mortgages. Six months ago, there were 22 lenders offering 100% products compared to just nine now in England. The number of products on offer has fallen from 162 to just 39. In Scotland only 7 lenders will sell 100% mortgages.

The lowest rates on offer in October were around 5.99% – now they are 6.14% despite the Bank of England cutting the base rate twice since then. Typical arrangement and associated fees were found to have risen from £4,954 to £5,134.

Although lenders have given up on 125% mortgages but there is still life in the 100% mortgage market albeit with higher rates and fees as companies price for risk. As always, the risk reflects the rate.


And as a follow on, when the nasty stuff happens, I can continue helping....

Mortgage Advisers believe they have a key role to play in helping to bring down arrears and possessions levels, by providing advice and counselling to borrowers, and helping them liaise with their lender, according to the Intermediary Mortgage Lenders Association (IMLA).

Almost half (48%) of brokers surveyed said intermediaries can support borrowers in difficulty – although a significant minority of 38% said their role was not to help borrowers manage arrears. The remaining 14% did not express a view.

Brokers said they needed early notification of an arrears problem by the lender – mentioned by 57% of respondents. A small percentage (9%) argued lenders should pay fees to brokers for arrears counselling.

IMLAs executive director commented: “Many, but not all, intermediaries are keen to play a more proactive role in supporting borrowers who may get into financial difficulty, seeing this as an integral part of the service they provide their customers over the long term. They are able to provide a higher level of expertise and independent advice to borrowers than they could find elsewhere.”

If you have a problem paying your mortgage, or know someone who is having problems, please feel free to contact me and I'll do all I can to assist in such matters. After all, the service I offer is from end-to-end, warts and all !

Smokers who quit could save over £12,500 on protection products.

The insurer Prudential says that smokers who stopped smoking could save over £12,500 on life and serious illness insurance premiums.

The life company says people could get up to 50 per cent off their premiums and added to the savings they would make on not buying cigarettes, it would be equivalent to receiving a 9.5 per cent pay rise.

Apparantly, research has come out ahead of National No Smoking Day (March 12 this year) and found that 20% of smokers said they would be willing to pay up to £6 for a packet of 20 cigarettes, while 3 per cent of smokers said they would still buy cigarettes if they cost more than £20 per pack of 20.

A smoking habit at this rate would cost nearly £7,300 every year. When also taking into consideration the extra premiums smokers pay on their life and serious illness cover, it becomes £7,800 per year.

PruProtect CEO Sammy Rubin says: “National No Smoking Day is a time when smokers will be thinking about the true cost of their habit, financially and physically. At PruProtect we support both, and offer those wanting to quit not only a financial incentive by saving money on premiums, but encourage people to lead a healthier life style through our Vitality points scheme. To help those finding it tough to quit, we also offer heavily discounted entry to Alan Carr’s Easy Way smoking cessation courses.”

An ex-smoking (for over 30 years) Independent Mortgage Adviser says "If you are a smoker, stop smoking, save money, save your health, be able to smell and taste things properly, and think of your family and friends who hate being around a smoker".

Have a good weekend, y'all. I'm clearing out the garage !

A rare day out, mixing with colleagues and the stars!

My first entry for a few days. Been a bit busy you know!

Whilst not wishing to bore the reader with what's keeping me busy, I will say what I did yesterday.

On a rare day out for me, I went along to my Network's annual conference, which was held in west London. On a bitterly cold day, I had already decided that I'd go by my motorbike, (eco-friendly and free parking!) which after a few miles I regretted to my frozen-to-the-bone legs! I really must get some better cold weather gear.

Amongst all the information delivery that is the norm at such an event, we had two guest speakers. The first was the new Dragon in the Den, James Caan. He was a very good speaker, and he told us how he made his millions, and the process he went through. Effectively, when he starts a business, he writes down all the attributes that business should have. He then looks at that list, and thinks what name it would have if it were a person. That's why his businesses are named with real names and not corporate names. He even said he'd chosen his own name that way!

In the afternoon, we were definitely entertained by Ian Robertson, the BBC rugby correspondent (he of the Scottish accent), who gave us a quick- fire round up of anecdotes as a preparation to him interviewing the other guest speaker, Lawrence Dallaglio, who has won the Rugby World Cup in 2003 and was a Final loser in 2007. Lawrence likened the sports world to the business world in many ways, and he nearly gave us the 'truth' about what he really thought about Will Carling, but then added "I'll tell you what I really think in the bar afterwards" which raised a good laugh.

We also heard from the CEO of New Star investment managers, John Duffield. Whilst giving us his very considered opinion on the current investment climate, and how it relates to the housing market, he did say that the current price of shares should not reflect the pessimism of the buyer. Everyone knows that it is best to buy shares when the price is depressed and stock such as house builders now represent half the purchase price they did a year or so ago. (This does not constitute investment advice, by the way!) He also said that the stock market is traditionally half a cycle ahead of the economy, which is an interesting indicator for the laymen. He also said that currently it is quite possible that the economy is going to come down, and therefore it is an excellent time to invest. John Duffield founded Jupiter Asset Management in 1985 and built it into one of the UK's most successful retail fund management businesses. Within 15 years, Jupiter's funds under management grew to £14 billion and the company attracted approximately one million investment accounts. In the five years before he left Jupiter in 2000 it received more than 100 investment awards. He then went onto start New Star, which has won many awards for its marketing since it's inception. Not bad for an investment company.

Today, it's back to my desk and on with the work.

Remortgaging in demand, but FTB's 'wait and see'

Borrower demand for remortgages has increased by 25% in the last four months and has exceeded demand for advice from first-time buyers (FTBs) for the first time ever. The number of FTB's seeking advice is usually between 5 and 10 per cent higher than remortgagors but in September 2007, this switched over for the first time and remortgages have continued to rise and exceed purchases ever since.

An industry spokesman said “Borrowers are really astute at the moment in terms of looking to lower their mortgage rate, as the number of people looking for remortgage advice has risen by 25% since October. (ED: Wait a minute. They said September earlier, who's writing this stuff?) On the other hand the number of first time buyers has dropped, indicating a ‘wait and see’ attitude as they look to see if the housing market goes down any further.”

An experienced mortgage adviser (i.e the writer of this Blog !) said " This is what I've already said, as 1,400,000 people with existing fixed rate deals end during 2008, and the demand to replace these product will increase over the coming months. Therefore the need for Independent Mortgage Advice will also increase, which will keep me in business for the forseeable future, so says my crystal ball" Or else!

However, what's keeping me busy right now are people who have sold existing properties and are buying new homes. As always, 1st Call 4 Mortgages bucks the industry trend !

I'll leave you with a thought to ponder: What was the best thing before sliced bread?

Leap Years Day, and love is all around.

Following similar recent announcements from Alliance & Leicester and Nationwide, more reductions have been announced in the amount lenders will lend as a maximum percentage of the purchase price. Step forward Cheltenham & Gloucester, who have now reduced maximum loans from 95% to 90% across their product range. The lender said that the move was part of its 'prudent approach to lending,' adding that the ranges which had been withdrawn or had their maximum LTVs reduced only accounted for a tiny part ( just 1.7% of the lender's mortgage book had been 90% + loan to value deals) of its overall business. The lender is now refocusing efforts on its core business. C&G also apologized from giving intermediaries 'less notice than usual' after informing them of the developments on Thursday, for a withdrawal that evening. At least we got an apology this time ! Interestingly, parent company Lloyds TSB will continue to lend up to 95%. C&G said the decision was made in order to focus on improving service levels to its core products. As a broker, I find it is usual that lenders are swamped with business they cannot handle due to staffing issues when they have ultra-competitive deals. This leads to an ever decreasing spiral of service levels, so eventually lenders withdraw from a product range or market entirely (witness above) so that they can rein in the application levels, which allows them to get their service back to an acceptable level, that attracts more business that lets them make a profit (not that any product is unprofitable for them, heaven forbid.) As I said, it's a merry-go-round !

It's been a week of 'doom and gloom', with more redundancies announced, lenders making amendments to product ranges at short - or no - notice, technical problems with provider's web sites, and other issues such as poor service and outright stupid things like the inefficiencies I mentioned on Wednesday. For my point of view, I've been busy trying to arrange mortgages for people with bad credit history, and people who have come back to me after 'disappearing' whilst they searched for the perfect property, and trying to arrange buildings insurance on a property in a ex-mining area. I'm very glad to say that all 'problems' were able to be resolved. That's what I'm here for after all.

Today is the 29th February - Leap Years Day. Love is in the air, supposedly. Maybe I'll get that marriage proposal after all! My other half better hurry up as her parents are coming to stay for the weekend, which may put a dampener on such things ! On that note, I hope you have a good weekend. I intend to !

Today's thought: "Where there is love, there is life". (Mahatma Gandhi)

Inefficiencies at my cost really irritate.

I am amazed at how inefficient companies can be. I moved home (and office) last autumn, and I informed many organisations of my new address. Around the same time, I also changed the network that I affiliate my business through. You'd think that telling a company just once of the change of details would be sufficient, especially as on any product application I give them, it reiterates my current details. Today I received a cheque from Norwich & Peterborough Building Society, not only addressed to my old address, which I'd let over 6 months ago, but also for the wrong amount. The wrong amount was due to them not updating my Network details correctly, which I'd told them about in October. Luckily, I had arranged a mail re-direction service with the Royal Mail for 6 months, but this ended on the 20th February, even though I received this letter over 1 week after my re-direction service was supposed to end. So, it's not only the lender who was inefficient, but also the Royal Mail (even though I have benefited from their inefficiency). The time and cost of other people's inefficiency is something that really riles me, but this is the times we live in. I will continue to 'name and shame' the organisations that I deal with and who don't seem to make changes at the time of request, or are as efficient as I am, which cost me time and money. Why should I be the one to show them the error of their ways, at my time and expense? And don't get me started on 0870 numbers !!

Following on from last week's withdrawal of all 6 providers of 100%+ products, it's been announced today that RBS Intermediary Partners (that’s the Royal Bank of Scotland, Nat West bank, the One Account, and First Active) has lowered its maximum loans to 95% of the property value. They used to lend up to 100% of the property value. Another sign of the increasing 'credit crunch' and it's long-lasting effects. I fear they won't be the last to make such changes.

Time for some mortgage advice....

Borrowers could see a huge hike in monthly mortgage payments when their fixed rate deal ends...

The 1,400,000 mortgage borrowers whose fixed rate deals will come to an end this year could see their monthly payments increase by nearly £400 if they don't plan ahead and arrange to switch to another mortgage scheme.

Most mortgage deals revert to the lender's standard variable rate (SVR) once the fixed or discounted period is over. This time two year's ago, West Bromwich Building Society had the leading two-year fixed rate, at 4.19%. Someone who had that deal and has a £150,000 interest-only mortgage will see their payments go from £524 a month to £917 when the fixed rate expires at the end of March and they move on to West Brom's SVR of 7.34%.

To avoid paying such a rate, It is crucial to remortgage on to another fixed or discounted product. Unless the borrower is tied into a mortgage deal with extended penalties, there is no need to pay any lender's SVR, as it is the most expensive option by far.

But, be warned - even if you remortgage, you will probably be paying more than you have been in the last 2 years. The Bank of England base rate is currently 5.25%, compared to 4.5% this time two years ago. And, as a result of the credit crunch, many mortgage lenders have been looking to widen their margins. As a result, mortgage rates are significantly higher than they were in 2006.

There are some good deals available though and the Council of Mortgage Lenders said this week that the payment shock for those coming off low fixed rates will not be as severe as many had expected.

As the credit crunch has resulted in many lenders increasing their margins, and now being more cautious about who they will lend to, it has also brought some relief to existing borrowers. The Bank of England's decision to cut interest rates in December and earlier this month stemmed from concerns about the impact of the financial crisis on the economy.

As a result many mortgage rates are lower than they were last summer - in fact if you want long-term security you can even secure a 10-year fixed rate deal at a lower rate than the leading two-year deal that was available six months ago.

As always, you should speak to me, an Independent Mortgage Adviser, to discuss the current possibilities. Call on 08458 386938 during office hours and I'll be happy to start the process for you.

As ever, all the best,

Des

Another day, same ####

Most of today has been spent on AXA's online system, trying to input a life assurance application. Having input all the details required up to page 3, out of an application that runs to 20 pages, I then found an 'error on page' icon. I called Axa's online technical helpline, to be told that I am the third person today to have this fault, so they will now investigate it and call me back. 2 Hours later, without a call from them, I tried to do the application again, and it went through faultlessly, but I am still awaiting their telephone call to say matters have been rectified. Fat chance that call will ever be received.

I heard that Northern Rock are actually calling existing mortgage customers to say that they'd be better of going to another mortgage lender once their existing fixed rate wds with Northern Rock. Amazing to see such honesty from a lender, especially as they need the money! However, most financially-savvy borrowers would know that NR's current mortgage rates are hugely uncomepetitive, and would move away anyway.

A spokesman for NR said: "It is something we have confirmed for some time. Since September we said we were taking prudent steps to reign back our lending."We're writing to customers coming to the end of their deals and think it's fair to say there are probably better ones out there, and to contact a independent mortgage broker about them." The spokesman added that customers approaching the end of their current deals are welcome to remain with the bank on its SVR, which is currently 7.59%. As mentioned a few days ago, the current lowest Standard Variable Rate is the Stafford Railway Building Society's, now just 5.99%. Full marks to Northern Rock for such honesty.

Things are not all happy at Alliance & Leicester either, with the news that they are encouraging members of their staff to apply for voluntary redundancy, and are looking to show up to 300 people the exit door.

Also keeping me busy at present is an appeal to a lender who's Valuer has downloaded a property I am currently arranging a re-mortgage on. It's been downvalued around 20%, from £170,000 to £135,000. Rather stupidly, the local valuer has only done his 'due dligence' on the actual property postcode, which has had only 4 sales in the last 4 years. and not the whole road, which has quite a few postcodes within it's length, and many more sales to prove market values. We now have to show the proposed lender the error of their valuer's ways. This is more unpaid-for work, which is not only frustrating but should also be also unneccesary had a 'professional' person should do their job properly in the first place.

Let's see what tomorrow brings !

57 varieties

Interesting to note that since the Bank of England cut its lending rate two weeks ago from 5.5% to 5.25%, we have seen 57 lenders adjust their Standard Variable Rate (SVR) to reflect the 0.25 reduction. Encouragingly, Stafford Railway Building Society has done one better than the Bank of England by reducing its rate by a huge 0.35 per cent to make it the lowest SVR in the market at 5.99 per cent. However eight of these 57 lenders have cut their SVRs by less than a quarter point, including Northern Rock at 0.1 per cent and Britannia at 0.15 per cent. Most of these rate revisions will come into force in March. Northern Rock's failure to pass on the rate cut in full was no great surprise, with circumstances as they are at the moment meaning that new lending does not appear to feature in the stricken lender's strategy going forward, as now the focus is on their savings book and attracting more money into the coffers through competitively priced deposit accounts. On closer inspection, none of the top five biggest lenders has any current mortgage products linked to SVR.

As mentioned yesterday, there was just one lender left in the 125% product arena, namely Birmingham Midshires (who also call themselves BM Solutions). Lo and behold, today's new is that they too have withdrawn from this marketplace. This now means that it is only possible to borrow upto 100% of the property price, but not beyond it. Amazingly, Birmingham Midshires have announced this product withdrawal retrospectively, as the products were withdrawn last night ! So much for ANY notice period.

If the credit crunch continues, I can foresee lenders reducing their minimum lending to 95% only, which would enforce borrowers to have saved a deposit (which is always good advice anyway, as it saves literally thousands of pounds in associated fees).

This ties in nicely with other news today that First-time buyers (FTBs) are returning to the property market, with the National Association of Estate Agents (NAEA) reporting a fourth consecutive monthly rise in FTB's. New homebuyers increased their market share by 1.5 per cent between December and January, bringing it to 14.5 per cent overall. The increased optimism has been largely put down to the current financial climate with the drop in property prices in some areas acting as a platform for many those who may have otherwise struggled.

It is imperative that FTB's are able to afford property, as this class of borrower is who fuels the mortgage market from it's grass roots.

Interesting times, as always, in the mortgage market.

Old friends revisited, and nothing changes.

Thursday morning:
I had a very enjoyable day out in the countryside of Cornwall yesterday, around St Mellion in North Cornwall and then down to St Ives and Gurnards Head, in west Cornwall, revisiting old friends and seeing how much the place has changed (which it hadn't really, apart from the roadworks along the A38 which will have some impact) and yet the lending world did not stop it's onward march. There were more cutbacks of jobs announced and also the removal of the headline-hitting (for all the wrong reasons) 125% products from 4 lenders (Abbey, Alliance & Leicester, Coventry BS and Godiva Mortgages). This leaves Northern Rock (and one other lender) very much in the frame for this kind of product, designed to help first time buyers get a foothold on the property ladder, albeit at a premium interest rate. I'm sure it's only a question of time before they have to succumb to public pressure, especially they are now government-owned. However, with an interest rate of 8.2%, they effectively make the product unaffordable for First Time Buyers anyway, effectively pricing themselves out of their own market. With the mortgage market being so cyclical, hard times such as those currently being exerienced have been here before. I remember around 28 years ago, when there were actually queues for mortgages, as funding was so tight. Although we've not yet come to that point, the 'stupid' products are being dropped, to leave 'sensible' products left on the shelves. As we all know, 'sensible' people will have saved at least a 5% deposit, and therefore have these 'sensible' products available to them. What is left on the shelves (according to my sourcing system today) are 9,822 mortgages (with some duplicates due to the 'route' the product is available from). Incredible to think a few months ago there were over 20,000 products listed on the sourcing system, which is a clear indication to me that things have got tough. Also, with a deposit comes lower monthly payments, and associated fees, which would save literally thousands of pounds to borrowers. It's also clear that using an Independent Mortgage Adviser makes more sense than ever nowadays as, if there's more than 2 products available for a given situation, advice is what's needed.

I had to re-register with a lender today, as I'd recently changed my mortgage network. When inputting my details, I couldn't get past the screen where I had to input my telephone number (an 0845 number). I called the lender (on an 0845 number) and they said I cannot use an 0845 number for registering. Stupid, or what?

Thursday afternoon:
I just received this email from Northern Rock..(at 14.50pm )
"Withdrawal of Together
Northern Rock will withdraw the Together mortgage range on Thursday 21 February 2008.
Applications for the outgoing Together products will be accepted until 8pm on Thursday 21 February. "

Exactly what I said earlier, and reiterates what I said when I said they'd have to bow to pressure to remove such 'stupid' products. Another example of products being withdrawn at a moment's notice !

Sense will prevail (but not when it comes to lenders and their frustrating online systems, it seems).

The way I work, and a rare day out in the countryside.

Today's news is dominated by the Government's decision to nationalise Northern Rock. They say it is the right thing to do right now as it is a good platform from which to stabilise the bank and repay billions of pounds of state loans.The move follows advice from investment bank Goldman Sachs, which concluded a temporary period of public ownership better met the Government’s objective of protecting taxpayers. In reality, the NR situation affects 3 kinds of people (ignoring all us taxpayers for a moment): savers, borrowers and shareholders. For savers, all deposits are now government-backed, however much you have on deposit. That arguably makes Northern Rock the safest bank to have savings with in the country. If your money is in a different bank, it is covered by the Financial Services Compensation Scheme (FSCS) which guarantees 100% of the first £35,000 of savings. For borrowers, it is "business as usual" in the sense that you should continue to pay your mortgage as you normally do. The only difference now is that, if you missed payments and ended up having your home repossessed, ultimately it would be the government who owned your home. I cannot imagine that Mr Darling would come knocking at your door should you miss a mortgage payment, though! For shareholders, they stand to lose out the most, as shares have been suspended, and therefore cannot be sold, and who's to know what value they will be at should the time come to de-nationalise the bank. As investment advisers tell us, "The value of your investment can do down, as well as plummet" (he said, jokingly) and, sadly, this is a case in point.

Also in today's news is the McCartney/Mills divorce case. It seems that the eventual payout could be a British record for divorce settlements. Not the kind of record Sir Paul would want to make. Let's wish them both happiness in their future lives apart.

On a personal front, I'm taking a day out on Wednesday, as my 'other half' is going on business to Cornwall, and I'm being allowed to tag along. As I don't get out much(!), being home-office based, it's a lovely way of seeing some of the countryside. I'll have my phone on 'divert' so I'll be contactable when people call.

This brings me onto how I actually work. Firstly, a bit of background. After 25 years in the financial services industry, in early 2006, I decided that I would do what is most efficient in every manner for me and my clients. After re-assessing how I work, reading many articles about 'efficiency', I decided to actually put it into practice. ( I hate the word 'practice' as much as I hate the work 'try'. If something needs doing, then do it. Don't 'practice' or 'try' doing it!) I decided to cut out all 'waste of time' elements from my working day, and the biggest waste of time of all is travelling. At a stroke, I gained about 4 hours a day back into my working day. Travelling around a hour there and an hour back, twice a day, was not only a complete waste of time, but not very good for my health or the environment. The absolute heart of my business is dealing with people and solving their situations in the most effective ways, and by effective I mean not only financial but also in my working habit. As in any relationship, it has to work both ways, for them and for me. Also, people nowadays don't necessarily want face-to-face advice, and are happy dealing over the phone and using email. The psychological aspect is that there is no 'sale pressure' and everyone is on the same side, wanting the same results. Also, with busy working lives, people would only see their financial advisers in the evening, after a long working day, so by their very nature, they were not always at their peak of thinking, able to make rational decisions about their financial planning, decisions that could affect them for many years to come. Couple that with dealing with mortgage lenders and insurance companies, and efficient working practises becomes mandatory for me. Nearly every mortgage lender and insurance company nowadays has an online system to 'do business' with. From getting a lender's 'decision in principal' to arranging an insurance policy, it can virtually all be done online nowadays. Instant (ish), efficient, friendly to the environment, lowers costs of running the business, and less stressful. I have a very low carbon footprint! I am also 'paperless' as much as possible. I don't even own a filing cabinet! All post is scanned and put into computer files, and then shredded, and then re-cycled (or into the compost bin).

Being a sole trader, and now being able to deal with people all around the UK, and by cutting out travelling, I have helped people with their mortgage arrangements as far away as Devon, Dorset, Somerset, Glasgow, Worcestershire, Warwickshire, as well as those in my original 'patch' of London, Hertfordshire, Bedfordshire and Buckinghamshire. Now, try getting to some of those places and back in a working day from Berkshire! I do have a stock phrase 'I'm not super-glued to my chair' and so I do go to see people should they demand it. They just have to pay for my time and expenses. See, it's better for everyone to work the way I now do business !

Till next time,

Des

Hi there,

This is my very first blog, ever.

As I like to be at the forefront of technology, and I like to have an 'open access' availability for my business contacts, it's time to join the world of Web-logging, popularly known as Blogging. In reality, I've probably waited too long, but now is the time to bite the bullet and move on with one of those things I've been meaning to do for quite some time.

I'll be using this blog to keep anyone who's interested in the world I live in, which is that of an Independent Mortgage Broker. Using my 27 years of experience is something I'm very proud of, as well as counting many clients, both old and new, amongst my friends. My greatest thrill is to see someone's dreams come to reality, and my occupation gives me that possibility on a regular basis.

I'll be posting things such as my latest deals (with complete anonymity of my clients, i. e no names mentioned) as well as news of what's happening in the mortgage lending world. Although the principles are the same (i.e. a mortgage is a mortgage is a mortgage), the speed at which matters move is sometimes incredible. For example, many lenders nowadays are removing their products with little more than 12 hours notice, which can be incredibly frustrating when I have a client interested in a product, only for it to be whipped away without adequate notice. Just today, I received an email from Cheltenham & Gloucester (at 1.45pm on a Friday) to say their latest range is being removed at 5pm on Saturday, and is being replaced by a yet-to-be-announced new product range on Monday (which could be higher or lower rates and/or fees, better or worse, who's to tell today!). This leaves me with under 4 hours to tell any client who I may have been recommending the C&G product range to, to arrange a Decision in Principal and sort out a Full Application. As I said, incredibly fast moving, and nearly always frustrating all round.

I think that's enough for a first post. Come back soon, and see what other 'pearls of wisdom' I have to share with you.

Best wishes, as ever.

Des