Mortgage Strategy
19 November 2001
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A guaranteed income from interest support
19 Nov 2001
Sources close to the FSA claim lenders want borrowers to receive mortgage interest support from the government so they will be guaranteed an income from interest repayments. The comments were in response to a CML circular updating members on discussions currently being held with the Department of Work and Pensions (DWP) on guidance to Benefit Agency offices on flexible mortgages, and a review of the Mortgage Interest Direct (MID) scheme for Income Support for Mortgage Interest ...
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Associating with success
19 Nov 2001
In May this year Bank of England economist DeAnne Julius issued a report into UK banking that identified a need for brokers to secure co-ownership of the Mortgage Code. The report recommended that brokers seek to obtain a direct say in the scope and running of the Code, as they are bound by its requirements and pay the cost of its monitoring through the MCCB. It urged them to take strides to establish a trade association, both representative and respected enough to claim a legitimate ...
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BSA dismisses carpetbaggers
19 Nov 2001
The Building Societies Association has dismissed suggestions that its members face renewed threats from carpetbaggers after a manufacturing executive said he would stand for election to the boards of directors of the Nationwide, the Portman and the Coventry. Tim Tanner is the founder of Mutual Members, a group of building society members who campaign for directorial accountability. He has previously tried to put reform proposals to the Nationwide and the Portman, without success. Jennife
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CA calls for penalty transparency
19 Nov 2001
Redemption penalty charging structures must be clearly explained to borrowers, the Consumers' Association warned last week. Melanie Green, principal researcher at the CA, says: "Consumers should not be expected to work out how much the charge would be for themselves. There should be a clear example that is representative of what they would be charged, in cash terms if possible. There should be a cap on any charges linked to variable rate. We are also not in favour of overhanging ...
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Chameleon launch from Pink
19 Nov 2001
Mortgages plc and Pink Home Loans have teamed up to launch Chameleon, a tracker mortgage range available only to brokers who submit business through Pink. Chameleon is a range of bank base rate tracker products designed for sub-prime borrowers. The range is tiered with rates starting from 6.25% (APR 6.55%) for loans of 50% loan-to-value.
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Don't believe the doom-mongers
19 Nov 2001
According to the Nationwide Building Society and the Halifax House Price Index, house prices dropped in October by 0.5%, yet only a few weeks before these two major lenders could not agree on the state of the property market. Halifax claimed that it had ground to a halt, while Nationwide quoted figures that showed a rise in house prices of 2.8% - the biggest jump since 1993. The disparity in the companies' figures is partly because of the different ways in which they calculate ...
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Economists question Banks' 50-point cut
19 Nov 2001
Leading economists have questioned whether this months 0.5% drop in interest rates was a cut too far. Concerns that the Bank of England has overestimated the threat of recession appear to be justified by the Bank's own deputy governor, Mervyn King, who rates the UK's chances of recession at only one in 10. The minutes of the MPC meetings in August, September and October reveal just how fine a line the committee treads between boosting confidence and stifling inflation. At ...
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EMU could spark tracker mis-selling complaints
19 Nov 2001
Lenders are failing to clarify what will happen to borrowers' tracker mortgages should the UK join the single currency, sparking fears of another mis-selling scandal. Mel Castorina, IFA at Dulwich & Village Residential Brokers, told Mortgage Strategy: "Clients are told that they will get a percentage above base rate, but the Bank of England is likely to disappear sooner rather than later. If it does, will these schemes revert to the European Central Bank or the SVR of banks ...
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Everybody needs some-trade-body
19 Nov 2001
The need for a trade association to represent brokers working in the mortgage industry has never been greater. Unless the Treasury gives in to mounting pressure to push back the deadline for N3, regulation will be on us in just 284 days time. Brokers need to throw their weight behind a common voice. Lenders have the Council of Mortgage Lenders and some 70% of general IFAs belong to the Association for Independent Financial Advisers. But what do mortgage brokers and mortgage IFAs ...
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Experts say now ISA good time to buy
19 Nov 2001
ISA mortgages remain unpopular products, but industry experts insist that this is an ideal time for long-term equity investment. Robert Swan, marketing director of Close Finsbury Asset Management, says: "A lot of people are not investing in equities full stop, whether it is for a mortgage or other reasons. ISA sales are down 95% on this time last year." He adds: "Many investors are too short termist. Looking forward, we can see that now is the best time to get into equities." He ...
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GMAC-RFC has its finger in many pies
19 Nov 2001
Q: How is GMAC-RFC structured? A: The ultimate parent is General Motors Corporation of the US. General Motors has two principal operating divisions - GM Automotive and GMAC Financial Services. The latter has grown to be one of the world's largest financial services groups with 29,000 employees in 40 countries and assets of approximately $170bn. GMAC-RFC is part of the GMAC Financial Services Mortgage Group. Q: How is the company positioned within the intermediary sector? A: ...
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Green light for all-in-ones
19 Nov 2001
A barrier to current account mortgages will fall as banks take the hassle out of switching direct debits over to a new account. Research commissioned by Intelligent Finance reveals that the new automatic processes will make 12 million adults more likely to change banks,
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Higher levels of pre-payment hit profits
19 Nov 2001
The average age of a mortgage is now just four years compared to seven five years ago. A six-month long study by the Actuarial Profession also revealed how actuarial techniques used in the insurance industry can help mortgage lenders to measure pre-payment behaviour and its impact on profitability. The study focused on fixed-rate loans, which account for about a third of UK mortgages and which have even shorter lives. It revealed that increased levels of pre-payment occur in the ...
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Intelligent comment on repayment vehicles?
19 Nov 2001
I read with interest last week's cover feature Driving Down Debt. It's about time we got some intelligent comment on the issue of repayment vehicles, and none of the bunkum and balderdash that gets printed in the consumer press. I thought the article was very balanced. We at the sharp end have an entirely different view from those trying to sell papers with deliberately distorted views because they are controversial. It is high time that the consumer press was held ...
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Intelligent Finance sign Hearts FC
19 Nov 2001
IntelligentFinance signed its first affinity agreement with a UK football club last week, signing up Edinburgh's Heart of Midlothian FC. Hearts supporters will be able to access IF financial products while generating income for the club. IF products will be advertised for three years around the club's Tynecastle ground and on the club website. While the deal will help finance a youth academy, fans will not benefit from special rates on IF's discount mortgage product. Peter ...
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Interest rates to drop again in 2002
19 Nov 2001
Interest rates will fall again in early 2002 by as much as 100 basis points. A report out today from influential think-tank the Centre of Economics and Business Research forecasts another rate cut at the start of the year of between 50 and 100 basis points as inflation falls further. Last week, the Bank of England's quarterly inflation report played down the risk of recession. It said that UK growth had held its own against a worsening global picture, and says the ...
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Intermediary Response
19 Nov 2001
Mr and Mrs Wright's problem is quite common, with one parent wishing to take a career break to look after the children. When they first took out their mortgage, they had a combined income of £55,000. Losing Mrs Wright's income will force them to focus on restructuring their finances. Assuming that their mortgage, which is on a standard rate, costs £600 per month, and credit card and loan repayments are a total of £340 per month, this means that the clients ...
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L&G toolkit to support partners
19 Nov 2001
Legal & General has launched a toolkit to support its business partners and help them meet the requirements of the Mortgage Code Compliance Board. The first part of the toolkit concentrates on the requirements for fitness, with the second section, covering training and competency, due to be published in the nest few weeks.
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Learning materials for financial services
19 Nov 2001
From midnight on 30 November 2001, the Financial Services Authority (FSA) formally assumes its role as sole regulator for the financial services industry. The impact of this change is far-reaching, and for students and those working within financial services, understanding the implications of the new financial services regime is vital to maintaining relevant knowledge and continued compliance. Although IFAs and mortgage brokers will have a relatively detached relationship with ...
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Lender Response
19 Nov 2001
This week's problem case Steven, 27, earns £35,000 per year as an IT consultant on a fixed contract. His wife, Stephanie, 24, is a part-time hairdresser earning £12,000 per year average. First time buyers, they want to buy a £140,000 semi in Southport and have a £10,000 deposit. We would certainly recommend that Mr and Mrs Wright give consideration to obtaining a more competitive deal for their existing mortgage, while at the same time looking seriously ...
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Mortgage protection is up
19 Nov 2001
New figures from the Council of Mortgage Lenders and the Association of British Insurers reveal that 21% of all mortgage holders now have mortgage payment protection insurance. A third of people who took out mortgages in the first half of 2001 took out MPPI at the same time. Well over two million MPPI policies are now in force. Of all MPPI claims, 88%were accepted, compared with 82% a year ago. Over 90% of accident and sickness claims were accepted.
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Mortgage underclass needs more help
19 Nov 2001
Credit unions need to adopt more market-oriented lending strategies if they are to offer low income households an effective alternative to loan sharks, claims the Co-operative Bank. Although a handful of the larger unions now offer mortgage-type products, the report concludes that most of the 700 or so unions are too small to be the first choice of credit for low income consumers. Strengthened credit unions are seen as a way to choke off the market for unlicensed money lenders. Although ...
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My Mortgage Week
19 Nov 2001
Monday: I wake up feeling the full effects of a weekend spent in Turin with some of our leading introducers. My thoughts turn quickly to an exciting day for SPML. Today, we are launching our sub-prime flexible mortgage, the first fully-featured flexible mortgage in this sector of the market. I spend the morning at the office talking about the product to many of our key introducers and the response is very positive. After a hectic day, I get home reasonably early as the 'Italian' ...
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Namba launch delayed due to lack of interest
19 Nov 2001
The National Association of Mortgage Brokers and Advisers has been forced to put its launch date on hold through lack of interest. The would-be trade association, that says it will "roar" for brokers, has previously claimed 98% support among brokers for its £9.50 membership fee, and recently sent mailshots to nearly 3,000 firms. But self-appointed Namba chief executive Julian Jennings admitted last week that it will struggle to get its minimum 1,500 membership in ...
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Online banking on the up
19 Nov 2001
A report from Datamonitor finds that of those European consumers with internet access, 26% bank online. In 2001, the UK had the highest number of online bankers in Europe, with 7.52m people conducting some or all of their banking affairs over the internet.
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Online help for debt problems
19 Nov 2001
The DTI has teamed up with the Money Advice Trust to provide advice to thousands caught in the debt trap. Last year, Citizens Advice Bureaux received more than a million enquiries about debt, and reported that consumer debt problems had increased by 39% over the last four years. In total, the Bureaux helped clients with debts amounting to £1.2bn.
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PHL's new range fills the void
19 Nov 2001
Platform Home Loans has launched a new range of light-adverse products as the void between mainstream and sub-prime narrows even further. Guy Batchelor, sales and marketing director, says: "Following requests from our intermediaries and further market research, we have identified a gap in the mortgage market. It is an area that can best be described as the lending zone between us and our sister company Verso." Platform's new products are available on a full-status ...
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Regulation Q&A
19 Nov 2001
A. Your understanding is correct and as the market currently stands, you will find it difficult to ensure that the correct information is passed to the client. A significant change will be required to assist you. The first change is that lenders must recognise that the pre-sale information is their responsibility and that they will have to employ additional staff to provide you with the new illustrations or provide technology solutions to assist you. So, adding facilities to their websites ...
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Seminar will discuss N2
19 Nov 2001
The Institute of Financial Service is hosting a seminar to discuss the wider implications of N2. Held at Stationers' Hall, London EC4 on Wednesday 5 December 2001, it will feature several senior industry speakers including David Jackman, head of industry training at the FSA, and Mike McKee, director of wholesale markets and regulation at the British Bankers Association.
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Sources of advice for the franchise route
19 Nov 2001
I have only very recently become involved in the mortgage business and want to follow the franchise route. Can anyone tell me what options are available? I have been unable to find a good source of information to compare the various options. Is it better to join a network of independent mortgage brokers, and effectively 'go it alone' as a true independent? Or is it better to join a network of some form of associates giving 'umbrella' MCCB registration coverage? The ...
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Standard Life cuts rate
19 Nov 2001
Standard Life Bank will cut the standard variable rate on its Freestyle mortgage by 0.5% from 1 December 2001. The SVR falls from 5.5% to 5%. Neil Ross, managing director, says: "Freestyle continues to offer our customers an excellent mortgage at a great rate."
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Standard Life latest to enter all-in-one market
19 Nov 2001
Standard Life Bank is planning to shake up the flexible mortgage market in the new year with the launch of a new all-in-one mortgage. The product will follow an offset model, as the bank fights to regain market share captured from the success of brands such as Intelligent Finance and the Woolwich Open Plan. A Standard Life spokesman says that the launch timetable has not been finalised. "We're looking at next year and I'm confident we'll get there." Standard ...
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Sub-prime to benefit from recession
19 Nov 2001
The cloud of recession could have a silver lining for sub-prime lenders who expect unemployment to boost their customer base. Although government initiatives to reduce numbers of people in the 'credit underclass' are expected to squeeze the sub-prime customer base, some specialist lenders anticipate an economic downturn to reverse this effect. Steve Sandiford head of borrowing products at Birmingham Midshires, says "It may well be the case that the numbers falling ...
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Training Q&A
19 Nov 2001
A. Under Inland Revenue regulations, the maximum amount that an employee can contribute to an occupational pension scheme is 15% of remuneration. The Revenue allows most taxable elements of remuneration to be taken into account. These would include, for example, salary/wages, overtime, commission, bonus, private medical insurance, company cars and fuel. However, the rules of each individual pension scheme will usually refer to contributions based on pensionable earnings. Basically, ...
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Treasury to grill lenders for failing to pass on rate cuts
19 Nov 2001
Abbey National, Cheltenham and Gloucester and Northern Rock are among lenders to be quizzed by the Commons Treasury select committee for failing to pass on full interest rate cuts to borrowers. All lenders who failed to reduce mortgage rates by 0.5% following this month's interest rate cut will face a grilling from the committee. The committee's enquiry will form part of a wider review of banking practices in the new year. Although the Treasury committee has no ...
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Who knows the difference?
19 Nov 2001
Intermediaries have dismissed claims by Sun Bank that brokers and IFAs do not know the difference between sub-prime and complex-prime. Maurice Edgington, director of e-mortgage-uk.com acknowledges a problem sometimes exists, but says: "It's very difficult to differentiate from brokers' point of view. We keep it simple and the only people who ever use the term complex prime are Sun Bank."
