I could not believe what I was reading last week with the news that in final negotiations over European capital requirements, ministers agreed to define a mortgage default limit of 180 days, doubling initial proposals for a 90 day limit.
Conservative MEP Vicky Ford said she fought hard to increase the limit from the original 90 days.
But why oh why do we let the European Union interfere with us again?
It should be up to the lender how much leeway is given in addition to the 180 days.
Everybody loses if a property is repossessed.
This will not improve financial stability whatsoever, but will destroy families.
There may have been some serious errors over lending in the past, but overall since mortgages began they have been an opportunity.
Like the FSA, the people making these rules in Europe have no idea what it is like to lose your job and try and find work in the present climate.
They know they are safe and sound sat in the ivory towers in the EU.
Rumours were rife last week that the Funding for Lending Scheme will be extended and “put on steroids” when the chancellor announces the Budget next week.
But when will politicians ever speak to the people in the know?
The simple answer to this is never!
There is no point in speaking to bank executives as the FLS will not work until banks are made to extend criteria in order for deals to qualify.
At the moment all we are seeing are the customers who would have got the money anyway getting a better deal and the banks make more from them.
We are not seeing the marginal customers get funding and this all just seems to be a waste of taxpayers’ money, again.
I see Mortgage Strategy has introduced a Joke of the Week into its letters section.
Last week a regular contributor, Bobby, stated that he had no sympathy for the 13,500 Bank of Ireland tracker customers who have recently had the differential on their loans increased.
Not only that, he then went on to state that he he hoped all lenders followed suit because it would be good for the remortgage market.
In the light of this, I have a few comments myself.
Why not provide your surname? Don’t be shy, it’s a bit Frankie Boyle but humour is a broad church
You are obviously on a fixed rate and jealous
You clearly haven’t thought this through. If all customers totally mistrust all mortgage companies there won’t be a market.
In the event of a revolution,bizarrely caused by the normally mundane mortgage industry, you could be tried as an agitator.
I would suggest you keep this letter to prove you were only joking.
Stirling Partners Finance
Nationwide’s latest house price index showed UK house prices rose by 0.2 per cent in February taking the average value of a house from £162,245 in January to £162,638.
But the main issue I have with the Nationwide house price index is that it’s based on limited mortgage data.
These low transaction levels mean the sample size varies wildly and only represents a small percentage of the market. Furthermore Nationwide does not take into account cash purchases or fall through rates.
Forgive my cynicism but it’s very hard to draw any encouragement from this data.
In the wake of the announcement last week that Abbey for Intermediaries had launched a seven day special of a two-year fix at 2.49 per cent up to 75 per cent LTV with a £995 fee, there were a number of negative comments from brokers complaining that it contacts clients six months before their rates end offering new fixed rates.
Contacting clients is bad but if you actually reviewed how many times it happened to your clients I’m sure its few and far between.
Abbey have been a consistent provider to allow brokers to effectively line their pockets.
By not using a lender because of a risk this happens you are not doing your client justice. Clients are getting smart now and doing research you could end up losing them anyway.
It’s time people stopped moaning about clients they would have lost in time and start growing their book rather than churning over the same clients.
Name and address supplied
I was interested to read last week LSL Financial Services director of mortgages David Copland’s article on whether packagers have a future in the mortgage market and whether they are over stepping their mark from a regulatory point of view. He also went on to talk about whether it was time to introduce trail commission for mortgages.
He argued: “If mortgage advisers were to receive trail commission, it would help them to manage their cash flow which in turn would help them to expand if that was the right decision for their business. It would also provide an incentive to sell mortgages that would last for a longer period of time, such as an offset, and provide the stability that the government has been saying that we need.”
I bow to David’s superior knowledge of the packager market but would comment on trail fees.
This has a risk of alienating the smaller broker firms which have fixed up-front costs and would need initial subsidy if a switch was made.
Would the networks help financially with the transition? The downside of trail is also whether it may have a risk of skewing advice as they would earn more income from longer term deals.
But I would agree a wider debate is needed on these points.
With regards to the comments made by LSL Financial Services director of mortgage David Copland on introducing trail commission, I think the idea is an excellent one.
While in response others have mentioned that trail commission is possibly too tough a hit for some firms, undoubtedly it would benefit others.
It might mean an enhanced overall commission.
Also as regards cash flow it could increase the actual value of companies with sustained LT income.
I was staggered to read the news last week that secured loan lender Equifinance has launched a new secured lender subsidiary, Equifinance Plus, which lends to credit impaired borrowers.
It aims to accommodate borrowers who have had mortgage arrears, defaults and county court judgements in the last 6 months of their financial history, with LTVs up to 100 per cent.
The annual rate of interest will be 39 per cent for borrowers with a clean credit history and 48 per cent for those with recent impairments on their record.
But on what planet and in what circumstances is it good advice to recommend a client borrows at a rate of 39-48 per cent?
No client can be that desperate and no self respecting qualified adviser should recommend such extortionate high risk lending – sometimes you just have to say no to the client.
It seems madness to me.
Name and address supplied
With regards the comment criticising Equifinance Plus’s new product on Mortgage Strategy Online last week, that rant typifies the type of patronising rhetoric that keeps the reputation of brokers/IFAs in the gutter.
Pricing for risk is the way forward if financial services are to become inclusive and pandemographic. 39 per cent or 48 per cent APR is by no means expensive. It would be far more worrying if there was some ridiculous low rate then followed by a much higher rate – yes the kind you probably recommend all the time when your advise on virtually all mainstream lenders.
I was interested to read about the new secured loan product out from Equifinance.
I for one would not recommend the product. If my client was clean and wanted £1,500 to £5,000 iI would send them to the bank for an unsecured loan where they would attract the same sort of repayment over three years as they would with this product over five years.
I also appreciate the fact that it is pricing for risk but I don’t see the selling value, I would not recommend the product.
Lloyds TSB’s research on first-time sellers last week was a good example of the restrictive stance lenders are taking.
It found that lmost two-thirds of first-time sellers want to move up the ladder but are unable.
Moreover, around 22 per cent say it is now harder to move up the ladder than it was to get on it in the first place.
Of the 500 interviewees who took part, 65 per cent cited raising a deposit as a serious obstacle, 53 per cent indicated a lack of affordable housing, 52 per cent were concerned with cost including stamp duty and 25 per cent are trapped by negative equity in their current homes.
Many potential borrowers who are finding difficulty in moving are perfectly good credit risks but just don’t fit their lenders profile or credit scoring model. What is needed is a loans/mortgage ombudsman who could rule on whether a borrower is a reasonable risk and put details of the potential borrower on a website where other lenders could perhaps offer loans. Alternatively what we really need is a return to sensible person to person underwriting right across retail bank lending. It used to work in the past – why not today?