View more on these topics

Peace of mind is still valued by clients

The strength of the modern mortgage market was underlined with the Council of Mortgage Lender’s publication of lending figures for February. Although showing a drop of 7% on January’s figures, the 24.6bn still represented a record February and was up by 9% on the same month last year.

In fact, the CML points out that the talk of higher interest rates seems to have had little impact on those people looking for new homes or remortgages and it is sticking with its 360bn forecast for 2007.

Of course, there have been concerns about the impact of rising interest rates on levels of mortgage borrowing. Other statistics from the CML, this time relating to January, show that large numbers of borrowers are opting for fixed rate loans.

Looking at the first-time buyer sector, 85% of all first-time buyers and 70% of home movers chose fixed rate products with these deals accounting for 72% of new mortgages. These encouraging figures show that borrowers are receiving some good advice to help them in selecting the right types of mortgages.

Consumer interest in fixed rates will fluctuate depending on the comparative cost of fixes relative to variable deals.

The CML’s data points to a favourable costing for fixed rate over discounted rates although these numbers relate to the mortgage business completed, as opposed to originated, in January.

January’s surprise rise in the base rate led to higher swap rates and therefore a bumping up of the fixed rate deals on offer. It will be interesting to see how the proportion of fixed rate take-up will be affected by the increase in the cost of these deals. Hopefully, borrowers will understand that the security of a fix is something that can serve them well in an uncertain economic environment.

While we may not have seen borrowers following Professor David Miles’ recommendation and taking up long-term fixed rates in their droves, this does suggest that peace of mind is a valued commodity. This is particularly true in the sub-prime sector, where those that have experienced credit difficulties are well served by locking into a rate for two or three years.

The products on offer in the sub-prime arena allow that to happen, giving shelter to borrowers without extended lock-ins. This is ideal when it comes to providing a credit repair solution and providing manageable mortgage payments for a time to enable borrowers to get back on track.

Once clean credit records have been built up, brokers are in a position to complete a re-entry to the mainstream so borrowers can take advantage of lower rates.

Recommended

L&G reports 19% drop in critical illness rejection rates

Legal & General has reported 2006 rejection rates for critical illness claims are 19% lower than the previous year. Claims declined for non-disclosure have reduced by 15% and claims declined for not meeting the policy definitions have dropped by 27%. L&G paid 92.1m in critical illness claims last year – 11% more than 2005. Russell […]

Technology to give lenders the edge

In this market, firms need every advantage and communication-enabled business processes can help by reducing errors, speeding up processing and improving service levels, says Frank Eve

DA brokers miss out on club products

Just before Mortgage Day, many lenders stopped product development and some even repriced upwards so that reduced demand would let them develop technology to cope with regulation.

February gross mortgage lending 14.9bn, says BBA

Gross mortgage lending fell in February but was up 7% on the previous year, analysis by the British Bankers Association reveals.In February gross mortgage lending stood at 14.9bn, well down on the 16.6bn seen in January.There were 167,000 mortgages approved for all purposes in February. Earlier house purchase approvals data has been re-stated from last […]

Naming a reward programme

Six tips to get your reward programme name right

by Debra Corey, group reward director  Choosing a name isn’t easy. Whether it’s for your new puppy, a bundle of joy or your reward programme, a name determines a first impression – and often a lasting memory. When it comes to your reward programme, the name will determine how your employees feel about it even before […]

Newsletter

News and expert analysis straight to your inbox

Sign up