With some lenders no longer specifying an acceptable CCJ value, borrowers are finding more products available to them
Pepper Homeloans sales director Rob Barnard recently shared some interesting facts about CCJs. He pointed to Registry Trust figures showing there were more CCJs registered against consumers in England and Wales last year than for any other year on record.
On average, there were 2,799 CCJs issued each day in 2016. That is 15.77 per 1,000 people, compared to 12.79 in 2015.
Interestingly, however, while the number of judgments has risen, the average value has fallen dramatically. Last year it was £1,711, whereas in 2008 it stood at £3,624.
There are a number of factors driving this change, including an increase in unsecured and credit card debt and the fact more claimants are suing for smaller amounts today.
Specialist mortgage lenders have not been slow to recognise this trend and some have moved away from specifying the number and value of CCJs acceptable for each of their products to a system that specifies only the number. These lenders are more interested in when and why a life event happened that resulted in a CCJ, rather than the actual value of the CCJ.
Here is an example of why this can be so helpful. A borrower went through a difficult divorce two years ago and the financial turmoil that followed resulted in two CCJs of more than £2,500 being awarded against him six months later. However, having regained control of his finances he decided to buy a home of his own. He had a 30 per cent deposit, meaning a loan of 70 per cent loan-to-value.
Discovering that the high-street lenders he approached would not consider his application, he went to a broker who pointed him in the direction of specialist lenders that would.
One was willing to offer a deal with a starting rate of 3.68 per cent, provided he had not incurred any CCJs in the past 18 months (which he had not) and had incurred no more than two in months 19 to 24 (he had not).
Brokers need to read very carefully the small print regarding the number of CCJs permissible and in what period they can be incurred, but there is an increasing number of lenders that cater for these types of circumstance. Let’s hope simplification is a trend that catches on.
Specialist lenders continue to sharpen rates and criteria
Specialist lenders have also been busy in recent weeks, enhancing both their rates and lending criteria:
- Kensington has cut rates on its specialist distributor-exclusive two- and three-year fixed-rate products by up to 0.5 per cent, including its no-fee options.
- Pepper Homeloans has cut its 30-month, two- and five-year fixed rates and reduced fees on its range of non-conforming residential mortgage products.
- The Mortgage Lender is marketing a ‘packager exclusive’ deal for first-time buyers up to 85 per cent LTV. It offers a choice of a two-year tracker or a three- or five-year fix, with rates starting from 2.72 per cent. It will consider adverse credit.
- Magellan Homeloans has cut its two-year fixed rates by up to 1.01 per cent across its range of complex prime mortgages, which are available up to 85 per cent LTV.
- Foundation Homeloans has launched a range of residential mortgage products, with rates starting from 2.99 per cent for two-year fixes with an arrangement fee of £995. It will accept CCJs, defaults and arrears within the past two years.
- Vida Homeloans has cut its two-year tracker and two- and five-year fixed rates on buy-to-let products by up to 0.6 per cent, and reduced reversion rates across its BTL products.
- Aldermore has lowered the stress rate and reversion rates on its five-year fixed-rate BTL mortgages, which now have rates from 3.28 per cent with a 2 per cent product fee.
- Shawbrook Bank has cut rates by up to 1.68 per cent and increased its maximum LTV to 70 per cent on its commercial mortgage range.
- Secure Trust Bank has entered the UK mortgage market with an intermediary-only range of products for the self-employed and those with complex incomes. Rates start from 2.99 per cent.
- Bluestone Mortgages has enhanced its criteria by reducing its minimum loan amount to £50,000 and the minimum property value to £75,000. It has also increased its maximum loan to £400,000.
- Together has introduced a tiered approach to interest coverage ratios, which is 125 per cent for basic-rate taxpayers, 145 per cent for higher-rate taxpayers, 165 per cent for additional-rate taxpayers and 125 per cent for limited company applicants.
As more new lenders enter the mortgage market, we are seeing more specialist propositions being announced, as well as existing lenders sharpen both rates and criteria. It is a competitive market but one that is working to the benefit of borrowers and brokers.
Doug Hall is director of 3mc