Selfcert.co.uk is not a welcome new lender
In this industry there are few genuine surprises but recently I had to check my watch to see if I had been asleep for a couple of months and woken up on 1 April.
The reason was the launch to market of selfcert.co.uk from its base in the Czech Republic. Its decision to circumvent the UK’s regulatory standards perhaps tells you everything you need to know and part of me does not wish to give it the further oxygen of publicity. But there is something very wrong about its ability to do this and to secure business from UK nationals.
There are also some incredible points to the proposition, which set my hair on end and caused my teeth to gnash.
Take a line from the story in this very publication, which said: ‘The firm will check affordability using social media accounts to analyse lifestyle habits…’
Not for this lender even the most cursory check of bank accounts to see incomings and outgoings but instead, one presumes, a look at a borrower’s Facebook account to gauge how many times they have been out drinking and eating with friends or gone on holiday. Is this truly the future of lending?
The MMR was introduced for very good reasons: self-cert loans, while they might have been appropriate for some, were certainly not appropriate or necessary for the employed, and a return to lending decisions based on a signature rather than the facts is a recipe for disaster.
I usually heartily welcome new lenders but, on this occasion, I will do no such thing.
Bob Young Fleet Mortgages
Shame on insurers over rising household debt
At the beginning of the year, Bank of England governor Mark Carney warned that rising levels of household debt posed an “indirect” threat to the economy. His concerns followed predictions from the OBR that household debt would rise until the end of the decade, hitting 171 per cent of GDP, up from 146 per cent currently.
The economic recovery is the trigger for increased borrowing and a spike in unsecured debt levels. So why hasn’t the insurance industry picked up its pace to ensure consumers have the means to meet their financial commitments in the face of adversity? The Times reports the UK is at a “turning point” and warns of more defaults/home repossessions, while Citizens Advice confirms that more than a quarter of a million Brits ‘live for the day’ when it comes to their finances and half run out of money by the end of the month.
How many more prompts do insurance and policy providers need? They continue to bury their head in the sand and do nothing about the UK’s burgeoning protection gap, fearful of the consequences of offering a solution that, although once tarnished, is now ethically ahead of the pack. Shame on them.
Kesh Thukaram, Best Insurance
MCD could discourage foreign-property buyers
Last week, Mortgage Strategy reported that the FCA had asked the European Commission to reclassify foreign currency loans to lift the “burden” on lenders as a result of the Mortgage Credit Directive.
The FCA said: “By adopting a very broad definition of foreign currency lending, the MCD imposes significant new burdens even where there is no currency mismatch between the denomination of the loan and the income or assets from which it is being repaid.
“An example would be a UK pensioner who has bought a property in Spain using a loan secured on their existing property in the UK. Despite this being a sterling loan repaid using sterling pension income, it is classified as a foreign currency loan.”
I agree. The MCD could be discouraging cross-border investment in property.
I have clients purchasing in Ireland and gearing using mortgages, but a few lenders there are withdrawing from providing mortgages to non-residents as a result of the MCD. Some brokers have incorrectly advised that the EU has banned such loans.
In essence, these loans are in euros and paid for by the rent received in euros, so they are not foreign currency loans as they are not supported by offshore incomes.
Ireland’s property market is such that foreign investment outside Dublin could revitalise the areas and help them cope with soaring rental demand. For the lenders, they can get rid of distressed properties that have not received mortgage payments in years, and start lending again.
Arron Bardoe, Temple Capital Finance