What is happening in the UK Mortgage Market currently?
So its been a while since I last wrote because I thought you needed a rest from my jottings and I have been busy both helping customers and developing my business with Joe Stallard as we prepare for the next 5 years or so.
I want to update you on things that you may find interesting or relevant in small bite-sized chunks. Hopefully easy to swallow and digest!
Mortgage Market Competition
The Financial Conduct Authority has brought out its interim report into mortgage market competition, which says amongst much else there is no easy way for consumers to know which mortgages they qualify for at an early stage, hindering shopping around.
The truth of the matter here, is that the sheer amount of choice and complexities of each lender’s unique criteria mean that it will be very hard to break this cycle. That is why a good mortgage intermediary should be around for a few years yet.
Putting the Customer First
And so, on a related note, there is also no evidence to show that advisers choose the deals that the pay the most commission to themselves.
As you would expect nothing would horrify me more.
I must justify what I do for my customers in writing and to their face and I take huge pride in getting the best deal for them and only them. I’m glad to see my peers doing the same.
Cheapest doesn’t equal best
On a final point from this FCA report, I read an international news agency saying that it was hard for customers to access “the cheapest deals”.
What is the cheapest and when was it ever the best?
There are just too many variables to make that statement meaningful.
If a more expensive 5-year fixed rate is better for a customer than a cheaper 2-year fix then the customer shouldn’t be looking for the cheapest, end of.
The “in-house” brokers
Now a moan!
A customer of mine was recently hindered from using me for a new build home purchase. He was told he could not get “some additional benefits” in the purchase if he didn’t use the in-house broker.
It is, of course, only right that the customer has the opportunity to use a new Home Mortgage expert, but it is totally wrong that a customer should be threatened with some form of exclusion.
Anyway, moan over, let’s move on, but I do hope that these firms start to put the customer first!
Support for Mortgage Interest
A Bit of important housekeeping now which I hope you never need to use.
From the start of this tax year, the Support for Mortgage Interes benefit has been withdrawn and replaced with a loan from the Department of Work and Pensions, secured against the property.
Interest WILL be due on this debt.
At the same time, the Government has extended the period in which claimants must wait before this payment is made.
It has also altered the eligibility criteria, so couples with one earner will not now be able to claim.
This benefit was typically paid to unemployed and disabled homeowners, to help with mortgage payments.
I make no apologies for talking about this with all my customers.
They say a 30 to 60 year old is 14 times more likely to take 3 months or more off work due to sickness than to die in that period.
And yet most of my customers ask me for life assurance!
Nearly 1 Million people in the UK are unable to work for one month or more because of an accident or sickness, 750,000 are living with cancer and 1in 4 of use will suffer from a mental illness.
Cover is vitally important.
Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income.
Joint borrower, sole proprietor
The guarantor mortgage is all but defunct but there is the Joint Borrower sole proprietor loan that will indeed suit many.
The product is predominantly geared to helping close family members either get onto the property ladder or move home.
Often parents choose to act as the second applicant, using their income to maximise mortgage lending, however only the first applicant appears on the mortgage deeds.
This ultimately means that parents’ or family members’ higher salaries can be used to support lower incomes, without co-owning the property.
Being a borrower leaves the parent with responsibilities to the lender, but they are not an owner, so they avoid any extra stamp duty payments.
I’ve read reports that the market seems to be slowing a little, but I myself have noticed a big upturn in mortgage enquiries and my workflow is at its highest ever point.
Estate agents local to me tell me they are busy taking on property and selling it quickly.
I believe there are pockets in the London where prices have checked, corrected, and come back.
These market swings have always happened at some point and always will. Remember, they also provide opportunities.
My next post will concentrate specifically on special products for first-time buyers.
Enjoy the sun!