Archive for the ‘Uncategorized’ Category

What’s happening in today’s market?

Thursday, October 13th, 2016

Transactional Activity

The third quarter was the period that immediately followed the UK referendum in which the British public voted to leave the European Union. Many people felt that business activity would be severely curtailed and although there was a significant fall in UK consumer confidence in the weeks immediately following the vote, much of that negativity now does appear to have been overcome as the wider economy does appear to be once again performing relatively robustly.

In the mortgage arena new transactional activity has remained remarkably resilient with no material reduction in new business overall. Overall transactional activity was down by approx 1.9% in July versus June and by 1.9% in August versus July, but this reflects seasonality associated with the peak holiday season. September witnessed something of as rebound with new mortgage activity rising by more than 12% in September over August. The third quarter mortgage volumes amounted to more than £3,3bn of new lending bringing the cumulative figure to almost £10bn. Completions remained in line with new business and we did not witness a wholesale collapse in housing chains as some had forecast following the vote to Brexit.

Remortgage activity on home owner residential cases edged up as a share of overall activity rising from 23% of transactions in Q2 to 26% in Q3. Buy to Let continues to perform relatively strongly amounting to 16% of overall activity, almost back to where it was prior to last year’s Autumn statement announcing SDLT changes associated with second homes and B2L properties, although currently almost two thirds of that B2L activity is remortgaging.

Lender usage

Lender positions in terms of most frequent usage has witnessed little change at the top of the ranking. Halifax were number one in two of the last three months and remain number one overall. Nationwide wrestled top spot from Halifax for one month in the last three and retained second spot for two successive months and remain second year to date. NatWest were third in each of the last three months and remain third year to date. Santander were and remain fourth having occupied that same spot each month in 2016. Barclays are still fifth but only just having slipped to seventh and eighth in the last two months and are now only 0.1% ahead of BM Solutions in % share terms who are sixth. TSB are now seventh with Virgin Money and TMW tied in eighth, followed by Coventry in tenth, Leeds B.S in eleventh, and Skipton and Accord tied in twelfth spot. Next come Bank of Ireland / Post Office followed by Platform. New entrants Tesco have gained traction and achieved 2.5% of our business in August – HSBC who have recently extended their pilot to now include almost all MAB advisers (excluding N.I) achieved approx 1% share of business in September but not all advisers had access throughout.

Interest Rates

At the beginning of the third quarter July average rates across two, three and five year fixes were 2.55%, 2.84% and 3.13%. In the three months subsequently they have fallen to 2.44%, 2.79% and 3.04%. respectively. During that time period we have also seen a BOE base rate reduction, the first since March 2009.

Mortgage Products

We have for a sustained period reported mortgage product numbers based upon data provided by Trigold. With almost all of our advisers now using Twenty 7 Tec we will in future be using this as the source data to measure any increase or fall in mortgage products numbers Product numbers have been on the rise over several years and we have reported the overall number including those that are categorised as exclusives via specialist distributors (packagers). This has had the effect of increasing numbers quite dramatically, e.g. if a range of say 20 products is made available from a lender and then made available to several different packer groups as semi exclusives, these products will show on mainstream sourcing systems multiple times and therefore be duplicated in the product count. We will in future only report core product numbers and in the short term this will reduce the overall number of products that we report and comment upon.

Market Conditions

The Bank of England decision to reduce the Bank Base rate by a quarter of one per cent in August to 0.25% was not a great surprise as many forecasters had predicted that they would make the change at the MPC meeting of July following the UK decision to Brexit at the referendum. The BOE have taken the decision to ease monetary policy by a combination of both a base rate reduction and further quantitative easing to support the UK economy – as in their view growth is likely to be more constrained with the country having voted to Brexit. Whether the decision proves correct only time will tell? The introduction of what is the “Term Funding Scheme” has been designed to ensure that lenders can pass on the reduction in the BBR to existing borrowers who are on variable rates – both tracker and SVR based clients without the lender incurring undue margin pressure – in essence the scheme will be a subsidy to lenders – At this point it is estimated that only around half of all mortgage lenders have passed on the Base rate reduction so it will be interesting to see if there are any consequences applied to the lenders who have failed to do so!. Although the BBR reduction is welcome for many borrowers it is not likely to impact significantly on the buying or borrowing aspirations of many new house buyers or remortgage customers but it will impact further millions of savers adversely!

As we mentioned earlier rates have been falling consistently for a sustained period, however what it does appear to be doing for some existing borrowers is a prompt to consider remortgaging when borrowers receive notification from their existing lenders advising of the change – as for many it will highlight the relatively high rates that many borrowers are languishing on – the average SVR in the market prior to the BOE rate reduction was circa 4.80%. As brokers this provides an ideal opportunity to re-engage with our former customers to appraise them of the range of rate options available to them – falling mortgage rates and in most areas increasing property values mean even more compelling reasons to consider switching – and for some even paying an ERC may prove beneficial!

Mortgage Market Overview

Wednesday, June 1st, 2016

Interest Rates

At the start of May average rates have eased further in all categories – average two, three and five year fixed rates declined by 1bps, 5bps and 3bps respectively to 2.54%, 2.86% and 3.17%. Two year BRT also eased by 2bps to  2.06%.  In the buy-to-let arena, average fixed rates on two years declined by 4bps while three and five years remained unchanged from the beginning of April – this left rates at 3.28%, 3.87% and 4.00% respectively.

Mortgage Products

Mortgage product numbers broke through the 20,000 level for the first time since 2008 after experiencing another increase of more than 1,400 products within the broker sector alone. The last time mortgage product numbers were at this level was just prior to the collapse of Lehman Brothers in 2008 which was one of the major causes of the financial crisis. Following that event mortgage product numbers declined almost month on month until the following February 2009 when they reached a low point of only 2,560 products, but since that time we have been on a slow but steady increase to where we now are today with broker products representing 73% of the market.

Market Conditions

The PRA recently issued a public statement in which they commented that they were to investigate underwriting standards within the buy-to-let sector as they were concerned that some lenders were not being as diligent as they would expect them to be.  As a consequence of that and in response we have already witnessed several lenders announce and implement changes to their rental stress calculations, with TMW and Barclays at the front of the move to get out ahead of any regulatory intervention. Other lenders will, we are sure follow suit, as no-one lender will want to be in receipt of all of the business that can only be conducted using a 125% rental calculation, and most importantly no-one lender will want to be last man standing, so expect other lenders to follow suit. With rental stress calculations moving towards 145% at around 5.00/5.50% (and possibly above) as the new normal. Clearly a number of transactions that would be approved today at 125% will fail at the new higher rates and this will weigh further on buy-to-let transactional activity in addition to the changes already implemented on SDLT rates, and the introduction of changes to the treatment of mortgage interest from 2017/18 and onwards etc…

We are now less than one month out from the EU Referendum, and the campaign rhetoric on both sides is becoming increasingly desperate in their respective attempts to convince the British electorate of their arguments. As we commented last month, transactions do not appear to have been unduly affected by the impending referendum, however one of the biggest hurdles facing the market remains the lack of housing stock on the market with the supply/demand imbalance more acute than ever!

Brian Murphy’s comments on BBC Radio 5 Live

Monday, December 8th, 2014

bbc radio 5 live

Economy continues to grow but is it growing faster than we thought?

Friday, August 30th, 2013

The last month or so has continued the more positive and upbeat theme that has been gaining momentum since the early spring.

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Help to Buy extension helps falling rates

Wednesday, May 29th, 2013

In recent weeks we have now had confirmation from the Chancellor that the Funding for Lending scheme (FLS) is to be extended to 2015.

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Positive signs for the mortgage market as The Budget is announced

Thursday, March 21st, 2013

The Budget, as is generally the case, has been met with mixed reaction depending on where one sits on the political divide.

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Mortgage price war hotting up as rates continue to tumble

Friday, February 22nd, 2013

2013 has continued where 2012 left off with lenders increasingly slugging it out in an ever more competitive mortgage pricing war.

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2012 – Is this the year that the housing and mortgage market finally started its renaissance?

Friday, December 21st, 2012

The mortgage and housing market in 2012 has it appears finally started to rise out of what can be only described as a very severe trough in the last four and five years.

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Some good news and some not so good news

Friday, November 23rd, 2012

Earlier this year the Governor of the Bank of England (BOE), Mervyn King talked about the likelihood of the UK economy zig-zagging and we have seen further evidence of this in recent days.

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Dare we use the term, “green shoots”

Thursday, October 18th, 2012

The economy continues to provide a series of mixed reports as to its health. Of the more positive ones, this week we have seen Consumer Price Inflation (CPI) continue its downward trajectory from 2.5% in August to 2.2% in September and is fast approaching the policy setters “target” level of 2.0%.

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