Mortgage rates drop to record lows

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The Bank of England has revealed that mortgage rates in the UK have now dropped to a record low as growing numbers of people scramble to fix mortgage deals.

The bank’s figures show that between July and September this year, the overall interest rate average for mortgage advances fell from 2.83% to 2.76%.

In addition, the number of new mortgages that are now fixed rate deals has risen from 78.9% to 80.7%.

However, the bank’s figures also reveal that increasing house prices has also led to a leap in the number of borrowers able to borrow more than four times their income.

The proportion of mortgages where the applicant has needed to borrow more than four times their income has risen to 10.3% in the quarter, up from 9.3% in the previous quarter.

A third have no idea how much mortgage interest they pay

In another report, consumer magazine Which? says that third of those with a mortgage have no idea how much interest they are paying on their home loan.

This is despite lots of publicity predicting a rise in interest rates in the coming months which could significantly increase their repayments.

Which? says that 32% of people claim to be unaware of their rate of interest, while 29% could tell researchers their exact rate.

The magazine has also revealed that the number of fixed rate mortgage deals has rocketed by 55% over the last two years to account for 77% of the total.

Bridging finance firm organises deal within days

Meanwhile, a bridging loan for nearly £1.2 million has been arranged by Shawbrook Bank in just 10 days.

The deal was put together on behalf of a bridging finance broker’s client who needed to quickly arrange finance to enable the purchase of a property.

The bank was approached by the broker to arrange short-term finance. They did this with a gross LTV of 71%.

A spokesman for the bridging finance brokerage revealed that their client wanted a substantial sum from a lender who could assess the case on its merits and complete on time.

The spokesman added: “Having worked extensively with Shawbrook, they sprang to mind and my client has benefited from their approach.”

Bridgebank Capital has completed on £35million of loan advances

Also, the growing popularity of the UK’s bridging finance sector has been underlined with news that Bridgebank Capital has completed on £35million of loan advances in recent months.

The financial outfit made the loans to a variety of clients including those settling bank finance, offshore entities and foreign nationals. Bridgebank is also predicting business worth another £20 will be completed by Christmas.

The bank is also predicting a bright start to 2016 with high volumes of big deals being predicted.

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Mortgage lending in the UK continues to rise

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The number of mortgages being approved has risen by 17% over the past year to reach 69,613 in October, says the Bank of England.

That number is up slightly from September’s figure of 69,012 and it is higher than the six-month average of 68,099 mortgage approvals.

The Bank has also revealed that the mortgages are worth £12.2 billion and economists had predicted the number of mortgage approvals to break through the 70,000 barrier in October.

One economist has pointed out in a national newspaper that the number of approvals is lower than August’s peak which is down to the lack of properties for sale on the market.

House price rises are also pushing up the value of mortgages

Howard Archer is chief economist with IHS Global Insight and he said that house price rises are also pushing up the value of mortgages.

He said: “While housing market activity has picked up during 2015 the easing back slightly of mortgage approvals could reflect the shortage of properties.”

Mr Archer also pointed out that the value of approvals was also probably boosted by the number of people looking to fix their mortgage deals into low rate offerings before a predicted rise in interest rates.

The Bank of England says that the number of remortgages that were approved in October was 39,629, which is a slight fall from September’s figure of 41,000.

People opting to lock into long-term mortgage deals

Peter Rollings, the chief executive of Marsh & Parsons, said lending is looking strong with people opting to lock into long-term mortgage deals before interest rose next year.

He added: “The Chancellor’s autumn statement will also have boosted the number of first-time buyers keen to get their foot in the door.”

He also predicted that buy to let landlords may also boost the number of mortgage approvals as they bid to beat the stamp duty shake-up set for next April when an extra charge will be levied on those who own second homes.

Bridging finance specialist helps release landlord equity

Meanwhile, a commercial bridging specialist has unveiled a product aimed at releasing billions of pounds from the portfolios of property professionals.

JustBridging.co.uk says that research shows that buy to let equity has risen by £70 billion in the past two years as property prices rise – they have risen by 15% in the UK and in London by 30%.

The firm’s director, John Davies, said: “Property professionals are equity rich but options poor and, understandably, the last thing they want is to unlock equity from their portfolio by remortgaging.

Use equity to buy additional properties

“This would increase significantly their borrowing costs and it can be frustrating as they are unable to use equity to buy additional properties or improve their houses.”

Now the firm’s PortfolioBuilder product offers flexible funding solutions to those with commercial property, including buy to let landlords, with funds of between £10,000 and £500,000.

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Confusing mortgage charges tackled

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Mortgage fees are to appear in a standard format after an agreement between building societies and banks to help customers from being confused when trying to compare offers and products between lenders.

The Council of Mortgage Lenders (CML) says the new tariff of charges when taking out a mortgage will also not have any hidden costs. They will also, more importantly, be laid out in exactly the same way for all lenders.

This means that mortgage providers will use the standard list of charges and fees which will enable property buyers to compare mortgage deals between lenders more effectively.

In addition, the lenders will also use standard terminology to describe the charges described.

Mortgage lenders have committed to using the CML’s new format

Around 85% of mortgage lenders have already committed to using the CML’s new format and will begin publishing their list of charges before the end of 2015 on their websites.

The charges being described will include application, legal and valuation fees as well as charges for early repayment.

Under the current terms, confusion is caused because an application charge, for instance, can be described by a lender as either a booking fee or an arrangement fee.

For lenders who charge fees that are not on the standard tariff, they will have to make these charges clear on a separate list.

Bridging finance appeals to more brokers

Meanwhile, research has revealed that the number brokers who now consider bridging finance as a potential solution for their customers has grown significantly.

According to bridging loan lender MTF, 93% of brokers said they considered bridging finance to be a useful financing tool in the third quarter – that’s up from 77% in the second quarter.

The survey is part of the lender’s quarterly broker sentiment report which also reveals that 76% of brokers had seen a rise in bridging loan volume in the same period.

Demand for bridging finance is higher

Demand for bridging finance is higher now outside of London with 59% of brokers saying they have seen an increase. The largest increase for bridging loans was seen by brokers in the South West of England.

MTF’s managing director, Tomer Aboody, said it was now a ‘distant memory’ since bridging finance was seen as a last resort for desperate borrowers.

He added: “Over the years, professional standards have improved and the market has matured so lenders operate in their own niches and focus on strengths.

“Borrowers are now dealing with established, transparent and experienced lenders. Bridging finance now sits alongside the mainstream with many borrowers and brokers seeing it as an alternative to High Street finance.”

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SMEs targeted by new bridging loan business arm

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Small and medium sized businesses (SMEs) in need of bridging loan finance are being targeted by lender Amicus Commercial Finance.

To be launched next January, Amicus says it will provide small businesses with ‘working capital facilities’.

In order to access the bridging loan funding, SMEs must have sales worth between £500,000 and £5 million.

The chief executive of Amicus, John Jenkins, said that the larger subsidiaries owned by banks are responsible for 85% of lending to small business.

Working with a bridging loan provider

However, because of cost savings, he added, many of these subsidiaries can no longer afford a local relationship-based service which professional service organisations, as well as small firms, value highly when it comes to working with a bridging loan provider.

Mr Jenkins said: “Many new entrants focus on larger businesses, we believe there is an opportunity in providing a proposition combining customer service, a transparent fee structure and innovative products which are powered by the latest technology.”

Amicus says the move is part of its strategy of entering specialist lending markets that are being poorly served by other lenders.

Bridging loans are becoming increasingly attractive to SMEs who are often looking for financial help during a cash flow squeeze.

Alternative lenders for bridging loans

This means there has been a growth in the number of alternative lenders for bridging loans targeting sector.

The loan itself is for a short-term and is secured against an asset, generally a property, though the loans do have a relatively high rate of interest.

For SMEs waiting for a customer to pay a large outstanding invoice, a bridging loan will help them through the cash shortfall to pay their bills or wages or even help them buy another property, for instance.

Landlords enjoy boom in buy to let mortgages

Meanwhile, the current buy to let boom in the UK is showing no signs of abating with more mortgage deals are never available.

According to the Council of Mortgage Lenders’ Bob Pannell, the sector is enjoying ‘it’s best spell since 2008’.

Despite mortgage lending running below the pre-economic crisis high of £350 billion in 2007 the number of buy to let mortgage products is currently at a seven-year high.

Buy to let mortgage deals

Landlords, and potential landlords, how a choice of more than 1,200 buy to let mortgage deals, according to the website Moneyfacts.

The site also points out that the number of buy to let mortgages currently being taken out is being fuelled by landlords remortgaging their property portfolio.

In addition, the current low interest rate environment is also attracting landlords to remortgage on fixed rate deals in a bid to beat the expected rise in interest rates.

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Fixed interest mortgages reach record low

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Despite the prospect of interest rates rising in 2016, the average fixed rates on two, three and five year mortgages are now at their lowest since 2012.

The figures come from a money comparison website which reveals that the average rate on a five-year fixed deal is currently running at 3.45% – it was 4% last year and in 2012 it was 4.67%.

The site also reveals that the average for a two-year fixed mortgage is 2.9% which compares to the 2012 figure of 4.48%.

The website is also advising people who own their home to fix deals while mortgage lenders are still cutting their mortgage rates.

Indeed, the number of 10 year fixed rate products that are on the market has risen from 55 last month to 41 this month.

And despite the Bank of England saying that interest rates look unlikely to rise before the end of next year, one think tank says that they could rise as early as February to 0.5%, their first rise in six years.

Interest rates will have to rise

That’s the view of the National Institute of Economic and Social research which says that interest rates will have to rise to ensure inflation stays at the Bank’s 2% target.

A spokeswoman for the comparison website said: “Mortgage lenders are decreasing their rates after hiking them for the last couple of months.

“And though the Bank of England’s base rate has not risen yet it is a case of when rather than if, so those homeowners looking for a cheap deal should take advantage of current low rates.”

Another financial website has also highlighted that tracker rates for mortgages are also dropping and have fallen below 2%.

This is, they claim, the first time on record that the rate has dropped below this level.

An average two-year tracker mortgage can now be found at the record low of 1.98% which is down from October’s tracker rate of 2.05%.

New bridging loan firm announces strong performance

Meanwhile, a new buy to let specialist lender has revealed strong year-to-date performance figures after recording £800 million worth of buy to let business.

Fleet Mortgages says it has passed its annual target of £450 million of lending and its target for 2016 has now been set at £750 million.

In the third quarter of 2015 they saw a 55% rise on the previous quarter and applications for standard buy to let products accounted for 50% of that demand.

Limited companies wanting a bridging loan accounted for 25% and HMO businesses accounted for the remainder.

Fleet Mortgages says there’s been a significant rise in limited companies making enquiries which, they believe, is down to the Government’s Budget move to cut mortgage interest tax relief by 2020.

The firm’s chief executive, Bob Young, said: “We are pleased with how business has progressed and breaking even in less than two months is astonishing.

“We are particularly pleased in the quality of business we are attracting which is higher than we expected.”

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Four month low for mortgage approvals

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The British Bankers’ Association (BBA) says that mortgage approvals for house buying in September have fallen to a four month low because there is, they claim, a lack of property available.

While the number of approvals was 44,489, the figure is still 14% higher than it was a year ago.

In addition, a decline in overdraft and personal loans was also noted between August and September and there was also a drop in net credit card lending too.

The BBA’s chief economist, Richard Woolhouse, said: “Remortgaging is high with savvy customers securing attractive deals before a possible rate rise.

“The mortgage market borrowing figures are strong with customers taking advantage of the record low interest rates.”

House prices in the UK

House prices in the UK have been strengthening in recent months fuelled by the limited supply of new housing.

While the number of mortgages being approved is at its lowest since May, credit card lending has dropped to its lowest since September last year.

The figures do not include mortgage lending from mutually owned building societies, they account for around a third of all mortgages in the UK, and the BBA’s report is recognised as pointing to the trends in the Bank of England’s own data.

The prospect of a rate rise occurring in the next few months are beginning to recede but the Bank of England is still urging households with excessive debt to prepare for an increase.

In addition, mortgage borrowers are particularly being warned that they should be prepared for a rate rise and many are heeding the advice to remortgage at current low record rates.

Indeed, the UK’s remortgaging sector is going from strength-to-strength as borrowers try to lock in low rates over fixed terms.

Remortgaging loans grew by 12%

Property services firm LMS says that remortgaging loans grew by 12% from August to September to reach 28,686.

They add that the remortgaging figure is also 4% higher than September last year.

In addition, house prices in the UK may have reached their peak, according to consultants Hometrack who say that the pace of growth is now slowing.

The firm adds to that there’s a big variation in performances between regions with some seeing prices for, such as Belfast, while house prices in parts of London are 43% higher than they were a year ago.

Firm’s bridging loan record

Meanwhile, a bridging loans firm has announced its best ever month with September recording their highest number of bridging loan completions.

Broker Loan.co.uk said the rise is part of its strategy of becoming the one-stop specialist financial shop for its intermediary partners.

The firm’s chief executive, Paul McGerrigan, said one reason for the rise was product innovation from lenders who are ‘forward-thinking’.

Second mortgage and bridging lenders

He added that low borrowing rates are also helping to fuel the rise and that a wide range of second mortgage and bridging lenders was crucial to their successful strategy.

Mr McGerrigan said: “Customers do not have a preference when they need money and our job is to help provide solutions as professional finance specialists that suit personal requirements and circumstances.”

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Mortgage lending reaches 19 month high

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The UK’s improving economy has seen a surge in mortgage lending and the amount loaned in August reached a 19 month high, according to the Bank of England.

The number of mortgages that were approved grew to 71,030 – higher than the forecast of 69,800 – to become the highest since January last year.

In total, lenders approved loans worth £15.6 billion in August which is the highest amount since 2008.

The growth in mortgage lending points to a strengthening housing market with some areas of the UK seeing new house price records being reached in September, according to property portal Rightmove.

Finance experts are pointing to weak inflation, strengthening wage growth and low mortgage borrowing costs for fuelling the trend.

Growth in mortgage lending and house price rises

Indeed, the growth in mortgage lending and house price rises is being helped, for instance, by the availability of two-year mortgages with a 25% deposit which had a rate of 2.5% year ago but this has now dropped to 1.95%.

The chief economist at IHS Global Insight, Howard Archer, said: “August’s performance may have been lifted by house buyers wanting to move quickly and looking for low mortgage interest rates before they rise.”

He added that strong buy to let activity was also helping to push up mortgage approvals.

IHS is predicting that house prices in the UK will grow by 7% this year and by 6% next year.

Access cheap mortgages with research

However, not everyone is able to access cheap mortgages with research from specialist lender Kensington revealing that one in three contractors is struggling to be accepted for a mortgage since leaving a secure staff job.

Kensington says that the potential mortgage market for contractors is huge with around 1.2 million people working in the sector and, the firm argues, mortgage lenders need to address this demand.

Kensington also says that contractors are highly creditworthy with 42% saying they earned more than they did in a staff job and 45% saying they had been working on a contract for two or more years.

Bridging loan firm reduces its minimum valuation

Meanwhile, one of the UK’s leading bridging loan providers is meeting growing demand by reducing its minimum valuation demand for light refurbishment to £75,000.

Previously, Aldemore had a minimum requirement of £100,000 which is in line with their buy to let and residential mortgages.

Aldemore has also reduced the minimum age requirement for a bridging loan from 25 to 21, except for first-time landlord applicants.

Exit bridging loan and switch to a commercial product

In addition, when their clients want to exit their bridging loan they can switch to a commercial or buy to let product for their long term funding needs.

Aldermore’s group managing director, Charles Haresnape, said: “The demographics of those seeking a bridging loan is changing and we are moving away from the idea of an ‘average customer’.

“We are committed to continually improving our services and products to provide bespoke and flexible financing options.”

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Mortgage lending in the UK reaches pre-recession levels

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The booming housing market has seen mortgage lending in the UK reach its highest level since before the recession started in 2007, says the Council of Mortgage Lenders.

Mortgage lending reached £20 billion in August which is a 12% rise on the year previously, though it’s also an 8% decline on July’s figure.

The annual increase is good news for the mortgage industry because after August 2007 the mortgage market was hit by the financial crisis.

That’s when mortgage lending halved by August 2008 and it’s taken since then to recover to 2007 levels – and that has taken 12 months of steady growth.

The CML’s chief economist, Bob panel, said: “This is the best spell since 2008 for mortgage lending which comes on the back of house purchases and remortgaging activity picking up over the summer.”

Mortgage activity will continue to grow until the end of the year

He added that growth in mortgage activity will continue until the end of the year although there are issues with affordability for home movers and first-time buyers.

In addition, the Halifax says that house prices have grown at their fastest since May 2014.

Financial experts are now predicting that the low mortgage interest rates, high employment and strong consumer confidence will help push up house prices even further.

However, there is currently an oversupply in mortgage lenders who have money for mortgage loans and not enough people who meet their lending criteria.

This will mean, say financial experts, that interest rates will remain low for the foreseeable future and the lending criteria for mortgages will be loosened to help lenders meet their volume targets.

Crystal’s eSource will boost bridging loan brokers

A new sourcing system for financial brokers covering bridging loans, mortgages and secured loans has been launched by Crystal Specialist Finance.

They have called their new system eSource which can be used on any device or operating system and it will, the firm says, help boost a broker’s point-of-sale business.

Bridging loan brokers will be able to produce immediate comparisons of secured lending options versus available mortgages to their clients.

eSource complies with the Mortgage Credit Directive

Their eSource system also complies with the upcoming Mortgage Credit Directive.

Crystal’s managing director, Jo Breeden, said: “eSource makes what is seemingly a difficult market accessible and open.”

He added that the firm was striving to improve their service offering and that the loan brokering industry will increasingly rely on similar technology in the future.

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Mortgage brokers voice fears over MCD

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The impact of the European Union’s Mortgage Credit Directive (MCD) is causing worry for nearly three-quarters of the UK’s mortgage brokers who believe that lending activity will be impacted as a result, according to a survey.

The Intermediary Mortgage Lenders’ Association (IMLA) undertook a survey of its members and found that 74% were concerned about the consequences of MCD and 71% of mortgage lenders also expressed a similar view.

The financial services industry has six months starting from 21 September to adopt the new regime under the directive.

Most of the new rules concern establishing better documentation and disclosure for those taking out mortgages.

Mortgage Market Review (MMR) brought in a raft of major changes

That’s in contrast to last year’s Mortgage Market Review (MMR) which brought in a raft of major changes including tightening up a borrower’s affordability criteria and how much advice is given to people applying for a mortgage.

Despite the initial fears of the MMR’s impact, the new rules have been adopted quite smoothly but 40% of mortgage brokers do not believe the same will happen with MCD.

Indeed, many believe that the new regime will create a challenge for the mortgage industry and 11% of brokers believe the introduction will be a ‘significant challenge’.

The executive director of IMLA, Peter Williams, said: “The UK’s mortgage market has undergone a series of adjustments recently and is now facing a collective challenge while being open for business and getting to grips with the new working practices.

“Life is returning to the mortgage market and sentiment is as positive as we have seen since the introduction of MMR.”

Homeowners are considering remortgaging their property

News about the worries of mortgage brokers over the impact of MCD comes at the same time as the Nottingham Building Society has revealed that remortgaging is being planned by one in six homeowners.

The building society says that borrowers are looking to take utilise of the current mortgage price war with low fixed rates available.

From their research, the society believes that the next six months will see a lot of remortgaging activity in the UK as borrowers can enjoy rate cuts on five-year fixed deals of less than 2%.

Bridging loan lender boosts short-term lending deals

Meanwhile, bridging loan lender Shawbrook is to enhance its short-term lending range following a boost in trade after reducing their large loan deals by 0.5%.

Among the highlights for their proposition to clients is an increase in the LTV for residential products of up to 75% and 70% for mixed use and semi-commercial purposes.

Demand from clients and bridging loan brokers

The firm’s sales director, Karen Bennett, said the changes were being made to help meet demand from their clients and bridging loan brokers.

She added: “We look forward to these improvements and how our proposition delivers the best interests of the borrower.”

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Bridging loan firm launches products for landlords

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Property landlords in the UK wanting to access bridging loans quickly have been offered a range of products by Keystone.

The firm says it has a range of bridging products which will deliver quick finance for landlords to buy properties, refurbish them and refinance them.

There are six products which have been priced in accordance with the applicant’s credit profile with prime borrowers enjoying better rates than applicants with an adverse credit history.

For bridging loans of up to £1 million, Keystone rates start from 0.85% per month with a 70% LTV – though this rises to 75% LTV on referral.

The credit line is being funded by Lancashire Mortgage Corporation

Decisions on bridging loans

Keystone’s managing director, David Whittaker, said: “Decisions on bridging loans are made within hours and funds released in five working days.”

He added that the products have no exit fees and that the costs and fees for borrowers have been kept intentionally low.

There is an assessment fee which is a one-off £199 cost with a bridging loan facility fee of 2%.

The bridging loans for landlords are available now via various broking firms.

Remortgages hit record peak

Meanwhile, new data has revealed that homeowners in the UK are cashing in on rocketing property values by pushing the average remortgage loan value to new heights, according to the Mortgage Advice Bureau (MAB).

The firm says that the typical remortgage value in June was £166,100 which grew by 2% in July to £170,094 – this is the highest figure since 2009 when data was first recorded.

MAB point out that the average value being remortgaged in the UK is now worth £300,898 – the highest since October 2014.

The research also reveals that homeowners are opting not to take smaller loans which would decrease their mortgage repayments but to use property price gains to generate cash.

The net result is that the average house equity has fallen to stand at £130,804.

Using property for releasing extra funds

MAB’s head of lending, Brian Murphy, said: “Many homeowners are using their property for releasing extra funds and they have benefited from house price rises.”

However, Mr Murphy pointed out that by opting for higher LTV ratios means that the borrowers are also opting for higher mortgage repayments.

He added too, that the average price of property in the UK has risen by a third in five years, according to the Office for National Statistics.

The MAB data has been put together from responses given by 900 estate agents and 700 mortgage brokers which revealed that remortgages have risen by 35% year-on-year.

Applying to remortgage

Most of those applying to remortgage are doing so ahead of an expected interest rate rise in the coming months and mortgage experts predict a growing number of homeowners will remortgage in the next few months.

Those who are remortgaging are opting for fixed rate deals and can enjoy some excellent deals being offered by lenders currently.

Mr Murphy added: “Mortgage interest rates have tumbled since the beginning of 2015 and many lenders are offering low rate deals.”

He also pointed out that some lenders have increased their rates in recent weeks which means that the peak for low remortgage deals is coming to an end.

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