I have on occasions been asked if I’m related to the late, world-renowned clairaudient, Doris Stokes. I’m never sure if the person is being sarcastic or genuinely showing interest – maybe if I was a medium myself I could be more certain.
However, in tribute to Doris, I’m going to don a large floral dress and get out my crystal ball.
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I was at the ‘augural’ Mortgage Brain Packager Forum last week. CEO Mark Lofthouse took great strides to reassure everyone that mortgage data was checked by two people and also subject to a computerised field sweep. Very commendable, however errors still occur – why? Put simply, there is a pressure in our industry to do everything at a thousand miles an hour.
This obsession is typified by automated valuation models (AVMs), and as more lenders look for efficiency and embody their instruction into their mortgage process, the trend is likely to increase.
Speed has always been important in the house buying chain as it can secure that dream home ahead of others. Likewise, remortgages have never been so pressured to stem off endless predators who the average person owes money to. Speed should not be undervalued, provided there is no compromise.
The basic mortgage valuation used to be the starting point for many consumers to ascertain whether further works were required. It is acknowledged that specialist reports can be tiresome for the broker, both in terms of their arrangement and potential to kill a sale, but equally important to the client, whose aboriculturalist’s report could highlight the potential of the nearby oak tree turning into ‘Audrey II’ from Little Shop of Horrors, and sprouting roots through the patio and onto your couch.
They are also important for the lender. Let’s not forget they have been around for five years, and it is only now they appear to have any credence. Picture this – a high-rise flat needs to be repossessed. The heavies are called in to nab the keys. They have to turn back, due to not being able to circumnavigate the horse on the lawn, followed by the demolished lift, the sick man in the stairwell, and several large bloomers on the washing line strewn across the balcony.
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I do think there is a place for AVMs, provided a proper valuation has previously been carried out fairly recently by that dying breed referred to as human beings. My concern is more inline with the ritual that Doris would perform in her crystal ball – extrapolating the mess onwards to 20 years’ time. When the mist clears, are we going to be left with a mass of Chinese whispers? AVMs of AVMs of AVMs? Will today’s mantra of fast and efficient at all costs result in the next generation’s nightmare, as they sleep in the emperor’s new pajamas while the ceiling creaks perilously above them? Who is left accountable?
Mainstream
Leading rates are appearing below 5 per cent again as the swaps have eased. Stroud & Swindon has two-year fixes at 4.89 per cent, while Alliance & Leicester’s is at 4.99 per cent. The 10-year fixed from Derbyshire is at 4.95 per cent.
Woolwich continues to champion its fee-free lifetime tracker at Base Rate plus 0.18 per cent.
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Halifax increased has increased its valuation fee scale by £15 across all purchase bands.
Self-cert
The Mortgage Business is poised to re-enter the 90 per cent loan-to-value (LTV) arena. Advantage has introduced prime self-cert up to 95 per cent LTV.
Buy-to-let
Chelsea is trying to redress the fixed versus floating rate balance by offering a lower coverage on trackers at 110 per cent, rather than its standard position of 115 per cent.
On Rooftop’s investor product, the valuer now must state a rental figure on their report. The product remains self-cert but the lender will presumably be keeping a closer eye on the actual returns to ensure they are not accepting properties too far below the waterline. The rate remains at 5.99 per cent, and importantly the LTV at 90 per cent which sets it apart.
The HBOS group has doubled its portfolio maximum to £10 million.
London Mortgage Company (LMC) has radically reduced the feasibility of using a letting agent letter to confirm rental coverage from 90 per cent LTV down to 75 per cent LTV. This was a distinguishing feature for LMC among the Lehman brands and is disappointing.
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The market has been waiting for rental yields on AVMs, but it appears GMAC Partners can wait no longer and has followed Close Brothers and West Brom for Intermediaries by offering instant offers on low LTVs, effectively ignoring the rental assessment altogether.
Adverse
Following on the AVM theme, Lehman Brothers has launched its solution which is identical across Preferred, SPML and LMC. The former two also now have one-year fixes without extended early repayment charges in their armoury to target the short-term credit repair market.
Amber Homeloans has launched an unlimited adverse self-cert to 80 per cent LTV at 6.99 per cent.
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Accord has expanded its range by adding an 80 per cent LTV bracket.
UCB Homeloans enters the market. The margins are fine so I guess it will principally be targeting the direct-to-broker market, leaving its sister firm, The Mortgage Works, to concentrate on packagers.
