It’s 10 to eight on a Saturday night. The excitement is growing, however you’re not quite at the same level as your mate Jimmy yet. Despite calling three times throughout the week, Jimmy has also texted twice today to ensure you’re still ‘up for it’. ‘Ding-dong’ – there he is, frustratingly 10 minutes early. The shirt you have been ironing has been stubborn to say the least, but it will have to do now as you cannot possibly let Jimmy see how domesticated you are.
As the door swings back standing there is an immaculately dressed Jimmy, albeit slightly out of breath – presumably because he has jogged all the way. He says: “You got any beers, Rich?” Begrudgingly I head to the fridge and return with two tinnies. We set off. Jimmy starts off at least two paces and a skip in front as I struggle to keep pace, after five minutes he appears to be jogging again. Then, as predicable as the hangover tomorrow – it happens. As Jimmy is cantering along, his wallet ‘falls out’ of his expensive Italian designer jeans, somewhere on the way before we arrive at the bar of The George. I turn to Jimmy and cringingly ask him: “You lost it again? What do you want; bitter, lager, cider?” He replies: “Yes, please.”
We all have spongers like Jimmy as mates. There are those who will help themselves, and those that help themselves to whatever they can get. The opposition party of the day continue to spout about the injustice of the current welfare state only to act out the reverse when they assume power. But just like Jimmy, who is really our mate, and being British, we don’t really care.
The dynamic also impacts in finance and our own industry. Like Jimmy’s mysterious wallet reappearance the next day, it goes largely unnoticed but potentially it must be an issue for ‘Treating Customers Fairly’ (TCF). Take the interest rate; have you ever considered this might actually be higher than it should naturally be to compensate for non-payers? This is at its most visual when looking at non-conforming to non-conforming remortgages where the rates are typically 2.5 per cent North – you could argue that these customers have probably been non-payers in the past and what goes around comes around. But the lenders will inevitably do their sums that probably a third won’t pay again, so someone has to. Is it right? Say the customer has amassed CCJs rather than arrears – he therefore has never wronged the mortgage world. It’s a bit like a late tackle in your Sunday league football game rendering a suspension in your hockey match the following day.
The same dynamic appears to being applied to the latest fad, automated valuation models (AVMs). Some lenders are sighting that a premium is required for this service as the risk to them is greater than a valuer visiting a property. Okay, they may never know the true answer to the question on the application form, ‘is the house waterproof’, as the applicant may have responded positively because when it rains, the water never leaves the cellar. However, say their house is actually fine, and the AVM has not been used as a method to exploit the lender – why should they have to pay more to compensate the dishonest?
Mainstream
Most commentators believe that the Bank of England will raise the Repo rate by 0.25 per cent in November, so with this in mind, who is currently trail blazing on the short-term fixes? Northern Rock, at 4.39 per cent to May 2008, with a £995 fee and 85 per cent loan-to-value (LTV) (4.84 per cent without fee); and Alliance & Leicester, with 4.64 per cent to November 2008 with a £799 fee and 95 per cent LTV.
Nationwide also offers a 4.47 per cent with remortgage package with a £1,499 fee at 90 per cent LTV (4.88 per cent with a £699 fee).
ING Direct made a loud entrance into the market, boasting a consumer champion ‘fee reduction’ approach. The rates are good but nothing more.
Woolwich managed to successfully spin the media with its ‘City Slicker’ angle of exceptional value for high bonus earners. Aimed at those looking in excess of £500k, this is a smoke-and-mirror, no early repayment charge (ERC) tracker which is well priced.
Self-cert
Kensington Mortgages has been visual in the industry press with its day one employment history stance. We all know this exists apart from the regulator, so let’s just keep it that way, chaps.
Buy-to-let
CHL Mortgages has introduced 85 per cent LTV products with 115 per cent rental cover.
Leeds Building Society now has an online solution.
UXM has joined a small band of distributors who do not require the applicant to place a deposit. It’s interesting how the new entrants are more willing to tread this path while the established players prefer to watch on from a distance.
Adverse
Platform withdrew all its rates seemingly leaving a gaping hole, as I have still not heard of its replacements.
London Mortgage Company is poised for a complete overhaul.
Norwich and Peterborough BS is the latest lender to delve into the deep, dark and mysterious world of adverse mortgages. It should be well placed as it has always embraced the unusual in the prime market with acceptance to property types in particular.
