As a nation we have an acute fascination with labels. Be they designer labels or the brown cardboard ones usually found around a cuddly bear’s neck, proclaiming: ‘If lost, please return to deepest, darkest Peru’, we seem to attach one to every item imaginable in an attempt to make our lives that little bit simpler.
Perhaps the most talked about are labels on food packaging, whereby a product is analysed in terms of e-numbers, protein, sodium and vitamin content – I always worry myself stupid if I don’t meet my recommended daily allowance of Riboflavin. Apart from those that qualify for the Egg Heads TV show, the rest of us are relieved to hear the latest news that supermarkets are looking at a traffic light system that does not so much ‘dumb-it-down’ but actually opens up a book of revelations. Now it’s down to the ‘experts’, who need to put foods into green, amber and red categories, which may be easier said than done.
I look at our own industry and stalwart Kensington Mortgages. A pioneer, which in 1995 took our industry into a brave new world dubbed ‘non-conforming’. Or was that ‘sub-prime’ or ‘adverse’?
It launched a range called ‘Open Door’; comprising of four products, depending on employment or self-employment, loan-to-value (LTV) and adverse tolerance. Over time this expanded to four alphabetical risk categories, including the ‘DD’ range lovingly referred to as ‘deep ‘n’ dirty’ by advisers, as it had no restrictions.
Now let’s bring this up-to-date for 2007, and depending on whether you have access to all of its standard and semi-exclusive plans, you’ll find Specialist Prime, Specialist Prime Self-Cert, Specialist Prime Buy-to-Let K75, Near-Prime, Near-Prime 500, Near-Prime 1001, Near-Prime Max, Minor, Very Light, Very Low, Light, Medium, HighOr and HighAnd – with further subsets for LTV, right-to-buy and buy-to-let.
Taking near-prime as an example, you can see Kensington itself has four categories. But to expand this to other lenders you could have a total of: none, one, £500, £1,000 of recent unsatisfied CCJs; or any number of CCJs registered one or two years ago. Some also disregard CCJs valued £100 or £250. Others include defaults within the CCJ total, most discount them altogether. Some allow one month’s arrears, others none. So why do lenders insist on generically labelling it near-prime? It’s meaningless in most instances.
Self-cert is another frustrating generic term. At Mortgage Times we produce a self-cert guide from time to time – this apprises what lenders’ actions will actually be. Some write for affordability letters from accountants, others call employers, some require the applicant to redeclare their income post-offer. Most believe self-cert should simply be a signature on an application form and this is where arguments can inevitably start.
Please let’s remind ourselves that labelling should be there to help.
Mainstream
Alliance & Leicester (A&L) now considers ex-local authority flats up to 75 per cent LTV.
BM Solutions has realised its Mortgage Plus product is failing to break the amazing stranglehold of Northern Rock’s ‘Together’ product, so has upped the ante by increasing the proc fee to match Northern Rock’s at 0.5 per cent. Now that’s one for compliance eggheads to ponder.
Leeds BS has increased income multiples depending on LTV and whether the application is single or joint. The extreme being four times joint or five plus one. It also now lends to the self-employed for the first time on its 100 per cent LTV product.
Buy-to-let
Norwich & Peterborough and Infinity Mortgages have extended their maximum portfolio to £2 million, with a maximum of 20 properties.
Bristol & West, A&L and Freedom Lending now lend up to 90 per cent LTV. The latter two have 100 per cent cover options.
Leeds BS allows an existing AST to prove rental coverage and will provide further advances automatically where 130 per cent yield is proven.
West Bromwich is using automated valuation models for speed to 75 per cent LTV. Cases above 70 per cent require a copy of the AST.
The Mortgage Business’ (TMB) Multi-House2House now allows two properties. With rental calculations being tough due to the Base Rate rise in January, self-cert of earned income is a very effective alternative.
Dunfermline now lends in England and Wales. It previously operated solely in Scotland.
Self-cert
A&L has removed income checks and increased its LTV to 90 per cent.
Adverse
Kensington has enhanced its income multiples.
Platform has removed higher lending charges to 90 per cent, and selectively includes a free remortgage legal service.
Rooftop no longer requires two active CAIS items for first-timers on its very light scheme.
On two niches, Leeds BS has increased the price on its adverse shared ownership product and Freedom Lending has launched a near-prime buy-to-let.
Thought of the fortnight
I write ahead of Valentine’s Day, and leave you potential studs with a question. If the world is getting smaller, how come the price of postage has gone up?
