It’s a shame that the people who actually know how to run this country are either cutting hair or driving black cabs.
Instead we have to turn to Darling and King, and beckon in a bearded saviour, in keeping with the season, in the name of Branson. If these three wise men don’t manage to thrash it out, we will have the bizarre safety net of nationalisation to protect the Labour voters in the North East constituency. I’m sure you all hope your businesses could be nationalised if you fall on hard times.
But the real Herods of this sad tale are the fickle investors, who seem reluctant to sound out the regional economic variances in the countries affected, preferring to cut the throats of everyone involved, knowing that individuals will think twice before trying to palm them off with poorly assessed assets in the future.
This leaves us all with a dilemma, and some of our most revered lenders have a mark outside their door.
If pressed last January for the names of the lenders who had the biggest outlook for 2007, I would have included Northern Rock and GMAC-RFC, the ultra strong ‘creators and traders’, whose distribution focused on volume manufactured by us, the intermediaries.
Northern Rock had a knack of charging high entry, completion and exit fees without hindering its juggernaut momentum. It also boasted a solution for first-time buyers – an area of the market that is generally under-served. I read that in some months in the first half of 2007, one in five applications were being sent to the Rock.
GMAC-RFC, a top 10 lender driven by an entrepreneur, had an unrivalled e-trading platform and was in the throws of integrating this with the largest distributors in the country. The premise was speed and cascade. Very sadly the cascade now only consists of one level of adverse and its visionary has since departed.
In 2008 the outlook is somewhat different; a more humble and prudent world rather than the super-fast thrills of dynamic commercialism. A return to community based principles, where locals invest their money in return for its safety and a little bit of interest trickle. The building societies in turn can select the right customer to benefit from it in the form of a mortgage.
For us, news of a ‘Plan B’ allowing lending to continue is good, but it is important to realise societies will not be pressured by volumes – or, dare I say it, ego wars – like the global creators and traders. They serve to protect their members and would not want to immerse themselves heavily into sectors that the media appears to have its teeth into. Otherwise answering questions at their annual general meetings would be very uncomfortable.
Most societies will have had a finite amount of money to lend. This is predetermined by their expected deposits, and the reduction in competition means they are in the enviable position of cherry picking, rather than lending more. As if to prove a point, one well-known building society recently reduced its loan-to-values (LTVs) by 30 per cent to funnel the flow.
Other methods of controlling the continual traffic through the society doors could be through the use of mortgage clubs, packagers or networks. Most predict they will be the preferred conduit as societies are unlikely to want to expand their broker-facing sales forces when the business is proactively looking to come to them. Yet they will appreciate they’ll have more brokers knocking on their door than ever before.m
Mainstream
Skipton is the latest lender to adjust its tolerance to automated valuation models: 80 per cent LTV to £200,000; 75 per cent LTV to an impressive £562,500. It has also effectively removed above 90 per cent LTV lending and reduced the generosity of its affordability calculation.
BM Solutions has lowered its procuration fee on Mortgage Plus, presumably as it is getting an increased share of this high LTV lending directly from the slowdown at Northern Rock.
Buy-to-let
Maximum LTV changes: CHL Mortgages to 85 per cent; Platform to 85 per cent; and Northern Rock to 75 per cent.
Maximum LTV changes for new build: Northern Rock to 70 per cent; West Brom for Intermediaries to 75 per cent; and Scarborough to 70 per cent.
Rental coverage changes: Woolwich to 120 per cent; Astra Mortgages to 125 per cent; Northern Rock to 100 per cent; and Shepshed to 115 per cent.
Woolwich now insists properties are owned for 12 months before it will remortgage them (new builds: 24 months). It will now not permit lettings to previous owners or properties let on a room-by-room basis.
West Brom for Intermediaries has imposed a minimum earned income amount. It has also increased the minimum age to 25-years-old. First-time buyers are now excluded.
GMAC-RFC’s non-verification of rental income is gone.
Salt has taken over as the broker brand of the Derbyshire.
Self Cert
Advantage has lowered its LTV to 85 per cent.
Adverse
Northern Rock has launched its new almost prime banding.
GMAC-RFC now has one level of adverse.
Mortgages plc and Platform have withdrawn all 90 per cent LTV products.
Rooftop has removed heavy adverse remortgages for standard and ex-local authority properties.
The Mortgage Works has removed builder and vendor deposits and reduced its affordability calculation.
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