No matter how hard I try to dress it up, it has to be said that this week’s news is not the best.
With news of more lender job cuts, the fate of Northern Rock having being revealed and the withdrawal of 125 per cent mortgages taking centre stage, there hasn’t been that much positive to say in print this week.
The announcement of the government’s plans to nationalise Northern Rock on a temporary basis, as reported in MI, MSL and MS has, as expected, received lots of comments, the majority of which have been positive.
Objections appear to be around the issue that £45 billion-worth of Northern Rock’s high value and high quality mortgages have been securitised to an offshore asset fund called Granite.
However, it is believed that the arrangement had been suspended and that the new chief executive, Ron Sandler, would be in control of the decision to continue with the deal.
Products
BM Solutions was the final lender to pull out of the 125 per cent market, as reported in FA, MM and MSL. This comes following negative press of the sector. It could be two years before lenders return to this market, which will, of course, have repercussions for first-time buyers.
On the mortgage products front, it is clear that the liquidity crisis has had a huge impact on product availability, with Trigold revealing that product numbers have reduced by some 42 per cent since August 2007 to last month and Mortgage Brain seeing a drop of 30 per cent in the same period.
It is little wonder that the intermediary market is having issues with finding competitive deals in certain sectors, namely non-conforming.
A study by mform.co.uk attributes the low take-up of long-term products to a lack of choice with just seven out of 90 lenders offering clients long-term fixed rates of 25 years or more, according to MS, showing a lack of support for the government’s initiative prior to the budget on 12 March 2008.
House prices
Assetz’s annual House Price Watch, which provides an overview of data supplied by five of the main house price indicies, has revealed that residential property increased by a value of 5.5 per cent in January, compared with the same month in 2007.
However, it also documented that the price of an average house had fallen from £212,145 in December 2007 to £211,477 in January 2008. Assetz managing director, David Holbrook, believes that this indicates that ‘the market is leveling off’, that ‘the market would see a 5 per cent level of growth over the year’, and ‘that there would be an upward movement before the Spring’.
However, it looks like the upturn is not imminent if Hometrack’s latest survey, which reported that house prices fell for the fifth time in February, is anything to go by.
Buy-to-let
More coverage this week on the booming buy-to-let (BTL) market, with MM reporting on the Council of Mortgage Lenders figures showing that BTL lending increased by 13.7 per cent in the second half of 2007, taking figures from £21.2 billion in the first half of 2007 to £24.1 billion in the second.
Rental yields are also on the up, with levels rising to 6.3 per cent in January 2008 from 6.2 per cent in December 2007, according to Paragon in FA. The increase follows a long period of stability at around 6 per cent throughout 2006 and 2007.
The sector also saw some column inches of bad press, with the HM Revenue & Customs having sent 500 letters out to landlords who it believes has not declared their BTL properties on their tax return.
TCF
As the first of this year’s Financial Services Authority’s (FSA) ‘Treating Customers Fairly’ (TCF) deadlines approaches, the regulator has revealed that over a third of firms reviewed between September and December 2007 have fallen short of its expectations in that they are failing to actively analyse management information to test whether they are complying with its principles.
The Association of Mortgage Intermediaries (AMI) has launched a definitive guide to tell firms what they should be doing. Thumbs up to AMI for helping to turn a negative into a positive.
Finally, after much digging, there is positive story to give us all hope and in FA’s words ‘British Bankers Association (BBA) finds positive data among the gloom’.
The BBA reported that remortgages increased by 17 per cent between the months of December 2007 and January 2008 and house purchases increased by 4.6 per cent taking figures from 42,343 in December 2007 to 44,288 in January 2008. So things are picking up and with this month’s rate cut, hopefully activity will increase further still.
